Federal Estate Tax Exemption Made Permanent, Increased to $15 Million by New Legislation

For the past several years, estate planning for high-net-worth individuals and families has been shaped by a significant provision in the federal tax code that was set to expire. The scheduled expiration, often called a “sunset provision,” created a degree of uncertainty for long-term financial strategies, as the federal estate tax exemption was slated to be reduced significantly at the end of 2025.

At The De Bruin Law Firm, our work requires careful monitoring of legislative developments that impact our clients’ estate plans. A new piece of legislation, the One Big Beautiful Bill Act (OBBBA), was signed into law on July 4, 2025. This act makes notable alterations to the rules governing the federal estate tax, providing a new framework for generational wealth transfer in the United States.

What Was the “Sunset Provision”?

To understand the impact of the new law, it is necessary to review the legislation it amends. The Tax Cuts and Jobs Act (TCJA) of 2017 temporarily doubled the federal estate tax exemption, which is the amount of assets a person can transfer without incurring federal estate tax.

With annual adjustments for inflation, this exemption amount reached $13.99 million per individual (or $27.98 million for married couples) in 2025. The temporary nature of this increase was due to a “sunset provision” in the TCJA, which scheduled the higher exemption to expire after December 31, 2025.

Had this sunset occurred, the exemption would have reverted to its pre-TCJA level, estimated to be approximately $7 million per person in 2026 after factoring in inflation. This potential reduction in the exemption amount was a key consideration in many estate planning decisions that were made in recent years.

The “One Big Beautiful Bill Act” (OBBBA): Key Provisions and Changes

The OBBBA, enacted in July 2025, addresses the sunset provision directly. The legislation also increases the exemption amount beyond the levels set by the TCJA.

The key changes to the federal estate and gift tax exemption under the OBBBA include:

• Permanence: The bill eliminates the sunset clause from the TCJA, making the higher exemption a permanent feature of the tax code, subject to any future legislative changes.
• An Increased Exemption Amount: Beginning in 2026, the federal estate and gift tax exemption is set at $15 million per individual. This allows a married couple to transfer a combined total of $30 million.
• Annual Inflation Adjustments: The new $15 million base amount will be adjusted for inflation annually, starting in 2026.

This legislation alters the future of the exemption, which was projected to be around $7 million, and instead establishes it at a permanent level of $15 million.

What Do These Changes Mean for Estate Planning in Greenville, SC?

The establishment of a permanent, higher federal exemption has several notable implications for individuals and families engaged in estate planning.

• More Stability for Long-Term Planning: A primary effect of the new law is the removal of the uncertainty caused by the sunset provision. This allows for the development of long-term estate plans with a clearer understanding of the applicable tax rules.
• Increased Capacity for Tax-Free Transfers: With a $15 million per-person exemption, individuals can bequeath more assets without triggering federal estate, gift, or generation-skipping transfer (GST) taxes, which remain the same under the new law.
• Continued Use of Portability: For married couples, the “portability” provision remains an important planning tool. Portability allows a surviving spouse to utilize the unused portion of their deceased spouse’s exemption, effectively allowing the couple to pass on up to $30 million, plus inflation adjustments, free from federal estate tax.

Is Estate Planning Still Necessary in Greenville, SC?

While the federal exemption amount is now higher, this change does not diminish the need for a well-structured estate plan. The federal estate tax is only one component of a comprehensive plan.

Consider the following points:

• State-Level Estate and Inheritance Taxes: While South Carolina does not currently impose its own estate or inheritance tax, a number of other states do. These state-level taxes often have much lower exemption amounts than the federal government. For individuals who own property in other states, this remains a key planning consideration.
• Non-Tax Objectives of Planning: The core purpose of estate planning extends beyond tax mitigation. A comprehensive plan ensures your assets are distributed according to your specific wishes, provides protection for your beneficiaries, designates guardians for minor children, and prepares for the possibility of future incapacity. These goals are unrelated to the federal exemption amount.
• Potential for Future Legislative Changes: The term “permanent” in tax law means the provision does not have a scheduled expiration date. However, any future Congress has the authority to pass new laws that could alter the exemption again. Regular reviews of your estate plan remain a prudent measure.

The new law provides a different framework for wealth preservation and transfer. For those whose plans were created based on the previous rules, it may be time for a review to align strategies with the current legal landscape.

A Changed Legal Landscape

The legal and financial environments are subject to future changes. At The De Bruin Law Firm, we work to provide our clients with estate planning strategies that reflect the most current laws.

The legislative changes brought about by the OBBBA may impact your family’s financial and legacy goals. If you have questions about how the new $15 million federal estate tax exemption affects your planning, call us at (864) 982-5930 or contact us online to schedule a consultation to review your estate plan.