How the One Big Beautiful Bill Act Transforms Estate Planning Strategy
The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025, and it presents numerous changes to the estate and gift-tax planning landscape. For families, business owners, high-net-worth individuals, and those involved in estate planning, the OBBBA’s changes create opportunities and important reasons to revisit your existing estate planning strategies.
Key OBBBA Provisions
The recently passed OBBBA has introduced some of the most significant tax law changes in decades, with certain provisions taking effect in 2025 and 2026.
Federal Estate and Gift Tax Exemption
Starting in 2026, the OBBBA resets the federal and gift tax exemption at $15 million per individual, or $30 million per married couple (subject to future cost-of-living adjustment). This change from today’s $13.99 million exemption represents a major increase. For multi-generation families, it provides long-term clarity and expanded opportunities for wealth transfer.
Enhanced State and Local Tax (SALT) Deduction Cap
For the 2025-2029 tax years, the state and local tax (SALT) deduction cap is increased from $10,000 to $40,000 for most taxpayers, with the amount indexed for inflation at 1% annually. The adjustment may influence state residency and planning decisions, particularly for individuals who are high-income earners in states with higher tax rates.
Qualified Small Business Stock (QSBS) Changes
The new law also includes expanding tax advantages for Qualified Small Business Stock (QSBS). The OBBBA introduces a tiered system, allowing taxpayers to exclude up to 50% of the gain from the sale of QSBS held for more than three years, 75% of the gain from holdings held for more than four years, and 100% of the gain from holdings held for more than five years. These changes create opportunities for substantial tax savings for entrepreneurial families.
Resolution of the Tax Cuts and Jobs Act (TCJA)
The OBBBA lastly eliminates uncertainty surrounding the expiration of 2017’s Tax Cuts and Jobs Act (2017). With this permanent resolution in place, families and advisors can plan confidently with the knowledge that exemption levels and tax treatment won’t suddenly change.
Strategic Planning Opportunities
The higher exemption amounts that the OBBBA provides mean that more families can pass multi-generational wealth without worrying about federal estate taxes. This opens opportunities for strategies such as:
- Lifetime giving opportunities for those who felt constrained by the previous lower exemption amounts
- Establishing or updating dynasty trusts for multigenerational wealth preservation.
- Utilize charitable giving strategies that are aligned with both family values and tax efficiency.
Recommended Action Items for Current Estate Planning
Previously developed estate plans may no longer optimize tax efficiency or wealth transfer goals. Therefore, it is wise to have a professional review your estate plans in the areas including:
- Current will and trust provisions that reference outdated exemption amounts
- Funding decisions for existing trusts
- Formula clauses that may need revisiting due to OBBBA’s changes
- Generation-skipping transfer tax strategies
Schedule Your OBBBA Strategy Session Today
At Collens Estate Law, we are aware that every family is seeking to protect their legacy. The OBBBA creates new certainty in estate planning, and we are prepared to guide you through the new landscape to protect your family and your assets. Call us at (248) 265-3176 or visit collensestatelaw.com to schedule your consultation.