OBBBA Estate Tax Exemption: $15M Per Individual

#What the estate + gift exemption actually is

The federal estate tax applies to transfers of wealth at death, above the lifetime exemption amount. The same exemption pool covers lifetime gifts above the annual exclusion ($18K per recipient in 2024, $19K in 2025).

A couple can use up to $30 million. But the first spouse’s unused amount only carries over if the executor files a Form 706 on time and elects it. Plan for this when the first spouse dies.

Above the exemption, the federal estate tax rate is 40%. Below it, no federal estate tax applies (some states have their own estate or inheritance taxes with lower thresholds).

For most ETS clients, the estate tax does not apply at death. But for households with $5M to $30M+ net worth, the planning matters a lot.

#What changed

#The pre-OBBBA picture

Under TCJA (2017), the estate exemption doubled to roughly $11.18M per individual in 2018, and got indexed for inflation. By 2025 it reached $13.99M per individual ($27.98M MFJ).

The TCJA doubling was scheduled to sunset on December 31, 2025. That would have automatically reverted the exemption to about $7M per individual (the pre-TCJA $5M, indexed for inflation through 2025).

This sunset created the dominant estate-planning conversation of 2023-2025: “use it or lose it.” Households with $7M to $14M of net worth raced to make lifetime gifts before the exemption dropped. Some gifted tens of millions of dollars into trusts to “lock in” the higher exemption.

#What OBBBA did

OBBBA, signed July 4, 2025, did three things:

1. Permanently increased the exemption to $15 million per individual ($30M MFJ), effective January 1, 2026
2. Eliminated the sunset provision: the exemption no longer reverts
3. Continued annual inflation indexing: exemption grows each year going forward

For 2026 (the first year under new rules), the exemption is $15M per individual. In 2027 and later the amount grows with inflation. The IRS publishes the new figure each fall.

#What this means for ETS clients

How the new exemption lands depends entirely on where your household sits. Here is the outcome under OBBBA by wealth band:

#For households with under $5M net worth

The estate tax was never going to apply to you. OBBBA does not change your planning in any real way. Keep up with normal estate documents: will, durable power of attorney, healthcare directive, and beneficiary designations. Add a revocable living trust, if your state benefits from one for probate avoidance.

#For households with $5M-$15M net worth

You are in the most-affected zone. Pre-OBBBA, you faced a real possibility of estate tax exposure when the exemption dropped to roughly $7M at end of 2025. Now, with the exemption at $15M+ per individual, most $5M to $15M households have zero federal estate tax exposure for the foreseeable future.

Specific planning moves to revisit:

• “Use it or lose it” gifts you made in 2024-2025: Those gifts are still valid, and they used exemption you did not need to use. The gifted assets now sit outside your estate, but you already used the exemption. Generally not undoable.
• Irrevocable Life Insurance Trusts (ILITs): still useful for life insurance proceeds, but the urgency dropped. Premiums can continue or pause, based on your overall plan.
• Annual exclusion gifting ($19K per recipient in 2025): still useful for chipping away at the estate over time, especially for households heading toward the exemption.

#For households with $15M-$30M net worth

This zone gets meaningful relief from OBBBA. Say the old law had ended as planned. A couple with $25 million would have had a $14 million exemption. The extra $11 million would have been taxed at 40%, about $4.4 million. Post-OBBBA, at a $30M MFJ exemption, that same household has zero exposure.

Planning moves to consider:

• Re-evaluate Spousal Lifetime Access Trusts (SLATs) you may have set up for “lock in” purposes. The trusts are still valid, but the urgency is gone.
• Generation-skipping transfer (GST) tax planning: the GST exemption follows the same $15M/$30M permanent structure. Plans for tax-efficient multi-generational wealth transfer can now plan with stability.
• Continue annual exclusion gifting plus 529 superfunding as efficient ways to move wealth without using exemption.

#For households with $30M+ net worth

You will still face estate tax exposure. OBBBA reduced the bite, but did not get rid of it. The planning techniques (irrevocable trusts, Grantor Retained Annuity Trusts (GRATs), Charitable Lead Trusts (CLTs), family limited partnerships, valuation discounts) all still apply.

Here is the change for you: the time horizon for the planning is now longer, because the exemption is permanent (not scheduled to drop). Multi-decade strategies that assumed periodic re-engagement, to capture a new exemption ceiling, now have stability.

#What about state estate taxes?

