Understanding the One Big Beautiful Bill Act’s Estate Planning Impact
Major legislative changes can leave many families feeling uncertain—especially when they touch sensitive areas like estate planning. The One Big Beautiful Bill Act (OBBBA), signed into law in July, brings sweeping updates that may seem overwhelming at first glance. The good news? With a clear understanding of these changes, you can position your long-term plans to take advantage of new opportunities and prepare for potential challenges ahead.
Estate and Gift Tax Exemption Increase
Beginning January 1, 2026, individuals can pass on up to $15 million—and couples up to $30 million—free of federal estate tax, with future inflation adjustments. This increase eliminates previous uncertainty around phased reductions and opens doors for strategic gifting and wealth transfer.
Medicaid Reform and Long-Term Care Planning
The OBBBA introduces $1 trillion in federal Medicaid cuts, stricter eligibility reviews, and new work or volunteer requirements. These changes could make qualifying for long-term care support more challenging. Now is an ideal time to consider private long‑term care insurance and asset‑protection strategies to safeguard future care needs.
Fewer Estates Owing Federal Tax
With the new exemption levels, only about 0.25% of estates will owe federal estate tax. However, state‑level estate or inheritance taxes may still apply—so it’s important to review your state’s rules to avoid surprises.
Social Security Tax Changes
Through 2028, eligible seniors may claim a temporary deduction of up to $6,000—or $12,000 for couples over age 65—depending on income. This could allow more retirees to avoid taxes on their Social Security benefits. Keep in mind that this provision expires in 2028 unless renewed by Congress.
Medicare Budget Impact
The OBBBA postpones key Medicare cost‑sharing assistance rules until 2034 and potentially triggers nearly $490 billion in cuts under PAYGO rules. Seniors could see higher out‑of‑pocket expenses and reduced provider participation if these cuts take effect.
No Other Structural Estate Tax Changes
Aside from the increased exemption, the architecture of estate, gift, and generation‑skipping transfer taxes remains unchanged. Core updates from the 2017 Tax Cuts and Jobs Act remain locked in.
The OBBBA certainly adds complexity, but it also creates a meaningful opportunity for thoughtful, strategic planning. Now is a great time to revisit your estate documents, long‑term care strategies, and tax planning approaches. A trusted advisor can help you understand what these changes mean for your family and tailor a plan that fits your goals.