The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025, by President Trump. OBBBA represents a significant recalibration of the federal tax framework with direct and lasting consequences for estate planning.
At its core, OBBBA extends or makes permanent many of the tax cuts originally enacted under the Tax Cuts and Jobs Act of 2017 (TCJA), but stopping there misses the point. OBBBA not only locks in the TCJA’s framework – it adds additional layers of phaseouts and limitations.
For estate planning attorneys, the real takeaway is not just what changed, but what stayed the same, and how that should shape our advice to clients going forward.
Lifetime Exemption Amount and the Generation Skipping Transfer Tax (GST) Exemption Amount
A headline for estate planners is OBBBA’s “permanent” increase of the lifetime exemption amount (also known as the “credit shelter” amount).
Evan Y. Lin, U.W. 1998, is the founding attorney and managing member at
Lin Law LLC, in Green Bay, where he practices in business and corporate law, estate planning, real estate, and wills and trusts.
As all seasoned estate planners know, tax laws are only “permanent” until Congress decides to change it in the future. The good news, however, is that there is no pending “sunset” of the lifetime exemption amount to a lesser amount at this time, which had been the case for the better part of the last two decades.
With that said, as of Jan. 1, 2026, the lifetime exemption amount was increased from $13.99 million to $15 million per individual ($30 million for married couples with proper planning), indexed annually for inflation. The maximum estate and gift tax rate remains capped at 40%.
In addition, the Generation Skipping Transfer Tax exemption will continue to match the lifetime exemption amount and was similarly increased to $15 million for 2026, adjusted annually for inflation.
In short, many of the rules that estate planners have already been working with since the TCJA will remain in place, just with a higher ceiling and greater certainty in the near future.
Estate and Gift Tax Laws
Other than increasing and making “permanent” the lifetime exemption amount with no pending sunset, OBBBA largely preserves the existing framework of federal estate and gift tax laws.
Under these rules, key estate planning benefits including exemptions/exclusions, portability, and basis adjustments continue to remain available to taxpayers. A surviving spouse may continue to fully utilize both spouses’ estate tax exemption amounts through a timely “portability” election at the first spouse’s death.
The annual gift tax exclusion remains available at $19,000 per donor, per recipient for the 2026 calendar year, with annual inflation adjustments and availability of gift-splitting for married couples.
The long-standing “step-up” in income tax basis for appreciated assets owned at death is also unchanged under OBBBA, preserving one of the most powerful income tax benefits available in estate planning.
Taken together, these provisions underscore that OBBBA did not attempt to overhaul the estate and gift tax regime. Instead, it reinforces continuity and predictability, allowing estate planners to continue using familiar techniques with greater certainty around exemption levels.
Charitable Donations
Under OBBBA, several rules related to charitable donations were updated, which can affect how much of a donation may be deductible for income tax purposes and when it counts.
OBBBA makes deductions available to taxpayers utilizing the standard deduction, allowing non-itemizers to deduct up to $1,000 of charitable donations. This above-the-line deduction is limited to charitable contributions made to public charities by non-itemizers. Contributions to private foundations and donor-advised funds do not qualify.
For itemizers, the $1,000 cap does not apply, but there are some new limitations to consider. Beginning in 2026, charitable deductions (and certain other deductions) will only be deductible to the extent they exceed 0.5% of an individual’s Adjusted Gross Income (AGI) in any given year.
Also starting in 2026, for individuals in the highest marginal income tax brackets, charitable deductions will also be subject to a 2/37 limitation on the overall amount of the charitable gift. For individuals who give regularly or are considering larger or multi-year donations, from a timing and income planning standpoint, it may be advisable to review how current laws fit within their overall financial and estate plans.
Income Tax Rates
OBBBA also preserves TCJA’s marginal income tax rates and brackets.
For estate planners, one issue of particular importance is the continued application of compressed income tax brackets to non-grantor trusts. Trusts continue to reach the highest marginal income tax rate at dramatically lower income thresholds than individuals (i.e., $16,000.00 for trusts versus $626,350.00 (single individuals) versus $751,600.00 (married couples)).
This reality reinforces a trend that estate planners have already been navigating: income tax consequences often matter far more than transfer taxes when deciding whether assets should be held outright, in trust, or in grantor versus non-grantor form.
With estate tax exposure limited to a narrow slice of the population, income tax efficiency frequently becomes the primary driver of planning decisions.
Looking Ahead
Big picture, OBBBA reinforces a reality that estate planners have been confronting for more than a decade: estate tax minimization is no longer the primary objective for most clients. Instead, estate planning increasingly focuses on income tax efficiency, asset protection, flexibility, and thoughtful and responsible intergenerational transfers of wealth.
The passage of OBBBA highlights why estate planning is an evolving and dynamic process that requires periodic reassessment. Review plans regularly to ensure they remain aligned with current law, shifting economic conditions, and broader financial strategies, including wealth preservation, risk management, and overall tax efficiency.
At the same time, OBBBA’s lack of an automatic sunset provides a more stable foundation for long-term estate and gift tax planning, reducing the urgency that overshadowed planning under the TCJA.
That stability, however, does not mean immunity from change. While most provisions of OBBBA are not scheduled to expire, they remain vulnerable to future revision by Congress, making flexibility in estate planning especially important.
With the $15 million exemption preserved for the foreseeable future, OBBBA opens a window for more strategic estate and gift tax planning, particularly for high-net-worth clients, allowing them to move beyond reactive giving and focus more comfortably on long-term planning and responsible wealth transfers.
In light of this expanded planning landscape, now is the time for individuals to revisit existing estate plans (or to create one if they have not already) to ensure they reflect both current law and long-term objectives, ensuring that estate planners will have plenty to do going forward.
This article was originally published on the State Bar of Wisconsin’s
Solo/Small Firm & General Practice Blog of the Solo/Small Firm & General Practice Section. Visit the State Bar
sections or the
Solo/Small Firm & General Practice Section web pages to learn more about the benefits of section membership.