Estate Tax Exemption in 2025 and Beyond: What the OBBBA Means for Families

When it comes to wealth transfer and estate planning, few numbers are as closely watched as the federal estate tax exemption. This figure determines how much wealth can pass free of federal estate tax at death (or through lifetime gifts). With the passage of the One Big Beautiful Bill Act (OBBBA) in early 2025, the landscape has shifted in ways that may affect your long-term planning.

The Current Estate Tax Exemption

For 2025, the federal estate and gift tax exemption is $13.99 million per individual, or $27.98 million for married couples with proper planning. In practical terms, this means estates valued below that threshold will not owe federal estate tax. The top federal estate tax rate remains 40% on amounts above the exemption.

What Changes Under the OBBBA?

Before OBBBA, the exemption was scheduled to be cut roughly in half starting in 2026, reverting to pre-2018 levels (around $6–7 million per person). This potential “sunset” created uncertainty for families and business owners trying to plan for the future. Historical estate tax exemption amounts can be found here: IRA Estate Tax

OBBBA eliminated that uncertainty by:

• Setting a new exemption of $15 million per person (or $30 million per married couple) beginning in 2026.

• Indexing the exemption for inflation moving forward, helping it keep pace with economic conditions.

• Making the higher exemption permanent, rather than temporary—though future legislation could always revisit the rules.

Why This Matters

Estate tax exposure primarily affects individuals and families with significant wealth, but the exemption is not just a number for the ultra-wealthy. It influences:

• Business succession – Family-owned businesses and farms often face liquidity challenges when passing to the next generation.

• Gifting strategies – Lifetime gifts that use part of the exemption may need recalibration under the new law. Estate and Gift Tax FAQs

• Charitable giving – Charitable trusts and foundations may be structured differently depending on taxable estate projections.

• State estate taxes – Some states have lower exemption amounts than the federal level, which requires coordinated planning.

Planning Considerations

1. Review Your Current Estate Plan: If your plan was built with the assumption of a much lower exemption in 2026, you may have opportunities to simplify.

2. Reassess Gifting: With a higher exemption locked in, lifetime gifting may still play an important role, but the urgency has shifted.

3. Coordinate With State Law: Even if you’re under the federal threshold, state estate or inheritance taxes may apply.

4. Stay Flexible: While OBBBA establishes permanence, Congress has the power to change course. Building flexibility into trusts and estate structures remains wise.

Final Thoughts

The increase in the estate tax exemption under OBBBA provides clarity and planning stability for families with significant assets. Still, estate planning is more than a tax calculation, it’s about ensuring your wealth supports your family, your business, and your legacy in the ways you intend.

If you have questions about how these changes may affect your situation, consider reviewing your plan with a qualified estate planning attorney and your financial advisor.

www.rigdencapital.com

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About Rigden Capital Strategies

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Disclosure: This content is for informational and educational purposes only and should not be interpreted as financial, legal, or tax advice. While we strive for accuracy, we do not guarantee the completeness or reliability of the information provided. Investment decisions should be based on individual circumstances, and we recommend consulting a qualified professional before implementing any financial, legal, or tax strategies. Past performance is not indicative of future results, and all investments carry risks, including potential loss of principal. No investment strategy can guarantee success or protect against loss in all market conditions. Investors should carefully consider their risk tolerance, investment objectives, and financial circumstances before making investment decisions.