Estate and Gift Tax Lifetime Exemption Under The One Big Beautiful Bill

On July 4, 2025, President Trump signed the One Big Beautiful Bill into law. The legislation makes far-reaching changes to the federal tax code and other parts of the government. The bill cuts certain taxes, changes funding for a number of federal programs, raises the debt ceiling by $5 trillion, and extends many of the provisions originally introduced in the 2017 Tax Cuts and Jobs Act (TCJA).

Lifetime Exemption For Estate and Gift Tax

The lifetime exemption for Estate and Gift Tax was scheduled to be reduced by 50% effective January 1, 2026. The One Big Beautiful Bill sets the exemption at $16 million for 2026 and indexes it for inflation in following years. The new $15 million exemption is roughly the amount of the exemption for 2025 increased by the normal inflation adjustment without the reduction that was included in prior law.

With the increased exemption, many individuals who would have otherwise been subject to estate tax on their death will no longer be subject to the tax. Many of these people were rushing to get estate tax strategies implemented during 2025 to avoid tax caused by the reduction in the exemption. These taxpayers now have more time to consider what strategies are needed to avoid the estate tax.

It is still important for individuals whose total assets are near the limit to work with their tax advisors and estate tax attorneys to evaluate estate tax planning. High net worth individuals often increase their assets at a rate higher than the rate of inflation. An individual who is not currently subject to estate tax may have a taxable estate in a later year because of growth in the value of their investments. In those cases it is important to do planning to minimize the ultimate estate tax liability.

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With major changes to tax rules, both individuals and business owners are encouraged to revisit tax strategies. A proactive approach will be essential to capture benefits, manage risk, and stay compliant as the new provisions take effect. If you have questions about the information outlined above, or need assistance with another tax issue, WhippleWood CPAs can help. For additional information call 303-989-7600 or click here to contact us. We look forward to speaking with you soon.