Legislative changes affecting estate planning, updated for the 2026 OBBBA landscape.
Estate/Gift Exemption
$15M
per individual
Couple Exemption
$30M
married filing jointly
Annual Gift Exclusion
$19K
per recipient
GST Exemption
$15M
per individual
Estate/Gift Tax Rate
40%
top marginal rate
QSBS Exclusion
$15M
per issuer
QSBS Asset Threshold
$75M
gross assets at issuance
SALT Cap
$40K
per household (phaseout at $500K AGI)
The One Big Beautiful Bill Act (Pub. L. 119-21) permanently raised the federal estate, gift, and generation-skipping transfer tax exemption to $15 million per individual ($30 million per couple), effective January 1, 2026. The $15M base amount will be indexed for inflation beginning in 2027. This replaces the scheduled sunset to ~$7M that was set under the Tax Cuts and Jobs Act of 2017.
Action Required: Review and potentially restructure existing irrevocable trusts and gifting plans to take advantage of the increased exemption. Married couples should review portability elections. Individuals who fully utilized the prior $13.99M exemption now have an additional $1.01M of exemption capacity.
Source: Pub. L. 119-21, signed July 4, 2025; IRS Rev. Proc. 2025-32; IRC §2010(c)(3)
For QSBS acquired after July 4, 2025: gain exclusion cap raised from $10M to $15M per issuer (subject to greater-of test with 10× adjusted basis). Corporate gross asset threshold raised from $50M to $75M. New tiered holding periods: 50% exclusion at 3 years, 75% at 4 years, 100% at 5+ years. Both the $15M cap and $75M asset threshold will be indexed for inflation beginning in tax years after 2026.
Action Required: Founders should re-evaluate QSBS stacking strategies with the new $15M per-issuer limit. Consider gifting QSBS shares to non-grantor trusts and family members to multiply the per-taxpayer exclusion. Note: pre-OBBBA stock still uses legacy $10M/$50M thresholds.
Source: Pub. L. 119-21 §112001 et seq.; IRC §1202(a), (b), (d) as amended; Holland & Knight July 2025; McDermott Will & Emery July 2025
QSBS acquired on or before July 4, 2025 retains the legacy thresholds: $10M per-issuer gain exclusion cap (or 10× adjusted basis), $50M corporate gross asset threshold, and the requirement for a full 5-year holding period for 100% exclusion. The tiered 3/4/5-year holding periods do NOT apply to pre-OBBBA stock.
Action Required: Audit all QSBS holdings to determine acquisition dates relative to July 4, 2025. Pre-OBBBA and post-OBBBA stock in the same company will have different exclusion parameters. Ensure tax advisors are applying the correct thresholds to each lot.
Source: Pub. L. 119-21 §112001; IRC §1202 as amended; Grant Thornton July 2025 Alert
State and local tax (SALT) deduction cap raised to $40,000 per household for tax years 2025–2029. The cap phases out for households with AGI exceeding $500,000. Beginning in 2026, the $40,000 base increases 1% annually. These provisions sunset after 2029 unless renewed.
Action Required: High-income residents of high-tax states should evaluate whether state trust planning (NING trusts) or domicile changes remain beneficial given the modest SALT relief. The $40K cap still leaves most UHNW individuals significantly limited.
Source: Pub. L. 119-21 (OBBBA) SALT provisions
Revenue Procedure 2025-32 provides the official inflation-adjusted amounts for 2026, incorporating OBBBA amendments. Key amounts: $15M estate/gift/GST exemption, $19K annual gift exclusion (unchanged), $194K non-citizen spouse annual exclusion (up from $190K). These represent the authoritative IRS figures for 2026 planning.
Action Required: Update all estate planning models and trust documents to reflect the official 2026 figures. Ensure formula clauses in existing trusts operate correctly with the new $15M exemption.
Source: IRS Rev. Proc. 2025-32, 2025-32 I.R.B.; IR-2025-145
The IRS Section 7520 rate for April 2026 is 4.6% (per Rev. Rul. 2026-7). This rate affects the valuation of GRATs, CLATs, CRTs, QPRTs, and other split-interest trusts. At 4.6%, the rate is moderately favorable for GRATs (lower rates are better) and charitable lead trusts, while being favorable for QPRTs and charitable remainder trusts (higher rates benefit these).
Action Required: Model GRAT and CLAT scenarios using the 4.6% rate. Consider whether the current rate environment favors initiating new split-interest trusts. Remember: you can use the rate from the month of the gift OR either of the two preceding months.
Source: IRS Rev. Rul. 2026-7; IRC §7520
Both the $15M estate/gift/GST exemption AND the $15M QSBS exclusion cap / $75M gross asset threshold will begin inflation adjustments for tax years beginning after 2026. Based on current CPI projections, the estate exemption could rise to approximately $15.3M–$15.5M for 2027.
Action Required: Factor projected increases into long-term gifting and trust-funding strategies. Do not over-gift relative to current levels if the exemption will grow — but also do not wait if you have assets with high appreciation potential.
Source: Pub. L. 119-21 inflation adjustment provisions; IRC §2010(c)(3)(C); IRC §1202(b)(1)(B)
Multiple prior legislative proposals (including the FY2024 and FY2025 Green Book proposals) sought to: (1) include grantor trust assets in the grantor's estate for estate tax purposes, (2) treat sales between a grantor and their trust as taxable recognition events, and (3) treat distributions from grantor trusts as taxable gifts. While NOT included in OBBBA, these proposals remain active policy considerations for future legislation.
Action Required: Consider accelerating grantor trust strategies (IDGTs, SLATs, installment sales) while current favorable treatment remains in effect. The cost of delay could be substantial if grantor trust rules change. Monitor Treasury Green Book proposals and Ways & Means Committee activity.
Source: Treasury Green Book FY2024/FY2025 proposals; prior House Ways & Means proposals; legislative tracking
Prior proposals (including abandoned §2704 regulations from 2016) have targeted minority interest and lack-of-marketability discounts for family-controlled entities. The Biden administration's FY2024 budget proposed eliminating these discounts for transfers of non-business assets. While not enacted, future administrations may revive this approach.
Action Required: If using FLPs or family LLCs for valuation discounts, ensure structures have legitimate, documented business purposes beyond tax savings. Consider accelerating transfers. Obtain high-quality appraisals from qualified independent appraisers.
Source: Proposed Reg. §25.2704-1 (withdrawn 2017); Treasury Green Book FY2024; legislative tracking
July 4, 2025
OBBBA signed into law
Permanent $15M exemption, enhanced QSBS, SALT cap increase.
January 1, 2026
New exemptions take effect
$15M individual / $30M couple estate and gift tax exemption. QSBS changes effective.
2027
Inflation indexing begins
$15M base begins annual CPI adjustments. Projected ~$15.3M-$15.5M.
2028
SALT cap adjustment
$40K base SALT cap with cumulative 1% annual increases since 2026.
2029
SALT provisions expire
Current SALT cap provisions sunset after 2029 unless renewed.
Ongoing
Monitor grantor trust rules
Potential future legislation could change treatment of IDGTs, SLATs, and installment sales to grantor trusts.
This information is for educational purposes only and does not constitute legal or tax advice. All figures sourced from IRS Rev. Proc. 2025-32, Pub. L. 119-21 (OBBBA), IRS Rev. Rul. 2026-7, and analyses by nationally recognized law firms including Morgan Lewis, Holland & Knight, McDermott Will & Emery, Crowell & Moring, and Arnold & Porter. Consult qualified estate planning professionals for advice specific to your situation.