5 Ways the "One Big Beautiful Bill Act" Could Impact Your Estate Plan and Taxes

08.11.25

The "One Big Beautiful Bill Act," formally titled the "Opportunity, Balance, and Better Budget Act" (the “Act”), was signed into law on July 4, 2025, after narrowly passing through Congress. The Act includes a number of broad provisions that impact both government spending and tax policy — including changes that may affect estate plans and gifting strategies for high-net-worth individuals.

Below are five key ways your estate plan and taxes may be impacted:

1. Estate, Gift and Generation Skipping Transfer (GST) Exemptions

In 2025, the federal estate, gift and GST tax exemptions are $13.99 million per individual and $27.98 million per married couple. These were scheduled to drop to approximately $7 million and $14 million, respectively, on January 1, 2026.

Under the Act, the exemptions will instead increase to $15 million per individual and $30 million per married couple starting January 1, 2026, with inflation adjustments beginning in 2027. The top federal rate remains at 40% on amounts exceeding the exemptions.

Importantly, the Act does not impact state-level estate tax laws. For example, in Illinois, if an estate’s gross value exceeds $4 million after inclusion of adjusted taxable gifts, an Illinois estate tax return must be filed, regardless of whether a federal estate tax return is required to be filed.

High-net-worth individuals have long used trusts and gifting strategies to leverage exemptions and preserve family wealth. Prior to the Act, many felt pressured to make large gifts before the expected reduction in exemptions at year-end. While that urgency has eased, future changes in Congress or administration could alter the law again. Individuals should consider whether to take advantage of current planning strategies while they remain available.

2. Charitable Deductions

Starting in 2026:

• Taxpayers who do not itemize their deductions can deduct up to $1,000 (single) and $2,000 (married filing jointly) in charitable contributions to eligible charities.
• For itemizers, the Act imposes a 0.5 percent floor for individuals. Specifically, an individual who itemizes can deduct charitable gifts that exceed 0.5% of the taxpayer's contribution base for a tax year (adjusted gross income (AGI) without regard to any NOL carryback).
• Corporations are subject to a 1% floor.

Taxpayers potentially affected by this new threshold may wish to consider making contributions in 2025 that they otherwise were planning to make in 2026.

3. 529 Plans

Generally, a 529 plan operated by a state or educational institution provides tax advantages to make it easier to save for college and other post-secondary training, or for tuition for K-12 education. As long as the money remains in the account, no income tax will be due on earnings. When you take money out to pay for “qualified education expenses,” those withdrawals may be free of federal income taxes, and, in many cases, free of state tax, too.

Prior to the Act, qualified K-12 tuition withdrawals were capped at $10,000 per year. Starting January 1, 2026, the Act doubles this limit to $20,000 annually. It also expands the definition of qualified expenses to include books, materials, fees and other education-related costs.

However, states must choose whether to conform to the federal changes. Individuals should consult with an advisor before making withdrawals to avoid unintended tax consequences.

4. Trump Accounts

The Act introduces a new savings vehicle: the “Trump Account” — a federal IRA-style account for eligible children.

• Children born between 2025 and 2028 will receive a one-time $1,000 federal contribution.
• After January 1, 2026, parents of children born before 2025 can still open accounts (but without the federal funding).
• Annual contributions are permitted, subject to limitations.
• At age 18, account holders can withdraw funds for a limited set of “qualified purposes.”
• At age 30, withdrawals are permitted for any reason.

Withdrawals for qualified purposes will be taxed as long-term capital gains. Non-qualified withdrawals are taxed as ordinary income.

There are significant differences between a 529 plan and a Trump account. The type of account that is more advantageous will depend on your circumstances.

5. SALT Deductions

The State and Local Tax (SALT) deduction allows itemizing taxpayers to deduct certain state and local income or sales taxes (but not both) and property taxes on non-business real estate.

The SALT deduction has been capped at $10,000 since 2018. Under the Act, the cap will temporarily increase to $40,000, but introduces a phaseout:

• The cap is reduced by 30% of the modified adjusted gross income (MAGI) over $500,000.
• When MAGI reaches $600,000, the cap reverts back to $10,000.
• Both the $40,000 cap and the $500,000 income threshold increase 1% each year from 2026 through 2029.
• In 2030, the cap will revert to $10,000 unless extended by future legislation.

This change may primarily benefit high-income taxpayers in high-tax states. For many, the large standard deduction outweighs itemized deductions for households with more modest income.

Evaluate Your Estate Plan and Tax Liability

The Act introduces several significant changes that may affect both your estate plan and your overall tax liability. Our team is here to assist with reviewing your plan, evaluating gifting opportunities, and ensuring your long-term strategy aligns with current law.

We also recommend consulting with your wealth advisor and tax professional to ensure a coordinated approach.