OBBBA only changed federal law. Several states have their own estate or inheritance taxes with lower thresholds:

• State limits change often. Connecticut ties its limit to the federal amount. Oregon starts at $1 million. Check your state’s current figure
• Kentucky, Maryland, Nebraska, New Jersey and Pennsylvania have an inheritance tax paid by the person who inherits. Iowa ended its tax for deaths after 2024
• Texas, Florida, and most western and southern states have no state estate tax

Say you live in Texas and own only Texas assets. Then only the federal tax applies. If you own land or rentals in another state, that state’s tax may apply too. For clients in, or moving to, states with state-level estate taxes, this matters a lot. State thresholds are often much lower than federal, which creates planning needs on their own, separate from federal exemption changes.

#Common planning moves under post-OBBBA rules

For most ETS-client households in the $5M-$30M wealth range, the post-OBBBA estate planning baseline:

1. Document the basics. Will + durable power of attorney + healthcare directive + HIPAA authorization. Revocable living trust if state-level probate avoidance benefits.

2. Beneficiary designations everywhere. Retirement accounts and life insurance skip probate and go to the person you name. They still count toward the estate tax total. Annual review.

3. Annual exclusion gifting (where appropriate). $19K per recipient per donor per year (2025), no exemption used. For households heading toward the exemption ceiling, this is the slow drip that avoids estate tax buildup.

4. 529 plan superfunding (where there are kids or grandkids). You can put in 5 years of gifts at once, $95,000 per child per giver in 2025 and 2026. File Form 709 to choose this. Die within the 5 years, and part comes back into your estate. It still removes assets from your estate, grows tax-free, and targets education.

5. Trust planning for $15M+ wealth. Irrevocable trusts (SLATs, dynasty trusts, life insurance trusts) for households approaching or above the exemption. Coordinated with the estate attorney.

6. Charitable giving plan (if philanthropic). Donor-Advised Funds, Charitable Remainder Trusts, Charitable Lead Trusts, direct gifts of appreciated assets. Income tax + estate tax + impact benefits aligned.

#What we do when you engage

ETS does not provide legal estate planning services. That requires an estate attorney. What we DO provide:

• Tax-side analysis of estate planning structures: modeling federal + state estate tax exposure under the post-OBBBA rules
• Coordination with your estate attorney: ensuring tax positions align across the estate plan, business entities, retirement accounts, and personal returns
• Annual income + gift tax filings: Form 709 gift tax returns when annual exclusion is exceeded or substantial trusts are funded
• Cross-disciplinary planning: your estate plan should coordinate with your business plan, retirement plan, and tax strategy

For ETS-Strategic-tier clients, estate-side coordination is standard. Estate attorney referrals to specialists in our network when needed.

#Common questions

When does the $15M exemption take effect? January 1, 2026. The 2025 exemption was $13.99M per individual. Effective 2026, $15M per individual indexed for inflation.

Is OBBBA’s estate exemption truly permanent? Legally permanent, meaning no scheduled sunset. Politically, a future Congress could still change it. Plan with the assumption it is stable for the next decade-plus, but know that tax law is ultimately a political choice.

What if I made large gifts in 2024-2025 anticipating the sunset? The gifts are valid, and the exemption you used is gone. The gifted assets sit outside your estate. They also may not get a new tax basis at your death. That can mean more capital gain tax for the person who gets them later. Talk to us and your attorney before you give more.

Can I still do a SLAT (Spousal Lifetime Access Trust)? Yes. SLATs are still valid post-OBBBA. The urgency for “lock in” SLATs is much lower. But the technique itself stays useful for couples who want to move assets out of their estate, while keeping spousal access.

Does OBBBA change the GST tax exemption? The GST exemption is also $15 million per person in 2026 and grows with inflation. A couple has $30 million only if each spouse uses their own share. Unused GST exemption does not pass to a surviving spouse.

What about the step-up in basis at death? Unchanged by OBBBA. Heirs still get a step-up in basis at death for assets in the estate. An estate with tax due may also choose a later valuation date (Section 2032), but only if it lowers the tax. This is the most-significant remaining estate planning advantage for households where the federal estate tax doesn’t apply.

Should I revoke an irrevocable trust I established for “lock in” purposes? Generally no, irrevocable means irrevocable. The trust assets sit outside your estate (good), but also outside your control. Consult with your estate attorney about possible modification under decanting statutes or trust protector provisions.

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Have $5M+ net worth, and have not reviewed your estate plan since OBBBA? The Discovery call is the right starting point. We coordinate with your estate attorney, and handle the tax-return and gift-tax-return side of the planning.