Here are four things to know about the estate planning and tax implications from the recently enacted One Big Beautiful Bill Act (OBBBA) for both individuals and businesses.
1. The Act permanently increases certain Estate and Gift Tax Exemptions. Starting January 1, 2026, the federal unified estate and gift tax exemption will be permanently raised to $15 million per individual, with future indexing for inflation. This replaces the previous temporary exemption of approximately $13 million, which was was scheduled to sunset at the end of this year. Importantly, the exemption is portable for married couples, meaning a family that files a joint tax return and timely makes a portability election may avail themselves of a $30 million tax exemption.
2. Other tax benefits. The Act includes a temporary “no tax on tips” deduction—up to $25,000—for workers whose jobs customarily receive tips, effective 2025–2028; a matching “no tax on overtime” deduction for overtime pay beyond regular wages (up to $12,500, or $25,000 for joint filers); a new deduction for interest on car loans (up to $10,000 annually) for new, U.S.-assembled vehicles, through 2028—phase-outs apply based on income; and a special $6,000 additional standard deduction for taxpayers aged 65 and older, also through 2028, with income limits.
3. Enhanced Planning Opportunities. Although the Act reduces the number of estates subject to federal estate tax, it does not eliminate the need for comprehensive estate and tax planning. Most state-level estate and inheritance taxes persist, with much lower thresholds and/or a lack of portability, so it remains essential to review other planning strategies, such as a gifting program, charitable contributions, and the use of irrevocable trusts (i.e., GRATs, SLATs, and Dynasty trusts) to shift future appreciation out of estates. Further, planning serves other critical purposes, including, for example, ensuring your assets transfer according to your wishes, preserving privacy, enabling business succession, protecting beneficiaries, and preparing for potential future law changes.
4. For your Business. The Act makes permanent and expands the 20 percent qualified business income deduction for owners of pass-through entities (partnerships, LLCs, and S corporations) and sole proprietorships; makes bonus depreciation deductions permanent and increases it to 100% for qualified new and used assets acquired after January 19, 2025; permanently allows the immediate deduction of domestic research and development expenses for eligible small businesses; and eliminates clean energy tax incentives, such as the alternative fuel vehicle refueling property credit, the Sec. 179D deduction for energy-efficient commercial buildings after June 30, 2026, and the qualified commercial clean vehicle credit after September 30, 2025