The recently enacted One Big Beautiful Bill Act, signed into law on July 4, 2025, brings sweeping reforms to the federal tax code. Among its many changes are several provisions that directly affect estate planning, offering new opportunities and important updates for individuals and families looking to preserve and pass on wealth.
Here’s a look at what has changed and why it matters.
1. Estate, Gift, and Generation Skipping Transfer (GST) Tax Exemptions Made Permanent
The Act sets the federal estate, gift, and GST tax exemption at $15 million per individual (or $30 million per married couple), effective January 1, 2026. This threshold is indexed for inflation and, most importantly, is now permanent under the new law.
This change removes the uncertainty that previously surrounded the scheduled reduction of the exemption at the end of 2025. The prior law would have returned the exemption to around $7 million per person. The new law locks in a significantly higher threshold, reducing the number of estates subject to federal taxation.
2. Annual Gift Tax Exclusion Continues
The annual gift tax exclusion remains in place, currently allowing individuals to gift $19,000 per recipient in 2025 without using any portion of their lifetime exemption. Direct payments for tuition or medical expenses continue to be excluded from gift tax as well. These tools remain highly effective for tax efficient family support.
3. Deduction Changes for Estates and Trusts
The Act permanently eliminates miscellaneous itemized deductions for estates and non-grantor trusts. This rule applies retroactively to 2018 and removes deductions such as trustee fees and investment management expenses, which had previously been allowed.
This change may encourage trustees and estate administrators to reconsider how services are structured and compensated, particularly for larger or more complex trusts.
4. Expanded Benefits for Qualified Small Business Stock (QSBS)
For business owners and investors, the Act significantly expands QSBS benefits. The exclusion cap is raised to $15 million, and eligibility rules are relaxed for new stock issued after July 4, 2025. This offers meaningful planning opportunities for those aiming to grow a business while minimizing long-term capital gains.
A Strategic Moment for Estate Planning
Although far fewer estates will now face federal estate tax, estate planning remains essential. Key decisions such as who inherits, who serves as guardian or trustee, how assets are managed, and how state estate tax laws apply still require careful attention and valid legal documents.
Trusts, lifetime gifting, charitable strategies, and business succession planning all remain vital tools. In many cases, these strategies have become even more valuable under the new law.
If you have questions about how the One Big Beautiful Bill Act may impact your estate or would like help creating or updating your estate plan, Forbes Law Firm is here to help. We invite you to contact us to schedule a consultation and take the next step toward peace of mind for you and your loved ones.
