On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law, marking one of the most significant shifts in federal estate and gift tax policies in recent history. Spanning nearly 900 pages, OBBBA addresses America’s long-standing uncertainty around the future of federal estate taxes, while also introducing new tax benefits for families and businesses. The new legislation is expected to fundamentally reshape how Americans should approach their estate, legacy, and gift planning moving forward.
From high-net-worth individuals to small business owners to families planning for the future, this legislation will affect Americans on a wide scale, meaning that strategic planning is more important now than ever.
A New (Permanent) Era for Estate and Gift Taxes
One of the most impactful and permanent features of this new legislation is the increase in federal estate, gift, and generation-skipping transfer (GST) tax exemptions. Prior to the recent passage, the federal estate and gift tax exemption was set to reduce to approximately $7 million. Under the OBBBA, it will increase to $15 million per person (or $30 million per married couple), effective January 1, 2026. What’s notable is that these thresholds will no longer be subject to sunset provisions or experience automated expirations unless renewed by Congress. Additionally, the exemptions will be indexed for inflation, making them permanent.
While this does not exclude the possibility of a future Congress and administration from passing legislation that would repeal or reduce these exemptions, they do stand to provide significant relief and stability for those affected now.
It is important to note that the OBBBA exemption of $15 million is at the Federal level; the Massachusetts State exemption, which went into effect in 2023, remains at $2 million.
Generation-Skipping Transfer Planning
The generation-skipping transfer (GST) tax exemption will also be increased to $15 million, creating a variety of opportunities for more strategic multigenerational wealth planning. With this increase, generation-skipping trusts will become an even more lucrative and attractive method of estate planning. These trusts will allow one’s wealth to pass directly to descendants and avoid estate tax at the intermediate generation level. For families that are committed to building long-term financial legacies, this means significantly more wealth can stay within the family line, untouched by transfer taxes for generations.
Impact on Charitable Lifetime Giving
While the OBBBA certainly plans to raise exemption limits, it also aims to reshape how charitable giving fits into legacy planning, opening up new opportunities to align philanthropic goals with wealth protection and tax efficiency.
Under the new legislation, taxpayers who do not itemize can claim a charitable deduction for up to $1,000 for individuals and $2,000 for joint filers. For individuals who do itemize, a new 0.5% adjusted gross income (AGI) floor will apply, while corporations will have to face a 1% AGI floor. In addition, it will allow up to 60% of AGI for cash gifts to public charities to become permanent, providing clarity for larger donors.
What’s especially powerful under the new legislation is the ability to combine asset protection with charitable intent. The higher exemption amounts will allow arrangements such as dynasty trusts and hybrid domestic asset protection trusts (DAPT) to be used not just for preserving family wealth, but for making a lasting charitable impact as well. These approaches will help families shield their assets from creditors, reduce estate tax exposure, and still give back without having to sacrifice financial flexibility or control.
The new legislation has also introduced expanded charitable planning opportunities, including split-interest trusts, charitable lead trusts, and donor-advised funds. These tools allow individuals and families to preserve wealth while contributing to charitable causes, generating immediate tax benefits without needing to sacrifice their long-term financial goals.
A New Tax Framework Demands a New Approach
The OBBBA not only represents a shift in numbers, but marks a fundamental shift in the way individuals and families should address estate planning. With higher and more permanent exemption thresholds, enhanced opportunities for generation-skipping and long-term care planning, and new rules around charitable giving, this new legislation offers both relief and a new level of complexity.
The information detailed in this blog is just a snippet of how this new legislation will impact high-net-worth individuals, business owners, and families trying to secure their financial future. For some it may mean new opportunities to transfer their wealth efficiently and preserve their legacies for generations. For others, it will mark a significant shift in how they plan future long-term care. What remains clear is that strategies used under previous legislations and administrations may no longer be optimal.
That is where our team at Estate Preservation Law Offices steps in. To better understand this complex legislation and how it will affect your specific estate planning strategies, request a free consultation. We’re here to help you and your family navigate this new era with clarity, confidence, and a completely customized plan that protects what matters most.