The One Big Beautiful Bill Breakdown: Estate and Gift Tax Exemption Amount
All taxpayers are allowed to give away a certain amount of assets, either during their lifetime or at death, without triggering federal estate tax. Anything above that exemption amount may be subject to estate tax.
And the One Big Beautiful Bill features much-welcome changes to the estate and gift tax exemption amount.
The Previous Tax Law
Under the Tax Cuts and Jobs Act (TJCA) that passed in 2017, the federal estate tax exemption was increased from $5.49 million per individual (adjusted for inflation yearly) to $10 million per individual (adjusted for inflation yearly).
Any amount exceeding this provided exemption was taxed at a rate up to 40%. As of 2025, the exemption had been adjusted up to $13.99 million per person due to inflation.
The TJCA did not provide for a permanent increase to the exemption, but rather, it was set to expire at the end of 2025 and revert to pre-TCJA levels, expected to be indexed to around $7 million per individual.
New and Final Law Under the One Big Beautiful Bill
The passing of the One Big Beautiful Bill provided for a permanent increase to the federal estate tax exemption to $15 million per person or $30 million for a married couple starting in 2026.
Just like the TJCA, $15 million per person will be adjusted for inflation yearly, and it’s likely to be slightly higher than this starting in 2027. This new exemption is not set to sunset at any point and can only be changed if a future Congress passes new legislation.
The tax rate remains the same even after you exceed the new exemption amount.
What It Means for You
This increased exemption amount provides for a great planning opportunity for high-net-worth families whose net worth is currently over $30 million (as a couple) to potentially shelter the appreciation of their assets from a future estate tax by utilizing “during life” gift planning.
To learn more about how the One Big Beautiful Bill and this specific provision may impact you, contact your Warren Averett advisor.
