Permanent Increase in the Estate and Gift Tax Exclusion under the One Big Beautiful Bill Act
Permanent Increase in the Estate and Gift Tax Exclusion under the One Big Beautiful Bill Act
On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (“OBBBA”). The OBBBA extended or made permanent many of the tax provisions introduced under the 2017 Tax Cuts and Job Act (“TCJA”) that were otherwise set to expire at the end of this year and provided for many other domestic and international tax law changes.
Background: The TCJA Estate and Gift Tax Framework
The TCJA previously doubled the federal estate and gift tax exclusion and generation-skipping transfer tax exemption from $5 million to $10 million with such amount being subject to annual inflation adjustments. As a result, the inflation adjusted amount for 2025 is $13,990,000. However, the higher exclusion/exemption amounts provided by the TCJA were scheduled to expire effective January 1, 2026.
Key Changes under the OBBBA
The OBBBA eliminates the scheduled sunset of the increased exclusion and exemption amounts, making them permanent and introducing a modest increase:
Beginning in 2026, the federal estate, gift, and GST tax exclusion/exemption will be $15,000,000 per individual (or $30,000,000 per married couple).
These amounts will be adjusted annually for inflation beginning in 2027, using 2025 as the base year.
The portability rules allowing a surviving spouse to use a deceased spouse’s unused exemption remain unchanged.
The top estate and gift tax rate continues to be 40%.
The annual gift tax exclusion remains at $19,000 per recipient for 2025, with future inflation adjustments beginning in 2027.
While these changes are described as permanent, Congress has the authority to modify estate and gift tax provisions at any time.
Summary of Federal Exemption and Exclusion Amounts
Estate, Gift, & GST Tax Exemption
2025 $13,990,000 (individual) / $27,980,000 (married couple)
2026 $15,000,000 (individual) / $30,000,000 (married couple)
2027 $15,000,000 inflation-adjusted (individual) / $30,000,000 inflation-adjusted (married couple)
Annual Gift Tax Exclusion (per recipient)
2025 $19,000
2026 $19,000
2027 $19,000 inflation-adjusted
Summary
Please reach out if we can assist. Helen is available to assist with drafting documents necessary to carry out your gifting strategy, creating individually tailored estate planning documents based on your financial and family circumstances, or reviewing your current estate planning documents to determine whether updates are recommended. In addition, Helen is well suited to work with your accountant, financial advisor or family office to structure or update a tax-efficient estate plan.