Changes in Federal Estate Tax Law | Estate Planning Newsletter

What does the One Big Beautiful Bill Act (believe it or not that is the actual name of the legislation) do with estate planning matters? The following is a general summary:

• The Federal Estate Tax Basic Exclusion Amount increases to $15,000,000 per individual beginning January 1, 2026. This amount is adjusted annually for inflation starting in 2027 and continuing in following years.

• The Generation Skipping Tax Exclusion is increased to $15,000,000 per individual beginning January 1, 2026. This amount is adjusted annually for inflation starting in 2027 and continuing in following years.

• Portability remains available for the first spouse to pass away so that any unused exclusion can be “carried over” to the surviving spouse. However, portability is not automatic. The Estate of the first spouse to pass away is required to file a Federal Estate Tax Return (even if no Federal Estate Tax is owed) and elect portability. The technical term is “Deceased Spouse Unused Exclusion” (DSUE).

• The annual Gift Tax Exclusion Amount (which requires no reporting to the IRS) remains at $19,000 per person per year and is indexed for inflation.

Some planning tips for changes in the law are as follows: 

• The increased exclusion amount to $15,000,000 for 2026 is “permanent” in the sense that there is no automatic sunset or expiration date.  Therefore, the increased basic exclusion amount will not be decreased in any future year unless a future Congress and President enact and sign future legislation to specifically scale back or change the exclusion amount.

• The OBBBA 2025’s increase in Basic Exclusion Amount for 2026 and later years does not change the estate and gift tax planning strategies that have existed over the last several years. The one thing that the tax law change did accomplish was eliminate the “timing” issue of having to use the Basic Exclusion Amount before December 31, 2025 or risk that the exclusion amount being dropped in half for future years.

Yours very truly,

RAINEY, KIZER, REVIERE & BELL, P.L.C.

William C. Bell, Jr., Attorney at Law

This letter is intended to provide you with ideas for consideration in commercial transactions.  It is not intended to give a general solution applicable to all apparently similar individual problems, since slight changes in facts may require variance in legal advice.  Please contact legal counsel with specific questions.