Estate and Gift Tax Exemption Increased to $15 Million Under New Federal Law

The Big Beautiful Bill Solidifies a Permanent $15 Million Exemption for Estate & Gift Tax

Overview
On July 4, 2025, the “One Big Beautiful Bill Act” was signed into law. The legislation permanently increases the federal lifetime estate and gift tax exemption to $15 million per person (or $30 million per married couple), effective January 1, 2026, and subject to future inflation indexing. Unlike the prior sunset provision under the 2017 Tax Cuts and Jobs Act, the new law makes these higher exemption levels “permanent.”  Without the new legislation, the lifetime estate and gift tax exemption would have decreased to about $7.2 million per person (or $14.4 million per married couple) on January 1, 2026. 

The separate annual gift tax exclusion of $19,000 per recipient (for year 2025) remains in place and will continue to be adjusted for inflation. 

Implications for Estate Planning

• High‑net‑worth individuals with estates above $15 million should continue to implement tax-minimization strategies, though projected federal estate tax liability will be reduced.  This could include making annual gifts up to the annual gift tax exclusion to one or more recipients. 

• Clients with estates ranging from ~$7 million to $15 million can now be confident they’ll avoid federal estate tax entirely, assuming no prior gift usage.  Of course, the “permanent” nature of the exemptions are anything but.  While they will not automatically sunset, they can be changed by a further act of Congress.  Clients should continue to follow news regarding estate and gift tax laws.  Additionally, clients that own appreciating assets (such as equity in a successful business) will want to consider proactive planning in the event their assets may exceed the $15 million exemption one day. 

• Those who have used a substantial portion of their current exemption now benefit from the larger exemption to shelter future gifts.  In other words, if someone had previously used all of their lifetime estate and gift tax exemption by making lifetime gifts, they have just been given more exclusion to use. 

• Key planning tools remain vital—wills, revocable trusts, powers of attorney, health directives, and legacy plans—regardless of exemption size.

State-Level Considerations
These exemptions are applicable to estate and gift taxes on the federal level, not necessarily the state level.  Each state can impose its own independent estate and/or gift tax, and many have.  The good news for South Carolina residents is that the Palmetto State has declined to impose any state-level estate or gift tax. 

Conclusion
With this law, the federal estate and gift tax exemption is stable - and historically generous. However, congressional reversals always remain a possibility. It remains prudent for clients to have their estate plans reviewed periodically. Of course, estate planning is not just for individuals that have millions of dollars of assets. Every person in every economic category should have an estate plan in place. Bogdan Law Firm excels at planning for all individuals.