One Big Beautiful Bill Tax Act – How Can You Benefit?

Focus: Increase In Unified Credit (Estate & Gift Tax)
On July 4, 2025 President Donald J. Trump signed into law H.R.1 – One Big Beautiful Bill Act (“OBBBA”).  The OBBBA contains hundreds of provisions including permanently extending the individual tax rates Trump signed into law in 2017, which were originally set to expire at the end of 2025.

The United States uses a unified estate and gift tax system. This means a single exclusion amount applies to both lifetime gifts and transfers at death. Individuals receive a “unified credit”—also known as the applicable credit amount—which offsets taxes owed on these transfers. The IRS doesn’t charge estate or gift tax if the total value of taxable gifts and estates remains below the exclusion threshold. For transfers above that amount, the IRS applies a flat 40% tax rate. Unified credit is the lifetime federal gift and estate tax exemption amount that individuals can transfer tax-free, either through gifts during their life or bequests at death.

Prior law

The Tax Cuts and Jobs Act (TCJA) of 2017 doubled the estate tax exemption but included a “sunset” provision, which meant the higher amount was temporary and set to revert to the pre-2018 level (roughly $7 million), adjusted for inflation, at the end of 2025.

New law

OBBBA permanently repealed the TCJA’s sunset provision by doubling the exclusion while maintain the 40% estate tax rate and permanently increasing the federal lifetime gift and estate tax exemption. The OBBBA permanently increases the unified federal estate and lifetime gift tax exemption to $15 million per individual ($30 million for married couples), indexed for inflation starting in 2026. This secures the elevated threshold, preventing a drop to approximately $7 million per individual, which was anticipated if the TCJA provisions expired. This stability allows ultra-high-net-worth individuals to accelerate lifetime gifting and fund dynasty trusts efficiently.

The generation-skipping transfer (GST) tax exemption is now aligned with the $15 million per individual exemption, also indexed for inflation. This paves the way for robust multi-generational planning through dynasty trusts and other strategic vehicles.

This exclusion applies to estates and gifts made after December 31, 2025, and the exclusion will continue to rise with inflation.

But Beware …

Taxpayers still benefit from the annual gift tax exclusion, which remains separate from the lifetime exemption.

For 2025, the annual exclusion is $19,000 per recipient, up from the long-standing $10,000 base amount due to inflation adjustments. That means you can give $19,000 to each person without reducing your $15 million lifetime exemption.

What is Estate Planning?

A legal process where a person’s property and finance objectives are arranged with their healthcare decisions to achieve long term family planning goals.

What does an Estate Plan Include?

An Estate Plan package generally includes a Will, a Trust, a Power of Attorney and an Advanced Healthcare Directive. Usually there are other corollary documents that need to be prepared such as Quit Claim Deeds and Assignments.

A Will is an instrument by which a person records their desires regarding distribution of property and their specific wishes after death.

Two major disadvantages of relying on a Will alone to manage your Estate Planning goals include:

• A Will is not effective in the event you become incapacitated;
• A Will subjects your loved ones to a lengthy, public and expensive probate process.

A Trust is a legal relationship between its creator (“settlor”), its manager (“trustee”) and its beneficiaries. A Trust can be drafted to achieve any legal purpose during the settlor’s life and will determine the management of your estate in the event you become incapacitated or pass away.

Durable Powers of Attorney allow you to nominate the person of your choice to make decisions regarding your finances and healthcare decisions in the event you become incapacitated.

An Advanced Healthcare Directive and a Living Will allow you to make specific decisions regarding your end of life wishes and the extent to be on life-support.

What Should You Do?

Estate plans that were created when the Unified Credit was lower than the net value of the estate should be redone and simplified as those estates are now non-taxable.

You know that at the Law Offices Of Jeffrey B. Kahn, P.C. we are always thinking of ways that our clients can save on taxes. If you are selected for an audit, stand up to the IRS by getting representation. Tax problems are usually a serious matter and must be handled appropriately so it’s important to that you’ve hired the best lawyer for your particular situation. With careful planning and strategic execution, businesses can turn this tax change into a competitive advantage. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Orange County (Irvine), Los Angeles, San Francisco Bay Area (including San Jose and Walnut Creek) and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income. Also if you are involved in cannabis, check out what a cannabis tax attorney can do for you.  And if you are involved in crypto currency, check out what a bitcoin tax attorney can do for you.