For the past several years, a quiet anxiety has followed estate planning conversations in offices like ours. The Tax Cuts and Jobs Act of 2017 had doubled the federal estate and gift tax basic exclusion amount — but with a catch. Under the TCJA's own terms, that doubled exclusion was scheduled to sunset at the end of 2025, dropping back to roughly $7 million per individual. Families with meaningful assets spent years wondering whether trusts they'd funded, gifts they'd made, and plans they'd built would hold up.
That uncertainty is now resolved. The One Big Beautiful Bill — signed into law in 2025 — not only extended the elevated exclusion but raised it further, to $15 million per individual, indexed going forward for inflation. For married couples using portability, that means a combined exclusion of $30 million. And unlike the TCJA provision, these changes are permanent unless Congress acts again. There is no scheduled sunset.
What the Exclusion Actually Covers
The federal basic exclusion amount is the threshold below which no federal estate or gift tax applies. It governs three related taxes: the estate tax (on assets transferred at death), the gift tax (on transfers made during life), and the generation-skipping transfer tax (on transfers that skip a generation). All three share a unified exemption, and the $15 million figure applies to each.
What this means practically: an individual can transfer up to $15 million — through lifetime gifts, at death, or some combination — without incurring any federal estate or gift tax. A married couple, with proper planning to preserve both spouses' exclusions, can transfer up to $30 million free of federal tax.
Note on Pennsylvania: Pennsylvania has its own inheritance tax — a flat percentage applied to transfers to most beneficiaries, regardless of the federal exclusion. The One Big Beautiful Bill has no effect on Pennsylvania inheritance tax. Transfers to a surviving spouse remain exempt; transfers to children and other "lineal descendants" are taxed at 4.5%; transfers to siblings at 12%; and transfers to others at 15%. Planning for both layers remains important for Pennsylvania families.
Who Actually Benefits From This Change
The $15 million exclusion is most directly relevant for high-net-worth individuals and families — those with estates likely to exceed $7 million or $10 million. For the majority of our clients, the federal estate tax has not been the primary concern even at the TCJA levels. What changes for many families is the confidence to plan without one eye on a political calendar.
That said, the new exclusion affects several planning conversations across the wealth spectrum:
Irrevocable trusts funded during the TCJA window
Many families moved aggressively to fund irrevocable trusts — Spousal Lifetime Access Trusts (SLATs), Grantor Retained Annuity Trusts (GRATs), and similar vehicles — before the anticipated 2025 sunset. Those transfers are not reversed by the new law, and the IRS has confirmed that gifts made under the higher exclusion will not be "clawed back" even if future law were to reduce the exclusion again. Families who made those moves are in a strong position; those who hesitated now have more runway.
The portability calculation
Portability allows a surviving spouse to use the deceased spouse's unused exclusion — but only if a timely estate tax return is filed at the first death, even when no tax is due. With the exclusion now at $15 million per person, some families had assumed portability was unnecessary. We'd encourage a different approach: filing to preserve portability costs relatively little and protects against future changes in the law or unexpected growth in estate values.
Generation-skipping planning
The GST exemption rising to $15 million per individual opens the door for more families to consider dynasty trust structures — long-term trusts designed to pass wealth across multiple generations without incurring estate tax at each generational level. Pennsylvania has some specific considerations here, but for clients with the right profile, this is worth discussing.
What This Doesn't Change
The new exclusion resolves one major uncertainty but leaves others in place. A few things to keep in mind:
- The annual gift tax exclusion is separate. The $19,000 per-recipient annual exclusion (for 2025, indexed for inflation) is unrelated to the basic exclusion. Families can continue making annual exclusion gifts without touching the $15 million lifetime amount.
- State-level taxes remain. As noted above, Pennsylvania's inheritance tax is unaffected. For clients with property in states that have their own estate taxes — New York, New Jersey, Maryland, and others — state-level planning remains essential.
- Income tax basis considerations are unchanged. Assets held at death receive a step-up in income tax basis; lifetime gifts do not. With the estate tax less of a concern for more families, the calculus around whether to gift assets during life or hold them for a stepped-up basis at death deserves more attention, not less.
- The law can always change again. Permanent doesn't mean forever. Congress can and does revisit these provisions. Building flexibility into estate plans — through revocable trusts, retained powers, and structures that can be adjusted — remains sound practice.
Planning Takeaways for Our Clients
If you have an existing estate plan, this is a good moment to review it. Plans drafted in anticipation of the TCJA sunset may have been structured more aggressively than necessary — or may now have room to accomplish goals that weren't achievable under the prior framework. If you've been putting off planning because of the uncertainty, that reason has largely been removed.
Specific action items worth considering:
- Review any irrevocable trust structure to confirm it still aligns with your goals under the current exclusion
- If a spouse has died in recent years and no estate tax return was filed, consult with us about late portability elections — the IRS has allowed them in some circumstances
- If you have a taxable estate above $15 million, the window for advanced planning techniques remains open and, importantly, more stable than it has been in years
- For clients with Pennsylvania real estate or significant tangible property, review whether the state inheritance tax picture warrants restructuring
Bottom line: The One Big Beautiful Bill removed a source of planning anxiety that has been present for nearly a decade. That's genuinely good news. It doesn't mean the planning work is done — it means the conversation can now be about your specific family and goals rather than a legislative countdown clock.
This article is for general informational purposes and does not constitute legal advice. Tax laws are complex and subject to change. Please consult with a qualified attorney regarding your specific situation.