The One Big Beautiful Bill Act: A Comprehensive Overview of Its Impact on Estate and Tax Planning

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was enacted, bringing significant changes to estate, tax, and business planning that affect high-net-worth individuals and business owners. This article will outline the key provisions of the OBBBA, highlighting both new opportunities and potential challenges in the realm of estate planning.

Key Changes Introduced by the OBBBA

1. Permanent Increase in Estate and Gift Tax Exclusion

Starting January 1, 2026, the OBBBA raises the federal estate, gift, and generation-skipping transfer tax exclusion amount to $15 million for individual taxpayers, up from the current $13.99 million. What’s more, this new exclusion amount will be indexed to inflation, allowing for continued growth in future years.

This change preserves the enhanced exclusion previously established by the 2017 Tax Cuts and Jobs Act (TCJA), which was initially set to sunset. The OBBBA’s adjustment provides a favorable scenario for taxpayers, granting them the ability to transfer greater amounts of wealth to their heirs without incurring transfer taxes and enabling long-term estate planning with increased certainty.

2. Raised SALT Deduction Limit

Another pivotal change made by the OBBBA is the temporary increase in the State and Local Tax (SALT) deduction cap. From 2025 through 2029, the cap will rise from $10,000 to $40,000, adjusted annually for inflation at a rate of 1%. However, this increase phases down for high earners, starting at $250,000 ($500,000 for married couples), reverting to the baseline of $10,000 in 2030.

For taxpayers, particularly in high-tax states such as New York and Massachusetts, this increase may provide significant relief. Moreover, strategies related to pass-through entities can be revisited to maximize tax benefits, especially for those aiming to effectively manage income and deductions to remain below the aforementioned thresholds.

3. Modifications to Charitable Deductions

The OBBBA introduces a new minimum threshold for charitable deductions for those itemizing their taxes. As of 2026, only contributions exceeding 0.5% of an individual’s adjusted gross income will be deductible. For those opting for the standard deduction, this limit is set at $1,000 ($2,000 for married couples).

Notably, cash gifts to qualified charitable organizations will remain deductible at up to 60% of adjusted gross income, maintaining a more favorable allowance compared to the reduced rates proposed under the TCJA. Donors are encouraged to evaluate whether to accelerate or defer charitable contributions based on these new regulations.

4. Expansion of Qualified Small Business Stock (QSBS) Exclusion

The OBBBA also broadens the scope for the Qualified Small Business Stock (QSBS) gain exclusion, allowing more investors to qualify. The changes include:

• Introducing a tiered exclusion based on the holding period:
  • 50% if held for 3 years,
  • 75% for 4 years,
  • 100% for 5 years or more.
• Increasing the eligible gain from $10 million to $15 million (or ten times the basis, whichever is greater).
• Raising the threshold for a business to qualify as “small” from $50 million to $75 million in gross assets.

These modifications apply to shares issued following the enactment date of July 4, 2025, providing substantial benefits to small business owners and investors.

Conclusion: Navigating New Estate Planning Opportunities

The One Big Beautiful Bill Act introduces a host of taxpayer-friendly updates, including significant increases in estate and gift tax exemptions, a temporary rise in the SALT deduction cap, and new enhancements to the QSBS rules. These changes aim to provide clarity and predictability in estate planning, allowing individuals and families to make informed financial decisions.

For personalized guidance on how the provisions of the One Big Beautiful Bill Act may affect your estate plan, don’t hesitate to reach out to us. For an in-depth analysis of other critical elements of this new legislation, explore our article: The One Big Beautiful Bill Act Signed into Law: Tax Implications at a Glance.

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