The One Big Beautiful Bill Act (OBBBA) has introduced sweeping changes across the economic and legal landscape of our country, impacting individuals, families, and businesses in a range of ways. These changes will affect various aspects of financial planning—and estate planning is no exception. From revised estate and gift tax exemptions to expanded uses for 529 savings plans, the legislation includes provisions that could affect your family’s financial future. In this article, we break down the key changes introduced by the OBBBA that may impact your long-term estate planning strategy.
Federal Estate, Gift, and GST Exemption
Beginning in 2026, the OBBBA permanently increases the lifetime exemption amount for the federal estate, gift, and generation-skipping transfer (GST) tax to $15 million per person ($30 million for married couples), indexed annually for inflation. The OBBBA eliminates the previously scheduled sunset of the higher exemption threshold. Please note that the New York State estate tax exemption amount remains at $7.16 million per person.
Permanent Extension of TCJA Tax Rates
The OBBBA makes permanent the tax rates and brackets established by the Tax Cuts and Jobs Act (TCJA) of 2017.
Qualified Small Business Stock (QSBS)
For QSBS acquired after enactment of the OBBBA, the percentage of gain excluded from gross income will rise from 50% to 75% if the stock is held for four years. If held for five years or more, the exclusion percentage will increase to 100%.
Expansion of 529 Plans
The OBBBA expands permitted uses of funds in 529 education savings plans by broadening the definition of “qualified expenses.” Tax-exempt distributions from 529 savings plans now apply to additional expenses (beyond tuition) related to enrollment in private, public, or religious elementary or secondary schools, including books, materials, testing fees, tutoring costs, dual enrollment fees, and educational therapies. The OBBBA also increases the annual limit for 529 account distributions for K-12 expenses from $10,000 to $20,000. Additionally, the OBBBA allows 529 plan funds to be used for “qualified postsecondary credentialing expenses,” including tuition, fees, books, supplies, testing, equipment, and continuing education required for participation in recognized postsecondary credential programs.
Trump Accounts
The OBBBA establishes a “Trump account,” a new tax-deferred investment account for children who are U.S. citizens under the age of 18. Contributions to these accounts are capped at $5,000 a year (adjusted for inflation after 2027) and can be made by parents, relatives, employers, and other taxable entities, as well as non-profit and government entities. Accounts opened for children born between January 1, 2025, and December 31, 2028 will include a one-time $1,000 government contribution.
Charitable Contributions
For taxpayers who do not itemize, the OBBBA creates a charitable contribution deduction of up to $1,000 for single filers for certain charitable contributions ($2,000 for married couples filing jointly). For taxpayers who choose to itemize, the OBBBA establishes a 0.5% floor on the charitable contribution deduction. For corporations, the bill establishes a 1% floor for charitable deduction contributions. Deductions for corporate charitable contributions cannot exceed 10% of the corporation’s taxable income.
Estate Planning Outlook
All in all, the One Big Beautiful Bill Act protects and expands policies favorable for family wealth management and estate planning. RBT CPAs will continue to provide updated information to our clients as more detailed guidance on the OBBBA is issued. In the meantime, to find out how the recent tax law changes might impact your estate plan, we encourage you to reach out to our Trust, Estate & Gift team at RBT CPAs. As always, RBT CPAs is here to support all of your estate planning, accounting, tax, and advisory needs. Contact us today to find out how we can be Remarkably Better Together.