Federal Estate Tax Update: What the One Big Beautiful Bill Act Means for Your Estate Plan

August 6, 2025

Federal Estate Tax Update: What the One Big Beautiful Bill Act Means for Your Estate Plan

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law, bringing significant and permanent changes to the federal estate, gift, and generation-skipping transfer (GST) tax landscape. These updates offer both opportunities and considerations for individuals and families engaged in estate planning.

Significant Provisions of the OBBBA

1. Estate and Gift Tax Exemption Increased

Starting January 1, 2026, the federal estate and gift tax exemption will be permanently set at $15 million per individual (or $30 million for married couples, with proper planning).
This replaces the previously scheduled reduction to approximately $7 million per person under the sunset provisions of the 2017 Tax Cuts and Jobs Act (TCJA).
The tax rate remains at 40%.
Any previously reported gifts will continue to reduce the exemption available.

2. Spousal Portability Preserved

The law retains the portability election, allowing a surviving spouse to retain any unused portion of the deceased spouse’s exemption.
With proper filings, this can effectively double the exemption for married couples—up to $30 million in tax-free transfers.

3. GST Tax Exemption Aligned

The generation-skipping transfer (GST) tax exemption is now aligned with the estate and gift tax exemption at $15 million per individual, also indexed for inflation starting in 2027.
This is especially beneficial for clients using dynasty trusts and other multigenerational planning tools.

4. Annual Gift Tax Exclusion

The annual exclusion remains at $19,000 per recipient for 2025, with inflation adjustments continuing in future years.

What This Means for Wisconsin Residents

These federal changes do not affect state-level estate, inheritance, or death taxes. Currently, Wisconsin does not impose such taxes on its domiciled decedents.

Planning Considerations

As always, the law is subject to change. A shift in Congressional control or new legislation could alter these provisions in the future. In the interim, this new law provides a unique window of certainty for high-net-worth individuals and families. Now is the time to:

Reevaluate your current estate plan.
Consider lifetime gifting strategies using the elevated exemption.
Establish or expand dynasty trusts or spousal lifetime access trusts (SLATs).

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If you’d like to review your estate plan in light of these changes, we’re here to help. Please contact us to schedule a consultation and ensure your plan aligns with both the new law and your long-term goals.

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