Estate Tax Exemption Increase Under OBBBA

The One Big Beautiful Bill Act (OBBBA), passed in July 2025, brought a major update to estate planning rules. One of the most notable changes is the increase to the federal estate tax exemption — and this time, it’s permanent.

Here’s a breakdown of what’s changed and why it matters.

The New Rules

• $15 million per person: Starting January 1, 2026, up to $15 million of an individual’s estate will be exempt from federal estate and gift taxes.
• $30 million for couples: Married couples can combine exemptions, shielding up to $30 million.
• Inflation-indexed: The exemption will adjusted annually to reflect inflation.
• No sunset clause: Unlike prior laws, OBBBA makes this exemption permanent — there’s no built-in rollback.

Why This Matters

• Fewer taxable estates: Many families who once faced potential estate tax exposure with expiration of the Tax Cuts and Jobs Act (TCJA) will now be below the federal threshold.
• Reduced pressure to act quickly: Before OBBBA, taxpayers needed to consider making gifts prior to the 2025 sunset. Now that there is clear guidance for future tax years, taxpayers do not have to rush estate and gift planning.
• No need to alter investment and asset planning: Families can continue to manage their assets and investments without worrying about a drastic change to the estate tax exclusion.

What You Should Do

• Review your estate plan: Trusts, wills, and gifting strategies drafted under lower exemptions may no longer fit your goals.
• Consider strategic gifting: Moving appreciating assets out of your estate now can lock in future tax savings.
• Coordinate with state law: Work with your advisors to navigate state-specific rules that may still create a tax burden.
• Stay proactive: The exemption increase is good news, but it doesn’t replace the need for thoughtful, long-term planning.

The Bottom Line

OBBBA’s estate tax changes are a win for families and small business owners alike. With a $15 million exemption per person — indexed for inflation and here to stay — you have more room to plan without racing against a sunset date. But smart planning still matters. Reviewing your estate strategy now ensures your wealth is protected and passed on according to your wishes.  Please contact your DWD accountant with any questions you have related to these changes.