Estate tax exemption jumps to $15 million per person

Revolutionary wealth transfer protection transforms family planning

The One Big Beautiful Bill Act delivers transformative estate planning benefits by permanently raising the federal estate tax exemption to $15 million per individual, effective for estates of decedents dying after December 31, 2025. This historic legislation triples the previous base exemption of $5 million and prevents the scheduled reversion to approximately $6 million that was set to occur in 2026.

These enhanced exemption limits represent one of the most significant estate tax reforms in decades. Under the new rules, married couples can shield up to $30 million from federal estate taxes, while single individuals receive protection for estates valued up to $15 million. The legislation also resets the inflation adjustment base to 2025, ensuring more predictable future growth of exemption amounts.

The timing of these changes provides immediate relief for families who were facing substantial estate tax exposure under the previous limits. By permanently establishing the $15 million exemption, the One Big Beautiful Bill Act eliminates uncertainty and creates opportunities for comprehensive multi-generational wealth transfer strategies.

Understanding how these expanded exemptions work and calculating your potential tax savings becomes essential for maximizing the financial impact of this transformative legislation. With proper planning and strategic coordination with other provisions, wealthy families can significantly reduce their estate tax liability while building lasting legacies.

Understanding the enhanced estate tax exemption structure

The One Big Beautiful Bill Act fundamentally transforms federal estate taxation by establishing permanent exemption limits that take effect for decedents dying after December 31, 2025. These changes provide substantial relief for wealthy families while creating new opportunities for planning and multi-generational wealth transfer.

Key features of the enhanced estate tax exemption include:

1. Individual exemption increases to $15 million (up from $5 million base)
2. Combined exemption for married couples reaches $30 million
3. Permanent elimination of the 2026 sunset provisions that would have reduced exemptions
4. Inflation adjustments reset to use 2025 as the base year rather than 2010
5. Gift tax exemption also increases to $15 million per person for lifetime transfers

The enhanced exemption applies to both estate and gift taxes, creating comprehensive wealth transfer opportunities during life and at death. Families can utilize the full $15 million exemption through lifetime gifts, estate transfers at death, or strategic combinations of both approaches.

This graduated structure ensures that the enhanced benefits primarily protect family wealth while maintaining estate tax obligations for the wealthiest Americans. The permanent nature eliminates the uncertainty that previously complicated long-term estate planning strategies.

Calculating your estate tax savings under the new legislation

Your potential estate tax savings under the enhanced exemption depend on your total estate value, marital status, and overall family wealth transfer strategy. The One Big Beautiful Bill Act allows eligible estates to shelter substantially larger amounts from the 40% federal estate tax rate.

Example calculation for individual estate:

• Total estate value: $20 million
• Enhanced exemption: $15 million
• Taxable estate: $5 million
• Estate tax at 40%: $2 million
• Previous law tax (assuming $6 million exemption): $5.6 million
• Annual savings: $3.6 million

Example calculation for a married couple:

• Combined estate value: $45 million
• Combined exemption: $30 million
• Taxable estate: $15 million
• Estate tax at 40%: $6 million
• Previous law tax (assuming $12 million exemption): $13.2 million
• Annual savings: $7.2 million

For families maximizing the enhanced exemptions, estate tax savings can range from $2 million to $7 million or more, depending on the total family wealth and the planning structures in place. These calculations demonstrate the substantial wealth preservation impact this provision creates for affluent families.

Strategic planning considerations:

• Lifetime gift strategies can utilize exemptions before death
• Valuation discounts can maximize exemption effectiveness
• Generation-skipping transfer tax coordination requires careful planning
• State estate tax laws may provide additional planning opportunities

Strategic gift planning maximizes lifetime exemption usage

The One Big Beautiful Bill Act creates powerful opportunities for lifetime wealth transfer strategies by permanently raising the gift tax exemption to $15 million per person. Understanding how to coordinate lifetime gifts with estate planning ensures families capture maximum tax benefits while building multi-generational wealth.

Optimal lifetime gifting strategies include:

• Annual exclusion coordination: The 2025 annual gift tax exclusion of $18,000 per recipient works in addition to the lifetime exemption, allowing families to transfer substantial amounts tax-free each year
• Generation-skipping strategies: Direct gifts to grandchildren can utilize both gift and generation-skipping transfer tax exemptions simultaneously
• Valuation discount opportunities: Gifts of family business interests or real estate partnerships can leverage valuation discounts to maximize exemption usage
• Charitable giving coordination: Residential clean energy credit and other tax benefits can be combined with charitable giving strategies

Advanced planning techniques:

• Grantor trust strategies: Utilizing the enhanced exemption to fund grantor trusts can provide ongoing wealth transfer benefits through income tax payment obligations
• Family limited partnerships: Contributing appreciating assets to family partnerships can multiply exemption effectiveness through valuation discounts
• Installment sale coordination: Sell your home strategies can be combined with installment sales to family members for a comprehensive wealth transfer
• Business succession planning: S Corporations and other business entities can facilitate tax-efficient ownership transfers

Generation-skipping transfer tax coordination amplifies benefits

The enhanced estate tax exemption under the One Big Beautiful Bill Act works in coordination with generation-skipping transfer tax (GST) rules to create unprecedented opportunities for multi-generational wealth transfer. Understanding how these provisions interact ensures families maximize their wealth transfer potential across multiple generations.

