The One Big Beautiful Bill Act’s Impact on Tax and Estate Planning
On July 4, 2025, President Donald J. Trump signed the One Big Beautiful Bill Act (the OBBBA) into law. The passage of the OBBBA laid to rest the question of what policies would replace the 2017 Tax Cuts and Jobs Act.
The Tax Cuts and Jobs Act
The Tax Cuts and Jobs Act (TCJA) was signed in 2018, and among its changes to US tax policy included changes to the individual income tax brackets, an increase to the standard deduction, and an increase to the federal estate tax, gift tax, and generation skipping-transfer tax exemptions. Many of the changes implemented by the TCJA were set to expire on December 31, 2025, including the standard deduction and estate tax exemption. For example, the estate tax exemption for individuals would have reverted from $13.99 million for 2025 to $5 million in 2026. Instead, the passage of the OBBBA results in an increase of the estate tax exemption.
The One Big Beautiful Bill Act
The OBBBA made various changes to US tax policy which should be considered when completing your tax and estate planning, including changes to individual income tax rates, the standard deduction, and the estate tax exemption. These changes are discussed below.
Individual Income Tax Rates
The OBBBA permanently extends the reduced income tax rates of the TCJA, as shown in the following table.
| Tax Bracket | Before TCJA | After TCJA | After OBBBA |
|---|---|---|---|
| $0–$11,600 | 10% | 10% | 10% |
| $11,601–$47,150 | 15% | 12% | 12% |
| $47,151–$100,525 | 25% | 22% | 22% |
| $100,526–$191,950 | 28% | 24% | 24% |
| $191,951–$243,725 | 33% | 32% | 32% |
| $243,726–$609,350 | 35% | 35% | 35% |
| $609,351+ | 39.6% | 37% | 37% |
Standard Deduction
Under the TCJA, the 2025 standard deduction is set at $15,000 for single filers, $30,000 for joint filers, and $22,500 for heads of household. For tax years after 2025, the OBBBA increased the standard deduction to $15,750 for single filers, $31,500 for joint filers, and $23,625 for heads of household. These amounts are indexed for inflation using 2024 as the base year.
| Filing Status | 2025 Standard Deduction | Updated Standard Deduction |
|---|---|---|
| Single Filers | $15,000 | $15,750 |
| Joint Filers | $30,000 | $31,500 |
| Head of Household | $22,500 | $23,625 |
Estate Tax Exemption
The OBBA increases the estate and lifetime gift tax exemption from $13.99 million in 2025 to $15 million in 2026. For years after 2026, the exemption will be adjusted for inflation. The OBBA does not include any automatic sunset or expiration date for this increase in the exemption amount.
What this means for you
If you are an unmarried individual with a total net worth between $7 and $15 million, or if you are married with a combined net worth exceeds $14 million but is less than $30 million, then your estate will likely not owe federal estate tax after your death, depending on the lifetime gifts you have made or are planning to make. If your planning had already used the whole $13.99 million of your lifetime exclusion amount, then the 2026 increase gives you a not insignificant amount of additional exclusion to leverage in your planning.
While these updates to the tax policy are significant, the One Big Beautiful Bill Act included many more changes to the tax policy, which may need to be considered for tax and estate planning on case-by-case basis.
If you have questions or concerns about how the passage of the One Big Beautiful Bill Act impacts your tax and estate planning, reach out to your accountant, financial advisor, or the experienced estate planning attorneys at Solomon Dwiggins Freer & Steadman.