On July 4th, 2025, The One Big Beautiful Bill Act (OBBBA) was signed into law by President Trump. The bill makes several changes to the tax code set to take effect next year, which have meaningful implications for estate planning. The following are some effects of the OBBBA that are important to consider:
Federal Estate & Gift Tax Exemption Increase – Effective January 1st, 2026, the federal estate and gift tax exemption will be increased to $15 million per individual. This reflects an increase of over $1 million from the $13.99 million exemption for2025. This is a substantial change given that many anticipated a sunset of the Tax Cut and Jobs Act (TCJA) provisions at the end of 2025, which would have reduced the exemption to roughly $7 million per individual.
Preservation of Portability – The OBBBA preserves the portability of the federal estate and gift tax exemption. Portability enables married couples to utilize a combined $30 million exemption without losing any unused portion of their exemption at the first death of a spouse.
Permanency – The exemption increases created by the OBBBA are not subject to an automatic sunset, meaning that they will remain at their current amount (with future adjustment for inflation)until they are repealed or amended by Congress.
It is worth noting that Illinois residents are still subject to a $4 million estate tax exemption and no portability, which has remained unchanged since 2013.