David Pyke here with a brief update on what is now known as the One Big Beautiful Act. You probably realize that this comprehensive tax package passed the Senate and the House and was signed into law by President Trump on July 4th.
The most important aspect for me is how it impacts the estate tax planning area. You should know that the Act amended Internal Revenue Code Section 2010(c)(3), which deals with the estate tax exemption.
What it did was set the exemption amount—beginning in 2026—at $15 million per person (or $30 million for a couple), indexed for inflation. This essentially continues the current law. Right now, the exemption is $13.9 million and would have increased slightly due to inflation anyway. So this change adds a modest increase beyond normal indexing, then continues to index annually.
No other component of the estate tax law was changed.
Those components that are most important usually are:
- Portability – the ability for one spouse to save the exemption of the first-to-die spouse without special bypass trust, so that couples with less than $30 million do not have to do special estate tax planning
- Step-up in basis – the step-up in basis laws were retained. That’s the law that says that if you own an asset that’s appreciated in value, the value resets for tax purposes on your death, so that sets the new basis allowing your heirs often to sell highly appreciated property with no capital gain.
So, in summary, the law is slightly changed to increase the exemption amount and then continuing to increase it beginning at $15 million per person in 2026, and the rest of the estate tax law provisions were unchanged.
Good news on the estate tax front, from the One Big Beautiful Act.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, specific tax, legal or accounting advice. We can only give specific advice upon consulting directly with you and reviewing your exact situation.
