The One Big Beautiful Bill Act (OBBBA), signed into law in 2025, reshaped the tax landscape in meaningful ways. It established several changes, providing planning opportunities that individuals and families should be taking advantage of now.
Among the most significant changes is OBBBA permanently extending the elevated federal estate and gift tax exemption, set to sunset at the start of 2026 under the 2017 Tax Cuts and Jobs Act. The exemption now stands at $15 million per individual—$30 million for married couples—and will continue to adjust for inflation. The annual gift tax exclusion also holds steady at $19,000 per recipient—$38,000 for married couples.
With these permanent provisions, families have a longer runway to plan strategically, particularly with irrevocable trust planning. Married clients with assets that have growth potential may benefit from a spousal lifetime access trust (SLAT)—a trust established by one spouse for the benefit of the other spouse and children. Assets transferred to a SLAT are removed from the taxable estate using gift tax exemption during life, and both the assets and any appreciation pass estate tax free to future beneficiaries. Individuals should also consider using their annual gift tax exclusion to reduce their taxable estate year after year.
OBBBA also made noteworthy changes to itemized deductions. The state and local tax (SALT) deduction cap increased from $10,000 to $40,000, rising one percent annually through 2029 before reverting to $10,000 in 2030. However, higher-income taxpayers should note that the deduction is reduced by 30 cents for every dollar of adjusted gross income over $250,000 (single) or $500,000 (joint). On the charitable side, taxpayers claiming the standard deduction can now deduct up to $1,000 ($2,000 joint) for cash gifts to qualified public charities. Those who itemize should note a new floor of one-half percent of adjusted gross income before the charitable deduction applies. Additionally, taxpayers in the highest bracket must reduce most itemized deductions—other than those for qualified small business income and SALT—by approximately 5.4 percent.
These changes offer welcome certainty and a valuable window for proactive planning. Whether you are considering lifetime gifts, funding trusts, or reassessing your deduction strategy, now is an excellent time to revisit your plan. If you have questions, contact Reinhart attorney Max Schneberger or another member of Reinhart’s Trusts and Estates Practice.
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