New federal estate tax exemption jumps to $15 million—big win for wealthy Americans
Congress and President Trump have sealed a permanent $15 million federal estate tax exemption for individuals (and $30 million for married couples), fixing what was set to sunset at year‑end 2025. This landmark change, part of the sweeping “One Big Beautiful Bill” (OBBBA), removes uncertainty, protects family businesses, and reshapes estate planning strategies for high-net-worth households.
What the New Law Changes — and Why It Matters
Congress’s One Big Beautiful Bill, signed July 4, 2025, makes permanent the dramatic increase in the estate, gift, and Generation-Skipping Transfer (GST) tax exemption to $15 million per individual—indexed to inflation—avoiding a scheduled drop to roughly $7 million in 2026.
Previously, thanks to the 2017 Tax Cuts and Jobs Act (TCJA), the exemption had ballooned from $5 million to around $14 million. But that boost was set to expire. With OBBBA now law, it locks in the higher level, insulating estates from a major tax cliff.
This change means fewer estates will owe the steep 40% federal tax, far fewer than the already tiny fraction (under 0.2%) taxed today.
Key Impacts on Tax Planning
Removes the “Use-It-Or-Lose-It” Deadline
With OBBBA’s enactment, the rush to make lifetime gifts by end‑2025 is off. Estates can now strategize over the long term without fear of reversion to lower exemptions.
Increases Lifetime Gifting Flexibility
Unused exemption amounts remaining after big 2025 gifts (capped at ~$13.99 million) still roll over. In 2026, that allowance resets to a full $15 million, allowing richer gifting without tax penalties.
Other Major Tax Law Changes in the OBBBA
State & Local Tax (SALT) Relief
SALT caps for itemizers rise from $10 k to $40 k (subject to income thresholds) through 2029.
Charitable and Senior Deductions
Non-itemizers can deduct up to $2 k in charitable giving and seniors (65+) get an extra $6 k standard deduction. The Week
Child Tax Credit & Other Credits
The child tax credit is raised to $2,200. There are also new above-the-line deductions for tips, overtime pay, auto loan interest, and reinstated mortgage-insurance deductions.
What It Means for Individuals and Families
High-Net-Worth & Family Businesses
Eliminating the sunset gives family businesses and ultra-wealthy families certainty. Experts note long-term planning is now easier, but caution that political shifts could reintroduce changes.
Mainstream Attorneys and Trusts Still Essential
Even with high exemptions, estate planning remains critical. Legal tools like trusts (e.g., GRATs, ILITs), wills, powers of attorney, and healthcare directives ensure smooth and intentional asset distribution. MarketWatch
Tips for Smart Estate Planning
- Review Beneficiary Designations & Portability Rules
Portability of unused spousal exclusion simplifies estate strategies. Plan accordingly. - Leverage Lifetime Gifting Strategically
Even with high exemptions, gifts during lifetime can reduce the overall taxable estate and lock in cost-basis via step-up rules. - Assess State-Level Exposure
Some states (e.g., WA, OR) have much lower thresholds—planning must account for both federal and state-level estate taxes. WSJ - Plan for Inflation Adjustments
The $15 million base will rise with inflation—tracking changes year to year is essential. - Keep a Flexible Strategy
Maintain legal strategies like trusts and insurance, even if tax isn’t owed, for asset control and liquidity.
Conclusion
The historic passage of the One Big Beautiful Bill makes the $15 million federal estate tax exemption permanent, shielding wealthy estates from a looming tax cliff. But while fewer families will owe federal estate tax, comprehensive planning remains essential. Estate professionals underscore that even high-net worth individuals benefit from wills, trusts, and legal directives to secure their legacies and support loved ones, now and into the future.
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