New Tax Law Sets Estate Exemption at $15 Million, Opening Wealth Transfer Strategies for Families

The One Big Beautiful Bill Act has permanently set the federal estate and gift tax exemption at $15 million per individual, or $30 million per couple, with the figures indexed for inflation going forward.

The change gives families more certainty for long-term wealth planning than they have had in years. Under previous law, the elevated exemption was set to expire, creating pressure to act before a potential reduction. The new law removes that deadline.

Financial advisers say the higher exemption opens several planning strategies. Individuals who had already used their full exemption under prior limits can now make an additional $1.01 million in lifetime gifts per person to take advantage of the increase. Annual exclusion gifts of $19,000 per recipient remain available without touching the lifetime exemption.

Declining interest rates have made certain trust vehicles more attractive. Grantor Retained Annuity Trusts, or GRATs, work better when the IRS hurdle rate is low, since any investment return above that rate passes to beneficiaries tax-free. Intrafamily loans allow family members to borrow at favorable rates, shifting investment gains out of the lender's taxable estate. Charitable Lead Annuity Trusts have also become more appealing, as lower rates increase the amount that eventually passes to individual beneficiaries.

Charitable giving rules changed in 2026. Taxpayers who itemize can now only deduct charitable gifts that exceed 0.5 percent of their adjusted gross income. The effective value of charitable deductions for top-bracket taxpayers has also been reduced. Advisers suggest evaluating donor-advised funds to lock in deductions under more favorable terms.

October 15 is a critical date for taxpayers who filed for an automatic six-month extension on their 2025 returns. Small businesses looking to establish or fund an individual 401(k) or SEP IRA for the 2025 tax year generally must also act by this deadline.