Changes to the Federal Estate and Gift Tax Laws
The One Big Beautiful Bill Act, enacted on July 4, 2025, makes some notable reforms the federal estate tax system.
Permanent Exemption Increases
The new law raises the estate, gift, and generation-skipping transfer (GST) tax exemptions to $15,000,000 per individual, indexed for inflation, and makes this increase permanent, removing the uncertainty of the previously scheduled rollback.
Cost Basis Rules Remain Intact
The law preserves the cost basis adjustment at death, allowing heirs to inherit assets with a cost basis adjusted, or “stepped-up” to their current fair market value, while assets gifted during lifetime continue to carry over the donor’s original cost basis to the gift recipient.
The annual gift tax exclusion amount remains unchanged at $19,000 per person and continues to be adjusted annually for inflation.
What Stays the Same
No New Reporting
The law imposes no new reporting or disclosure requirements beyond those currently existing.
No Changes to Portability or GST Tax Calculations
The rules regarding the portability of a deceased spouse’s unused estate tax exclusion amount have not changed, nor has the new law modified the calculation and application of the GST tax exemption.
Trust Planning Vehicles Unaffected
No new taxes or restrictions are imposed on trusts and common trust planning vehicles such as:
- Grantor Trusts
- Spousal Lifetime Access Trusts (“SLATs”),
- Grantor Retained Annuity Trusts (“GRATs”)
Need Estate Planning Guidance?
For questions regarding this change or other estate tax matters, please contact a member of our Estate Planning team listed below.