One Big Beautiful Estate Tax Exemption
No Sunset in Sight – $15 Million Lifetime Exemption Made Permanent Under New Law
The July 4th signing of the “One Big Beautiful Bill Act” put a permanent stop to the looming estate tax sunset. This welcome news brings long-awaited clarity and relief to taxpayers and estate planning professionals alike. Without the new legislation, the historically high lifetime estate tax exemptions, which determine how much wealth can be transferred free of the 40% estate tax, would have been cut in half on January 1, 2026.
Federal Lifetime Estate & Gift Tax Exemption
| Tax Year | Old Rules - TCJA (2017) | New Rules - OBBA (2025) |
|---|---|---|
| 2025 | $13.99 Million | $13.99 Million |
| 2026 | Approx $7 Million* | $15 Million |
| 2027 | Approx $7 Million* | $15 Million** |
* Approximate value based on pre-TCJA exemption, indexed for inflation
** Indexed for inflation beginning in 2027 under OBBA
Figures are per individual; married couples may double these amounts with proper planning.
The table above outlines how much each individual taxpayer can transfer, whether through lifetime gifts or bequests at death, without triggering gift, estate, or generation-skipping transfer taxes.
Even for estates under the exemption threshold, basic estate planning remains essential to help achieve key objectives such as:
- Ensuring assets pass to the intended recipients
- Avoiding probate, which can be a lengthy and costly process (for additional information, continue reading: What Does “Probate” Mean?)
- Planning for incapacity, including medical and end-of-life care decisions
- Providing for minor children, both financially and in terms of guardianship
- Business succession planning
- Charitable giving
- Offering general peace of mind and clarity
From a tax planning perspective, it’s also important to remember that estates are valued at death and a lot can change over time. Assets may appreciate significantly over the years, and unexpected windfalls can occur. An estate that falls under the exemption today may easily outpace inflation in the future.
For married couples, estate taxes are typically not due until the death of the surviving spouse. However, if the couple’s combined estate exceeds $15 million, additional planning is essential to preserve the first spouse’s exemption and avoid unnecessary tax at the second death.
If you haven’t reviewed your estate plan recently, or if your financial picture has changed, now is a great time to revisit it. Please don’t hesitate to contact us if you’d like to discuss how the new law may affect your long-term goals.
About the Author
Angel Nevis
Angel Nevis, CPA, MST, is a Tax Principal with over 19 years of public accounting experience, focused in tax planning and compliance for high-net-worth individuals…
