Navigating the One Big Beautiful Bill Act: Estate Planning Guide

Whenever sweeping legislative changes occur, particularly in sensitive areas like estate planning, confusion and concern often follow. The One Big Beautiful Bill Act (OBBBA), signed into law in July, introduces significant amendments. Understanding these changes now can lead to stronger long-term planning, offering the chance to adapt strategies to benefit from new provisions and prepare for emerging challenges.

Estate and Gift Tax Exemption Increase

Starting January 1, 2026, individuals can pass on $15 million (or $30 million for couples) without facing federal estate tax, with adjustments for inflation each year. This increase ends prior uncertainty around phased reductions.

Medicaid Reform and Long-Term Care Planning

The OBBBA includes $1 trillion in federal Medicaid cuts, along with new work or volunteer requirements and stricter eligibility checks. These changes could make qualifying for long-term care support more challenging, so consider private insurance and asset protection strategies.

Fewer Estates Owing Federal Tax

Only about 0.25% of estates will now owe federal estate tax. However, state-level taxes may still apply, so it's important to stay informed about local obligations. Currently, Florida does not have an estate tax.

Social Security Tax Changes

There's a temporary new deduction of up to $6,000 ($12,000 for couples over 65) for those under specific income thresholds. This change could increase the number of seniors whose Social Security benefits remain untaxed, but this provision will expire in 2028 unless renewed.

Medicare Budget Impact

Key Medicare cost-sharing assistance rules are delayed until 2034, with potential $490 billion in cuts. Be aware of possible higher out-of-pocket costs and provider reductions if PAYGO rules activate these cuts.

No Other Structural Estate Tax Changes

Apart from the higher exemption, the structure of estate, gift, and GST taxes remains unchanged. The locked-in provisions from the 2017 Tax Cuts and Jobs Act continue to apply.

While the OBBBA introduces complexity, it also creates opportunities for proactive, strategic estate planning. Review your estate documents, long-term care plans, and tax strategies in light of these changes. Reach out to a trusted advisor to get personalized guidance tailored to your unique family and financial situation.