Policy Intelligence

The OBBBA (Pub. L. 119-21) was signed into law on July 4, 2025, and represents the most significant estate tax legislation since the 2017 Tax Cuts and Jobs Act. The centerpiece for estate planning is the permanent extension of the elevated basic exclusion amount, which was previously set to sunset to approximately $7M on January 1, 2026. By making the $15M exemption permanent (with ongoing inflation indexing), OBBBA eliminated the urgency that was driving accelerated gifting strategies throughout 2024-2025. However, the permanent exemption also creates new planning opportunities for deliberate, well-structured wealth transfers.

• Permanently extended elevated estate/gift/GST exemption ($15M for 2026)
• Modified QSBS: $15M cap, $75M gross assets, tiered holding for post-enactment stock
• SALT cap raised to $40,000 (from $10,000) with annual $1K increases through 2029
• Individual income tax rate cuts extended through 2029
• New provisions affecting carried interest and certain partnership structures
• No changes to step-up in basis at death (IRC §1014)

The IRS Priority Guidance Plan for 2025-2026 includes several items relevant to estate planning. Revenue Procedure 2025-32 established 2026 inflation-adjusted figures. Revenue Ruling 2026-7 set the April 2026 §7520 rate at 4.6%. Pending guidance items include: regulations implementing OBBBA §1202 changes, updated valuation discount guidance (following the withdrawal of proposed regulations under §2704), and potential regulations on digital asset reporting for estates.

• Rev. Proc. 2025-32: 2026 exemptions and exclusion amounts
• Rev. Rul. 2026-7: §7520 rate of 4.6% (April 2026)
• Pending: OBBBA implementation regulations for §1202 changes
• Pending: Digital asset reporting requirements for estates and trusts
• Withdrawn: Proposed §2704 regulations on valuation discounts (2017)
• §7520 rate updated monthly — affects GRAT, CLAT, CRT valuations

Several provisions enacted under OBBBA and TCJA have built-in sunset dates that could reshape the planning landscape. The SALT cap provisions sunset after 2029. Individual income tax rate cuts sunset after 2029. Potential future legislation could target: step-up in basis at death, valuation discounts for family entities, grantor trust income tax status, and dynasty trust perpetuity. None of these changes are enacted or certain — they represent areas of policy discussion that could affect long-term planning. Current strategy should account for but not overweight these possibilities.

• SALT provisions sunset December 31, 2029
• Individual rate cuts sunset December 31, 2029
• Step-up in basis: repeatedly proposed for elimination but never enacted
• Grantor trust rules: proposals to include in taxable estate have not advanced
• Valuation discount restrictions: §2704 regs withdrawn, no active proposals
• State-level changes ongoing — monitor state legislative sessions annually

Several current planning opportunities have inherent time sensitivity. The §7520 rate directly affects the effectiveness of GRATs and CLATs — higher rates make GRATs harder to beat but CLATs more efficient. The current 4.6% rate (April 2026) represents a moderate environment for both. For QSBS holders, the transition to post-OBBBA rules creates urgency: stock acquired after July 4, 2025 benefits from the higher $15M cap and tiered holding, but existing companies approaching the $75M gross assets threshold should consider issuing stock before crossing that line.

• §7520 rate (4.6%) moderate for GRATs — best when rate is low relative to expected returns
• QSBS: companies near $75M gross assets should issue stock before crossing threshold
• Annual exclusion gifts ($19K/person) are use-it-or-lose-it each calendar year
• State domicile changes should be established before December 31 for tax year planning
• Portability election (Form 706) due 9 months after first spouse's death + extensions
• Crummey notices must be timely to preserve annual exclusion treatment