In a major win for estate planners and high-net-worth families, Congress passed the One Big Beautiful Bill Act (OBBBA) on July 4, 2025, making permanent the elevated federal estate tax exemption that was originally introduced under the 2017 Tax Cuts and Jobs Act (TCJA). This legislation ensures that more estates can pass wealth to heirs and charitable causes without triggering federal estate taxes.

What Changed?

Before the OBBBA, the estate tax exemption was set to drop dramatically in 2026 — from $13.99 million per person to approximately $5 million (with an inflation adjustment). The new law prevents that sunset and instead:

  • Raises the exemption to $15 million per individual (or $30 million for married couples)
  • Indexes the exemption for inflation annually starting in 2027
  • Maintains the 40% tax rate on estates exceeding the exemption

This means individuals can transfer up to $15 million tax-free at death or during life, and couples can shield up to $30 million from federal estate tax with proper planning.

Why Does It Matter?

  1. Greater Flexibility in Estate Planning: With higher exemptions, families can make larger lifetime gifts, fund trusts, and support charitable causes without worrying about triggering estate taxes.
  2. Charitable Giving Opportunities: The elevated exemption allows donors to make substantial charitable bequests while still preserving wealth for heirs. This is especially impactful for those who want to support universities, hospitals, or community foundations.
  3. Dynasty Trusts and GST Planning: The generation-skipping transfer (GST) tax exemption is now aligned with the $15 million threshold, enabling robust multi-generational planning.
  4. No Sunset Provision: Unlike previous tax laws, the OBBBA does not include a built-in expiration date. While future Congresses could change the law, the current exemption is considered “permanent” under existing legislation.

What Should Your Next Steps Be?

  1. Schedule a meeting with our firm to review your estate plan to ensure it reflects the new exemption levels.
  2. Consider lifetime gifting strategies to take advantage of the elevated thresholds.
  3. Update charitable bequests to maximize impact while minimizing tax exposure.

The OBBBA opens the door to powerful legacy planning. Whether you’re focused on family, philanthropy, or both, now is the time to act. Call us today to update your estate plan and take full advantage of the new law.