The One Big Beautiful Bill Act (OBBBA) was signed into law, July 4, 2025, and it impacts many types of federal taxes, including federal estate and gift taxes, related to estate planning. Specifically, the lifetime gift tax exemption and the estate tax exemption permanently increased. You may recall, the 2017 Tax Cuts and Jobs Act (TCJA) provides that the federal gift and estate tax exemption was to fall from $14 million per person in 2025, to $7.1 million in 2026, meaning any estate with a net value over $7.1 million in 2026 would be subject to federal estate tax; undoubtedly would subject many more estates to federal estate tax liability (on average, a 40% rate). The OBBBA changes this. Starting in 2026, the OBBBA provides the federal estate tax exemption amount will be $15 million per person ($30 million for a married couple), indexed for inflation annually, and this will be permanent, meaning there is no sunset date.
Also of interest, the OBBBA provides for a continuation of federal estate tax portability, which allows a surviving spouse to use the unused portion of his/her deceased spouse’s federal estate tax exemption.
The simple take away is that the OBBBA is providing every taxpayer an opportunity to pass more value to his/her heirs during life or at death, without paying gift or estate tax.
We encourage you, the reader, to consult with your estate planning attorney and/or tax advisor regarding your individual estate planning. This summary provides a very general update on estate-related taxes but is not intended to provide individual legal or tax advice.