Estate Planning Under the One Big Beautiful Bill Act
When major legislation passes, it is completely normal for people to feel unsure about what it means for their long-term plans. The One Big Beautiful Bill Act (OBBBA), signed into law in July, introduces several meaningful changes—especially in estate planning. The good news is that understanding these updates now can help you take advantage of new opportunities and prepare for future challenges with confidence.
Below are the key changes to be aware of, presented in a randomized order to keep things engaging:
Fewer Estates Owing Federal Tax
Only about 0.25% of estates will now owe federal estate tax under the OBBBA. While this is good news for most families, it’s still important to consider whether your state imposes its own estate or inheritance tax, as those rules vary widely.
Estate and Gift Tax Exemption Increase
Beginning January 1, 2026, individuals can transfer up to $15 million—or $30 million for couples—free of federal estate tax, with future adjustments for inflation. This change eliminates previous uncertainty around phased reductions and gives families additional planning flexibility.
Social Security Tax Changes
The Act temporarily introduces a new deduction of up to $6,000 for individuals (or $12,000 for couples over 65) who fall under specific income thresholds. This may increase the number of seniors whose Social Security benefits go untaxed. However, this deduction is set to expire in 2028 unless extended.
Medicaid Reform and Long-Term Care Planning
With $1 trillion in federal Medicaid cuts, stricter eligibility rules, and new work or volunteer requirements, qualifying for long-term care assistance may become more difficult. Now is the time to consider private long-term care insurance or other asset protection strategies to avoid gaps in future support.
Medicare Budget Impact
The Act delays important cost-sharing assistance rules until 2034 and opens the door to potential cuts of up to $490 billion. If PAYGO rules trigger these reductions, seniors could see higher out-of-pocket costs and fewer providers participating in Medicare programs.
No Other Structural Estate Tax Changes
Apart from the increased exemption amount, the basic structure of estate, gift, and generation-skipping transfer (GST) taxes remains unchanged. Provisions established under the 2017 Tax Cuts and Jobs Act remain locked in.
While the OBBBA brings complexity, it also creates valuable opportunities for thoughtful planning. Now is an excellent time to revisit your estate documents, long-term care strategies, and tax planning approaches. Consider reaching out to a trusted advisor who can help tailor these changes to your family’s unique needs and financial goals.