GST tax coordination considerations:

• The GST exemption also increases to $15 million per person under the new legislation
• Direct skips to grandchildren can utilize both estate and GST exemptions simultaneously
• Distribution and termination events from existing trusts may trigger additional planning opportunities
• Child traditional IRA funding can be coordinated with GST planning for retirement wealth building

Multi-generational trust strategies:

• Dynasty trust funding can utilize the full $15 million exemption to benefit multiple generations
• Charitable remainder trusts can provide income to multiple generations while supporting philanthropic goals
• Traditional 401k and Roth 401k accounts can be structured to support multi-generational wealth transfer
• Health savings account maximization can preserve other assets for wealth transfer purposes

State estate tax coordination enhances overall savings

While the One Big Beautiful Bill Act addresses federal estate taxation, families should consider how state estate tax laws interact with the enhanced federal exemptions. Many states maintain separate estate tax systems with lower exemptions, requiring coordinated planning to optimize total tax benefits.

State planning considerations:

• Conforming state benefits: Some states automatically adopt federal exemption amounts, extending enhanced benefits to state estate taxes
• Non-conforming state strategies: States with independent estate tax systems may require domicile planning and trust strategies
• Multi-state planning opportunities: Families with assets in multiple states can coordinate exemptions and domicile strategies to optimize overall tax positions

Advanced state tax strategies:

• Domicile establishment: Strategic domicile changes can eliminate state estate tax exposure in some cases
• Trust situs planning: Locating trusts in favorable states can reduce ongoing state tax obligations
• Augusta rule coordination: Real estate strategies can work with estate planning to optimize state and federal benefits
• Business entity optimization: C Corporations and Partnership structures can facilitate multi-state planning

Business succession planning integration creates comprehensive strategies

The enhanced estate tax exemptions under the One Big Beautiful Bill Act create valuable opportunities for business owners to coordinate succession planning with wealth transfer strategies. These provisions support both operational continuity and long-term family wealth preservation goals.

Business succession coordination opportunities:

• Valuation discount strategies: Family business interests can be gifted at discounted values, maximizing exemption effectiveness
• Installment sale integration: Sales to family members can be structured to utilize exemptions while providing ongoing income
• Work opportunity tax credit and other business strategies can support succession planning
• Retirement plan integration: Business retirement plans can be coordinated with personal wealth transfer strategies

Advanced business planning techniques:

• Grantor trust sales: Selling business interests to grantor trusts can provide ongoing cash flow while utilizing exemptions
• Charitable remainder trust funding: Business interests can fund charitable remainder trusts for multi-generational income
• Employee achievement awards coordination: Employee benefit programs can support business value enhancement before succession transfers
• Tax credit optimization: AI-driven R&D tax credits can enhance business value while reducing current tax obligations

Charitable planning amplifies exemption effectiveness

The enhanced estate tax exemptions create new opportunities for coordinating charitable giving with wealth transfer strategies under the One Big Beautiful Bill Act. These techniques can multiply the effectiveness of exemption usage while supporting philanthropic goals and providing additional tax benefits.

Charitable strategy coordination includes:

• Charitable remainder trusts: Funding with appreciated assets can provide lifetime income while utilizing estate tax exemptions for remainder interests
• Charitable lead trusts: These can transfer substantial wealth to family members while utilizing enhanced exemptions effectively
• Private foundation coordination: Family foundations can be funded through exemption strategies while providing ongoing charitable benefits
• Donor-advised fund integration: These provide flexible charitable giving while coordinating with overall wealth transfer plans

Tax-efficient charitable techniques:

• Appreciated asset giving: Donating appreciated securities or real estate can eliminate capital gains while providing charitable deductions
• Tax loss harvesting coordination: Investment strategies can generate tax benefits while supporting charitable planning
• Retirement account charitable transfers: Qualified charitable distributions can reduce estate values while providing tax benefits
• Split-interest gift strategies: Charitable gift annuities and remainder trusts can provide income while reducing estate tax exposure

Trust and family office strategies maximize multi-generational benefits

The permanent enhancement of estate tax exemptions under the One Big Beautiful Bill Act creates opportunities for sophisticated trust strategies and family office structures. These approaches can preserve and grow family wealth across multiple generations while providing operational efficiency and tax benefits.

