What Changed Under the OBBA

The OBBA, enacted in 2025, amended federal tax law to raise the basic exclusion amount to $15 million beginning in 2026.

Key features include:

• $15M estate/gift/GST exemption per person starting January 1, 2026
• $30M combined protection for married couples through portability
• Inflation indexing beginning after 2026
• No scheduled sunset (unlike prior law)

Before the change, the exemption was $13.99 million in 2025 and was expected to drop significantly in 2026 under prior law. The OBBA eliminated that reduction and set a higher permanent baseline.

What “Portability” Means

Portability allows a surviving spouse to use the unused estate-tax exemption of a deceased spouse.

With the OBBA:

• Each spouse has a $15M exemption
• If the first spouse does not use their exemption, it can transfer to the survivor
• Together, a married couple can shelter up to $30M from federal estate and gift tax exposure

This dramatically expands the planning ceiling for married families.

Why This Matters for Estate Planning

1. Fewer Estates Subject to Federal Estate Tax

The higher thresholds mean federal estate taxes now apply primarily to the highest-net-worth households.

2. Reduced “Use-It-or-Lose-It” Pressure

Previously, families rushed to gift assets before a projected 2026 exemption drop. The OBBA removed that urgency by stabilizing and raising the exemption.

3. More Flexible Lifetime Gifting

Individuals can:

• Make larger tax-free gifts
• Fund trusts with greater principal
• Transfer business or real estate interests with reduced tax exposure

4. Continued Relevance of Planning

Despite the higher limits:

• The federal estate tax rate above the exemption remains 40%
• State estate taxes still apply in many jurisdictions at much lower thresholds
• Business owners and real-estate investors may still face exposure

Practical Implications for Individuals vs. Couples

Individuals

• Can transfer up to $15M during life or at death tax-free
• Gain new capacity if prior gifting consumed earlier exemptions
• May shift planning toward income-tax and capital-gains strategies rather than estate tax avoidance

Married Couples

• Portability creates $30M in combined protection
• Surviving spouses must still file an estate tax return to elect portability
• Trust structures may evolve, with less reliance on traditional “bypass” or “credit shelter” trusts in some estates

Planning Opportunities in 2026 and Beyond

The new exemption opens strategic options:

• Reassess existing trusts: Some may be over-engineered for tax avoidance
• Revisit gifting strategies: Focus may shift to asset protection and generational wealth goals
• Consider basis planning: Holding assets until death may now carry greater tax efficiency
• Review state tax exposure: Federal relief does not eliminate state estate tax risk

For high-net-worth families, planning becomes less about racing a sunset and more about long-term wealth architecture.

The Bigger Picture

The OBBA fundamentally changes the transfer-tax landscape by making the higher exemption permanent and indexed for inflation, providing long-term certainty absent future legislative changes.

Portability remains intact, and combined with the increased exemption, it establishes one of the most generous estate-transfer environments in modern U.S. tax history.

Bottom Line

Beginning in 2026:

• $15M exemption per individual
• $30M per married couple with portability
• Indexed for inflation and no automatic sunset

This is not just a technical adjustment—it’s a structural shift in how wealth transfers will be planned.

For many families, estate tax planning becomes less urgent. For high-net-worth individuals, it becomes more strategic—focused on control, legacy, asset protection, and multigenerational planning rather than simply minimizing federal transfer tax.