Over the last few months, you’ve probably heard about the “One Big Beautiful Bill” (OBBB, “the Act”), but you might not know how it affects you, your estate plan, or your business.
The Act was signed into law on July 4, 2025. It makes permanent many pieces of the 2017 Tax Cuts and Jobs Act that were set to expire in 2026. This looming expiration date caused significant uncertainty and prompted many individuals to consider updating their estate plans. So, what should you do now?
Check out these eight key impact areas of the OBBB and steps to take should your livelihood or business have opportunities or consequences.
Federal Estate Planning and Tax Consequences
Federal Estate Tax planning may not be needed if one’s taxable estate does not exceed the “exclusion” or “exemption” amount. In 2026, the OBBB increased the exemption amount at death and/or for lifetime gifts to $15,000,000 per individual and $30,000,000 per couple, indexed for inflation. Those below the exemption will not owe Federal Estate Tax at death, with a rate of 40% if tax is owed.
The Act also increased the Generation-Skipping Transfer Tax (“GST”) exemption to $15,000,000 per person, allowing increased wealth that can pass to grandchildren and more remote descendants. Additionally, the Act maintained “portability” between spouses, which allows a surviving spouse to inherit any unused exemption (there is no portability for the GST exemption).
For many people, these increased exemptions mean simpler estate plans. Nonetheless, high-net-worth individuals and families can use certain estate planning and tax strategies wisely to minimize death taxes. An estate planning attorney can help determine which ones are right for you!
Gift
The gift tax annual exclusion remains at $19,000 per individual, per donee, and $38,000 per couple. For larger gifts, a taxpayer would file a Federal Gift Tax Return.
529 Accounts
529s are common tax-advantaged accounts for education-related expenses. Under the Act, the class of qualified higher education expenses expanded, allowing more such expenses to be paid from these accounts. The growth of 529 assets is generally tax-free, providing significant advantages to account owners.
SALT Maximums
The Act increased the State and Local Tax (SALT) deduction to $40,000 per household, allowing individuals with high state/local tax burdens the opportunity to deduct these taxes from their gross income. Under the previous law, the deduction was capped at $10,000.
Charitable Giving
Taxpayers will only receive a tax deduction for charitable gifts exceeding 0.5% of adjusted gross income. This means it is useful to combine multiple gifts into a single tax year rather than making consistent, smaller gifts.
Business and Income Tax Changes
The Act has also had a significant impact on businesses and business owners.
Tax rates from the 2017 Tax Act were permanently reduced for individuals under the current Act. These reduced rates also apply to pass-through entities. The Act made permanent a 20% deduction for certain pass-through entities’ domestic profits. This applies to many LLCs, S corporations, and sole proprietorships. As for C corporations, the Act increases benefits and deductions for qualified small business stock. Investing in small businesses can be advantageous because the Act permits certain gains from selling qualifying shares to be tax-free.
Expensing Capital Investments
The Act allows business owners to expense capital investments such as business equipment. It makes permanent a 100% bonus depreciation rate for qualified property assets acquired or utilized by January 20, 2025. Eligible equipment, assets, and machinery can be written off in the year of purchase rather than over multiple years.
Research and Development Costs
The Act allows business owners to immediately deduct 100% of their domestic R&D expenses. This portion of the Act may apply retroactively to expenses beginning January 1, 2025.
Although the Act is now permanent, its terms may change in the future under a different political environment. Families, individuals, and business owners can plan for their futures knowing there is no “sunset” to the current law. Still, they should keep in mind that changes to the tax laws can and will occur in the future.
