How the “One Big Beautiful Bill Act” Impacts Estate Planning in 2025

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law. At nearly 900 pages, the bill is as sweeping as its name implies. While its provisions encompass income taxes, corporate deductions, and education savings, the most significant estate planning headline is clear: the looming sunset of the 2017 Tax Cuts and Jobs Act (TCJA) has been replaced by some changes that are potentially even more substantial.

These changes present a valuable opportunity for estate and trust planners working with high-net-worth clients to connect and adjust their strategies if warranted.

A Higher (and “Permanent”) Exemption

Prior to OBBBA, the estate, gift, and generation-skipping transfer (GST) tax exemptions were scheduled to drop sharply at the end of 2025, from $13.99 million to approximately $7 million per individual. Many advisors were preparing clients for a “use it or lose it” scenario, encouraging them to make large gifts and wealth transfers before the end of the year.

The OBBBA changes everything. As of January 1, 2026, the federal exemption increases to $15 million per individual, or $30 million for married couples, and will be indexed annually for inflation. That’s more than just an extension of the TCJA’s temporary provisions – it’s a meaningful bump and, for now, a permanent one.

Of course, permanence in tax legislation is relative. Future administrations could revisit these thresholds. However, for the time being, this increase provides a valuable planning window for estate and trust professionals, along with more stability than we’ve seen in recent years.

Why This Matters for Planners and Families

For individuals who have already used most or all of their prior exemption, the OBBBA unlocks an additional $1.01 million in gifting capacity in 2026. For those who haven’t, it creates room for larger, leveraged gifts, especially valuable for transferring appreciating or hard-to-value assets out of taxable estates.

Dynasty trusts, Grantor Retained Annuity Trusts (GRATs), spousal lifetime access trusts (SLATs), and other advanced planning vehicles now offer even more potential upside. The expanded exemption also applies to GST tax, giving multigenerational families new opportunities to structure lasting wealth transfer plans that minimize tax friction over time.

It’s also worth noting the inflation effect. With even moderate inflation, the $15 million exemption could grow by $600,000 or more in just one year. In practical terms, the annual increase could rival the total exemption amount from the early 1990s. That growth compounds over time, making early planning even more valuable.

SALT Cap and Other Key Considerations

The OBBBA temporarily raises the State and Local Tax (SALT) deduction cap from $10,000 to $40,000 through 2029, with annual inflation adjustments. For clients in high-tax states, this may offer temporary relief, but with a caveat: the deduction begins to phase out for those earning more than $500,000, disappearing entirely at an annual income of $600,000. And after 2029, the cap reverts to $10,000.

Importantly, the workaround for pass-through entities (PTET) remains in place. For clients with closely held businesses or partnerships, this remains a viable strategy to sidestep the SALT cap where state law permits.

Charitable Giving Changes

Charitable deductions also see an overhaul under OBBBA. For itemizers, only contributions exceeding 0.5% of adjusted gross income (AGI) are deductible. For non-itemizers, a new above-the-line deduction allows up to $1,000 ($2,000 for joint filers) in charitable contributions to be deducted, which represents a modest but welcome change.

While the new floor may disincentivize some clients, those making high-impact gifts can still benefit from planning around the 60% of AGI limit for qualified cash donations.

Wealth Transfer Opportunities

The jump to a $15 million exemption enables larger transactions across the board. For example, a married couple could now gift $30 million as seed money to a grantor trust, supporting a $300 million sale transaction under common wealth transfer structures. This scale was previously impossible, and for ultra-high-net-worth families, it opens the door to substantial lifetime planning opportunities.

However, the removal of the sunset also presents an unexpected challenge: urgency. Without a deadline on the horizon, some clients may delay action. As Estate and Trust professionals, it is your fiduciary responsibility to proactively connect with your clients when significant changes in tax legislation occur. Regular reviews ensure that your clients can take advantage of relevant opportunities before new policies come into effect.

How HeirSearch Can Help

As you optimize your clients’ estate and gifting strategies, consider the updates to gifts and estate tax regulations under the OBBBA to best protect their assets. By leveraging the latest tax law updates in strategic planning, estate planners can ensure that their clients’ estates remain compliant and aligned with their long-term goals more accurately.

Another reason to remain well-prepared and up to date with federal and state tax laws is that, for many states, an estate’s value is determined by the date of the decedent’s death. Having a plan in place proactively can help ensure an estate’s efficient distribution. This includes ensuring that all beneficiaries and heirs are lawfully identified, ideally throughout the planning process, rather than following the passing of an estate owner, as these searches can take time.

That’s where HeirSearch can help. HeirSearch’s researchers identify and locate missing or unknown beneficiaries and heirs for probate and trust termination, doing so efficiently and effectively. We work exclusively with executors, administrators, trustees, fiduciaries, bank and trust officers, and their counsel to establish kinship for legal purposes.

With our search services, we can help ensure an heir is located and not be a contributing factor to a prolonged estate distribution process.

Since 1967, we’ve completed tens of thousands of worldwide searches. We proudly offer no-cost, no-obligation consultations, court-ready reports, and reasonable, non-commission-based fees.

Contact us to learn more about our process and how we can support your needs.

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