On July 4, 2025, the One Big Beautiful Bill Act (the “Act”) was signed into law, bringing with it important changes to the federal estate, gift, and generation skipping transfer (GST) tax system. Many of the provisions in this legislation were originally enacted as part of the 2017 Tax Cuts and Jobs Act (TCJA), which have now been extended indefinitely.
Richard C. Humiston outlines some of the key provisions of the Act related to estate planning and highlights important considerations for estate planning clients in this new environment.
Estate, Gift, and GST Exemption
Perhaps the most consequential provision of this legislation is the increase in the federal estate, gift, and GST exemption amounts. The exemption for 2025 is currently set at $13,990,000. Prior to the Act’s passage, this amount was set to revert on January 1, 2026, to the pre-2017 figure of roughly $7,000,000. With the passage of the Act, this amount will now increase to $15,000,000 per individual ($30,000,000 per married couple) on January 1, 2026, with additional inflation adjustments in 2027 and subsequent years. Unlike in the previous legislation, there is currently no expiration date set on these new exemption amounts.
Estate, Gift, and GST Marginal Rate and Portability
The Act preserves other key provisions of the TCJA and extends them indefinitely. The highest federal marginal estate, gift, and GST tax rate will continue to be 40 percent. Any unused estate/gift exemption will continue to be portable at death to the decedent’s surviving spouse, however, the GST tax exemption will continue to not be portable.
Federal Gift Tax Annual Exclusion
Also preserved is the federal gift tax annual exclusion amount, which allows a set amount of qualifying gifts each year, to or for the benefit of a specific donee, to be excluded from the donor’s taxable gifts. This amount is currently set at $19,000, with inflation adjustments, and is not expected to decrease in 2026.
Estate Planning Considerations
These changes and extensions of existing provisions have created an opportunity for individuals to optimize their wealth transfer plans and minimize tax liabilities. Strategic gifts under these provisions will allow individuals to leverage the higher exemption amounts while reducing their taxable estate.
These new and extended provisions have the potential to provide long term stability in the realm of estate planning. Although the legislation did not set an expiration date on these provisions, a future Congress could always make substantial changes. Now is the time for individuals to re-evaluate their estate plan to take advantage of this new environment.
