The One Big Beautiful Bill Act (OBBBA): What It Means for Estate Planning in 2026 and Beyond
After months of negotiation and speculation, Congress has passed the One Big Beautiful Bill Act (OBBBA), a sweeping tax reform bill that significantly reshapes estate planning, trust taxation, and alternative minimum tax (AMT) policy. Building on the framework of the 2017 Tax Cuts and Jobs Act (TCJA), the OBBBA introduces permanent changes with far-reaching implications for high-net-worth individuals, families, and estate planners.
There are certainly a lot of provisions in this “big” bill so I’ve created a breakdown of which specific parts are most likely to affect your estate plan:
Expanded and “Permanent” Estate, Gift, and GST Tax Exemptions
Perhaps the most consequential change in the OBBBA is the permanent increase to the estate, gift, and generation-skipping transfer (GST) tax exemptions. Under the 2018 Tax Cuts and Jobs Act (TCJA), the exemption was set at $13.99 million for individuals and 27.98 million for married couples; now, beginning January 1, 2026, the exemption increases to $15 million for individuals and $30 million for married couples, indexed annually for inflation. Contrary to what some believe the exemption is not permanent, however, there is no set expiration for these amounts at this time. Thus, even if your net worth isn’t over $15 million, you should always consider implementing tax planning strategies within a trust because congress could reduce the exemption at any time.
SALT Deduction Expansion and Trust “Stacking” Strategy
In a move aimed at alleviating the tax burden in high-tax states, the OBBBA increases the State and Local Tax (SALT) deduction cap from $10,000 to $40,000 starting in 2026. The cap phases out for taxpayers with adjusted gross income (AGI) above $500,000 and is fully eliminated at $600,000.
While this provision sunsets in 2030, it opens the door to advanced planning opportunities. One strategy is trust “stacking,” or using multiple non-grantor trusts to claim multiple $40,000 SALT deductions. Each trust is treated as a separate taxpayer and may be able to pay and deduct its own state and local taxes, potentially offering significant federal income tax savings. However, the IRS closely scrutinizes aggressive implementations of this tactic, so careful structuring is essential.
Charitable Giving and Private Foundations
The OBBBA leaves much of the charitable giving landscape intact, but introduces a few notable changes. The 60% AGI limit for cash contributions to qualified public charities is now permanent. Additionally, a new 0.5% AGI floor means only contributions exceeding that threshold are deductible, encouraging “bunching” strategies to maximize tax benefit in a given year.
New “Trump Accounts” for Minors
The bill introduces government-seeded investment accounts for U.S. citizens under 18 with Social Security numbers. Eligible children born between 2025 and 2028 will receive a $1,000 government contribution, with up to $5,000 per year in additional contributions allowed (plus a $2,500 employer contribution exemption from gross income). These funds grow tax-deferred and are unavailable for withdrawal until the child turns 18. The initial $1,000 grant is certainly advantageous, but unless you have already maxed out your child’s 529 savings plan, that remains a better place to park additional funds dogeared for future educational expenses, as they come with more flexibility and better tax advantages for parental contributions.
The Alternative Minimum Tax: Relief for Many, But Not All
The Alternative Minimum Tax (AMT), a parallel tax system aimed at ensuring higher-income taxpayers pay a minimum amount, was substantially curtailed by the TCJA. The OBBBA makes permanent many of those AMT reforms, preserving higher exemption amounts ($88,100 for single filers and $137,000 for joint filers) and reducing the number of individuals affected.
However, the phaseout thresholds for AMT are set to revert to 2018 levels: $500,000 for singles and $1 million for joint filers. That means fewer people will pay AMT, but some higher earners may still be caught in its net, especially those in high-tax states or with complicated income profiles. Importantly, these AMT changes do not affect trusts and estates, which continue to be subject to more stringent AMT thresholds.
Beyond the Big Bill
Estate planning is crucial for protecting your family’s future, regardless of legislative changes. While tax laws may shift, your personal goals and family needs remain constant. Estate planning ensures your assets are distributed according to your wishes—not left to the default rules of probate courts. It allows you to name guardians for minor children, appoint someone to manage your affairs if you become incapacitated, and provide clear instructions for your care and financial matters. Even if your estate is well below the taxable threshold, having a plan in place helps prevent family disputes, costly delays, and unintended outcomes.
Beyond taxes, estate planning is about protecting the people you care about and preserving your legacy. Ultimately, estate planning is not about how much you have, but what you want to happen with what you have. A changing tax landscape may require updates, but it should never be a reason to delay or dismiss planning altogether. The true purpose of estate planning is to provide clarity, control, and peace of mind for you and your loved ones.
Key Takeaways
When new laws take effect, it is always a good reminder to review any existing documents to make sure they are still working for you and your family. Don’t forget that almost any legal provisions regarding taxes and estate plans can be changed over time through additional legislation by current or future administrations. Additionally, these changes are only regarding federal laws – it is still important to stay informed about Ohio’s state-specific laws regarding trusts, estates, and tax-advantaged planning. And, as always, your best bet for maintaining a strong plan that will provide stability and security for your loved ones is to consult regularly with a team of qualified professionals including your estate planning attorney, financial planner, and CPA.
