How did the One Big Beautiful Bill Act change estate, gift, and generation-skipping transfer tax rules for 2026 and beyond?
Executive summary
The One Big Beautiful Bill Act (OBBBA) permanently raises and indexes the federal estate, gift, and generation‑skipping transfer (GST) tax exemptions to $15 million per individual (effectively $30 million for married couples) beginning January 1, 2026, and continues annual inflation adjustments thereafter [1] [2] [3]. The top tax rates and core mechanics — including the 40% top transfer tax rate and the annual gift tax exclusion amount — remain unchanged under the Act [1] [4] [5].
1. What the law changed: permanent $15 million exemption and indexing
The single most consequential modification is that for gifts made or deaths occurring on or after January 1, 2026, the unified estate, gift, and GST exemption is set at $15,000,000 per person and will be adjusted for inflation in subsequent years, with the increase characterized as “permanent” because the statute contains no scheduled sunset returning the exemption to prior lower levels [6] [2] [3].
2. What did not change: rates, basis step-up, and annual exclusion
OBBBA leaves the statutory 40% top estate/gift/GST tax rate intact and preserves the long‑standing income tax basis step‑up rules for assets included in a decedent’s estate, while the annual per‑recipient gift tax exclusion remains at $19,000 for 2026 (or $38,000 for a married couple splitting gifts) — all aspects noted as continuing under the new law [1] [5] [7].
3. Immediate arithmetic: married couples, portability and inflation indexing
Practically, married couples can shelter up to $30 million from federal transfer taxes through portability or spousal planning, and the indexed increase means the $15 million floor will climb with inflation beginning after 2026 — a feature repeatedly emphasized by legal advisers as creating long‑term planning certainty [4] [8] [9].
4. How planning behavior and deadlines shifted
Because OBBBA removes the need to rush gifting before a scheduled TCJA sunset, estate planners and clients who had been accelerating gifts to use temporary higher exemptions can pause or recalibrate strategies; many advisory firms framed the Act as alleviating a prior “rush” to complete gifts before 2026 [10] [11] [12]. That said, commentators note opportunities still exist for taxpayers well above the exemption or those in high‑state‑tax jurisdictions where state exemptions differ [9] [7].
5. Winners, losers, and the political angle
Supporters cast permanence and higher exemptions as stabilizing multigenerational planning and protecting family businesses from forced sales to pay estate taxes; critics argue that locking in elevated exemptions disproportionately benefits very large estates and reduces federal revenue — an implicit policy tradeoff underscored in industry and law‑firm analyses [8] [6]. The Act’s framing and name, and the decision to make the increase permanent without a sunset, reflect an explicit legislative agenda to sustain TCJA‑era benefits unless future Congresses act to change them [1] [3].
6. What remains uncertain or outside available reporting
Sources consistently document the federal changes and their indexed nature, but public reporting here does not provide granular revenue estimates, projected distributional impacts, or detailed state‑by‑state interactions beyond noting that states may retain different rules — those analyses are not included in the cited materials and therefore cannot be asserted from these sources [9] [7].