One Big Beautiful Bill Impact on Gift and Estate Taxation
To move forward, we must look at the past.
In 2017, President Donald Trump signed into law the Tax Cuts and Job Act (TCJA) which temporarily increased the federal estate and gift tax lifetime exemption amount from $5 million to $10 million (indexed annually for inflation) for decedents dying and gifts made after December 31, 2027 and before January 1, 2026. The TCJA was set to “sunset” (i.e. expire) on December 31, 2025.
Fast Forward to 2025 and the One Big Beautiful Bill (OBBB)
The quickly approaching sunset of the TCJA imposed immediate urgency to act, otherwise inaction risked exposing millions of Americans to drastic estate and gift taxes. In 2025, prior to the sunset of the TCJA, IRC Section 2010(c)(3) was amended making permanent a $15 million basic estate and gift lifetime exemption, adjusted annually for inflation. This means that decedents who die or make gifts after December 31, 2025, are afforded $15 million in a lifetime exemption. Only amounts exceeding the lifetime exemption are subject to estate and gift taxation (depending on how the transfer is made).
What does the OBBB mean at the local level?
Unfortunately, the OBBB is federal in nature and does not affect state laws pertaining to inheritance or gift taxation. On the bright side, the OBBB has the potential of reducing millions of Americans’ overall tax liability.
Tax Planning in the Modern World
Although the OBBB provided a substantial increase in the lifetime exemption amount, tax planning remains critical. In general, the lifetime exemption amount is the aggregate of a person’s overall estate value AND gifts made during life. Meaning, a person cannot have an estate valued at $15 million while gifting $15 million throughout their life. The crux of any tax plan is finding the point of balance. To gift or not to gift, transfer or not to transfer.
Curious to see how the OBBB impacts you? Contact Amloyan Law today for a confidential consultation.
Prior results do not guarantee a similar outcome. The information on this page is provided for general informational purposes and does not constitute legal advice. Reading this page or contacting the firm does not, by itself, create an attorney-client relationship.