Advanced trust strategies include:

• Dynasty trust optimization: Utilizing full exemptions to fund perpetual trusts can benefit unlimited generations
• Directed trust structures: These provide investment flexibility while maintaining tax benefits and family control
• Asset protection integration: Trust strategies can provide creditor protection while maximizing tax benefits
• Distribution planning: Strategic distribution policies can optimize tax benefits across multiple generations

Family office coordination opportunities:

• Investment management integration: Professional investment management can enhance trust and family wealth performance
• Tax compliance coordination: Centralized tax planning can optimize benefits across all family entities and structures
• Child & dependent tax credits optimization: Current tax benefits can be coordinated with long-term wealth transfer strategies
• Administrative efficiency: Family offices can manage complex trust and investment structures while reducing overall costs

Investment strategy coordination multiplies wealth preservation

The substantial estate tax savings from enhanced exemptions create opportunities for increased investment and wealth building under the One Big Beautiful Bill Act. Families can redirect tax savings into additional growth strategies and long-term wealth accumulation while building comprehensive financial legacies.

Investment coordination opportunities:

• Alternative investment strategies: Real estate, private equity, and other alternatives can provide growth and diversification benefits
• Tax-efficient portfolio management: Coordinating investment strategies with estate planning can optimize overall tax benefits
• Oil and gas deduction integration: Energy investments can provide current tax benefits while building long-term wealth
• International diversification: Global investment strategies can offer growth opportunities while coordinating with estate planning

Long-term wealth-building strategies:

• Education funding coordination: 529 plans and other education strategies can work with estate planning for comprehensive family benefits
• Retirement plan optimization: Maximizing retirement contributions can preserve other assets for wealth transfer purposes
• Insurance coordination: Life insurance strategies can provide liquidity for estate taxes while leveraging exemption benefits
• Business investment strategies: Investing in family businesses or new ventures can provide growth opportunities while utilizing planning techniques

Protect your family legacy starting in 2026

Don't miss out on the unprecedented wealth transfer opportunities available through the One Big Beautiful Bill Act's enhanced estate tax exemptions. Starting with decedents dying after December 31, 2025, families can shield up to $30 million from federal estate taxes, resulting in millions of dollars in tax savings while building lasting multi-generational legacies.

Instead's comprehensive tax platform makes it simple to coordinate your estate planning strategies with other valuable tax benefits under the new legislation. Our intelligent system automatically identifies optimization opportunities and helps you integrate estate tax planning with business strategies, investment management, and comprehensive family wealth preservation.

Get started with Instead's pricing plans today to maximize your estate tax benefits while building a comprehensive wealth transfer strategy that protects your family's financial future for generations to come.

Frequently asked questions

Q: How much can my family save with the enhanced $15 million estate tax exemption?

A: Your savings depend on your total estate value and marital status. Individuals with estates between $15-20 million can save $2-2.8 million in estate taxes, while married couples with estates between $30-45 million can save $6-13.2 million. Most wealthy families save between $2-7 million in estate taxes.

Q: Can I use the enhanced exemption for lifetime gifts or only at death?

A: Yes, the $15 million exemption applies to both lifetime gifts and estate transfers at death. You can use the full amount during your lifetime, at death, or in strategic combinations. Lifetime gifts can be particularly effective when combined with valuation discounts and appreciation transfer strategies.

Q: What happens to the exemption amounts in future years?

A: The $15 million exemption is permanent and will adjust annually for inflation starting in 2026. The inflation adjustments use 2025 as the base year, which may result in slower growth compared to previous inflation adjustment methods.

Q: How do state estate taxes interact with the enhanced federal exemption?

A: State treatment varies significantly. Some states automatically conform to federal exemption amounts, while others maintain independent estate tax systems with lower exemptions. Many states have no estate tax at all. Strategic domicile planning may be beneficial for families in high-tax states.

Q: Can the enhanced exemption be coordinated with generation-skipping transfer tax planning?

A: Yes, the GST exemption also increases to $15 million per person under the One Big Beautiful Bill Act. This creates powerful opportunities for multi-generational wealth transfer through direct gifts to grandchildren, dynasty trusts, and other advanced planning techniques.

Q: Does the enhanced exemption affect gift tax annual exclusions?

A: No, the annual gift tax exclusion (currently $18,000 per recipient in 2025) remains separate from the lifetime exemption. You can make annual exclusion gifts without using any of your $15 million lifetime exemption, allowing for even greater wealth transfer opportunities.

Q: When do these enhanced exemptions take effect?

A: The enhanced $15 million exemptions apply to estates of decedents dying after December 31, 2025, and to lifetime gifts made after that date. The exemptions are permanent and will not sunset in future years.