Estate And Gift Exemption Clarity Under The One Big Beautiful Bill Act

What would you do if you could transfer $15 million to your heirs or business successors without worrying about future tax law changes? For years, tax advisors have helped clients plan around an uncertain future — especially around the estate and gift exemption limits that seemed to expand and contract depending on the political winds.

With the passage of the One Big Beautiful Bill Act (OBBBA) in July 2025, a key tax question has been answered. The estate and gift exemption is now permanently set (absent any future change in the law) at $15 million per individual, indexed for inflation. For families, business owners and anyone with long-term legacy goals, that permanence brings both clarity and opportunity.

The $15 Million Lifetime Estate and Gift Exemption: What the Law Says

Before this year, the estate and gift exemption had been in flux. The 2017 Tax Cuts and Jobs Act (TCJA) had temporarily increased the lifetime exemption to over $12 million, but it was scheduled to sunset in 2026. That uncertainty made long-term planning difficult.

Now, the OBBBA sets the exemption at $15 million per individual and will rise with inflation going forward. Portability still applies for married couples, effectively doubling the limit for a married couple to $30 million if properly elected.

The exemption applies to both lifetime gifts and transfers made at death, allowing individuals to make strategic moves while they’re still living. This is especially relevant when paired with valuation discounts and trusts that help reduce estate size. The IRS continues to oversee compliance through Form 709 for gifts and Form 706 for estates, with consistent rules around asset valuation and annual exclusions.

According to the IRS’s estate and gift tax guidance, the current (2025) annual exclusion is $19,000 per recipient. That figure operates independently of the lifetime exemption, allowing for additional wealth transfer opportunities each year without reducing the exemption total.

The key change is in the permanence. Without a sunset provision or looming expiration, individuals and families can now plan with long-term confidence, knowing that large gifts won’t be penalized later due to retroactive tax code revisions.

Impact on Estate Planning for Individuals and Families

This change in law significantly enhances planning options for high-net-worth individuals, including those with complex family dynamics or multigenerational wealth structures. Estate strategies that once relied on “use it or lose it” mentalities are now able to be more precise and tailored. Popular strategies like spousal lifetime access trusts (SLATs), grantor retained annuity trusts (GRATs), and intentionally defective grantor trusts (IDGTs) still play a role. But the urgency around implementing them before a potential sunset is no longer a driver.

Portability remains one of the most overlooked features in estate planning. Many couples still fail to file the proper election on the estate tax return of the first spouse to die, thereby forfeiting millions in exemption value. That makes professional guidance more critical than ever.

Business succession also becomes easier to structure under this new exemption level. Families can begin transferring minority interests or voting shares of closely held businesses without approaching the lifetime cap. That opens the door for staggered succession plans or charitable remainder strategies that include both tax advantages and philanthropic impact.

Business Owners and Succession: New Doors Open

For business owners, the new exemption level unlocks planning previously reserved for only the largest estates. Entrepreneurs can now transfer significant equity in family-owned companies (whether structured as S corporations, LLCs or partnerships) without triggering federal gift tax.

Succession planning becomes more strategic when large gifts don’t consume the entire exemption. That makes it easier to craft phased ownership transitions that preserve continuity while minimizing tax exposure. Owners who are years away from retirement can still begin moving equity out of their estates while retaining control and income rights.

The valuation rules and discounting opportunities continue to offer ways to reduce the reported value of transferred interests, especially when structured through family limited partnerships or voting/non-voting share classes. But with a higher exemption, even fewer structures are required to stay under the limit.

Buy-sell agreements can also be integrated into broader estate plans. When these agreements are coupled with gifting strategies and trusts, they support predictable business transitions and reduce the risk of forced sales at inopportune times.

Interaction With Annual Gift Exclusions and Generation-Skipping Transfers

Even with the $15 million exemption, the annual exclusion remains a valuable planning tool. For 2025, individuals can gift up to $19,000 per person each year without touching their lifetime exemption. Married couples can combine this for $38,000 per recipient.

This opens the door to large-scale gifting to children, grandchildren and even unrelated parties. These gifts can be used for tuition, housing, or other needs, either outright or through trust vehicles that maintain control.

The generation-skipping transfer (GST) exemption is also set at $15 million, aligning it with the basic exemption. This is especially valuable for those interested in skipping a generation to reduce estate shrinkage over time. Irrevocable trusts that include grandchildren as beneficiaries are often structured with GST exemption allocations to avoid the additional 40% tax.

It’s important to document gifts properly and file Form 709 where required. Gifts into Crummey trusts or 529 education plans often involve nuances that require professional oversight to maintain compliance and achieve intended tax results.

Risk Factors and Tax Planning Considerations Going Forward

While this exemption is permanent in the legal sense, the tax code is always subject to change depending on future administrations and Congressional priorities. It would take new legislation to undo this provision, but history has shown that tax policy can shift faster than expected (often as power shifts from one political party to another).

That makes it wise to continue planning with intention and flexibility. The IRS could increase audit scrutiny for high-value gifts and complex trust structures. Asset valuations, especially for privately held businesses, are likely to be a point of focus if this happens. Working with qualified appraisers and preparing full valuation reports will help withstand review.

State-level estate taxes also remain a factor. Many states have their own exemption thresholds, which are often far below the federal limit. Families in states like Massachusetts, Oregon and New York need dual-layer planning to ensure that state taxes don’t erode what federal law protects.

Market timing plays a role too. Transferring assets during a market dip may allow more wealth to be moved under the exemption while capturing appreciation outside the estate.

Estate and Gift Exemption Planning and Your Financial Future

The new permanent estate and gift exemption is a powerful planning tool. With $15 million available per individual and portability for couples, the door is wide open for proactive wealth transfer strategies.

Whether you’re managing a family-owned business, structuring a legacy plan or simply optimizing your estate to avoid unnecessary tax, this is the time to revisit your planning. Our team can help you understand how to use the exemption effectively and create a plan that aligns with your values and goals.

Contact a James Moore professional to learn how this exemption affects your estate, your business, and your future legacy.

All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a James Moore professional. James Moore will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.