The uncertainty is over, and families with growing estates can finally plan with confidence again.
For years, estate planning professionals and their clients have been living with a ticking clock: the 2026 "tax cliff" that threatened to cut federal exemptions in half. Business owners delayed succession planning. Parents postponed legacy gifts. Families watched the calendar, uncertain whether to act or wait.
The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, just changed everything. The scheduled drop to roughly $7 million? Gone. The rush to complete aggressive gifting before year-end 2025? No longer necessary.
Here's what you need to know about the new rules, and why this is still important, possibly even more important, when external circumstances feel shaky. This is something you can control.
Unified Lifetime Exemption Increases to $15 Million in 2026
Beginning January 1, 2026, the basic exclusion amount for estate, gift, and generation-skipping transfer (GST) taxes increases to $15 million per person. This replaces the prior 2025 exemption of $13.99 million.
The exemption will also receive automatic inflation adjustments going forward, which means the protected amount should gradually rise over time.
Most importantly, the scheduled drop back to roughly $7 million under the old Tax Cuts and Jobs Act rules is eliminated. The higher exemption is described as “permanent,” although Congress can always change tax laws in the future.
Why Proactive Planning Still Matters
Let's be direct about something: The current laws often penalize responsible savers. If you've spent decades building wealth through hard work, disciplined investing, and smart business decisions, the default federal tax system treats your success as something to be heavily taxed at death.
The $15 million exemption is a significant improvement, but it doesn't change this fundamental reality: You've worked hard to build what you have. Without proper planning, a considerable portion could still be lost to taxes, probate costs, and family disputes.
The Big Beautiful Bill gives you certainty and time, two precious commodities in estate planning. But it doesn't eliminate the need to plan strategically.
Consistency Across All Transfers
The $15 million figure is unified, meaning it applies consistently across all federal transfer tax types:
- Lifetime Gifts
- Transfers at Death (Estate Tax)
- Generation-Skipping Transfers (GST)
Amounts that exceed the exemption remain subject to tax, with rates up to 40 percent. For families with closely held businesses, appreciating real estate, or long-term investment portfolios, this larger exemption may offer more room for strategic planning.
Annual Gift Tax Exclusion Remains the Same
The Act does not change the annual gift tax exclusion. These exclusions will continue to adjust under existing inflation rules.
- For 2025 and 2026, the Annual Gift Tax exclusion is $19,000 per gift recipient
- Married couples who elect gift-splitting can give $38,000 per gift recipient
This allows families to continue transferring smaller amounts each year without using any of their lifetime exemption.
North Carolina: No State Estate or Inheritance Tax
North Carolina still does not impose a state-level estate or inheritance tax. The Big Beautiful Bill updates are federal only.
However, clients who own property in other states should pay attention to local estate or inheritance tax laws in those jurisdictions, since those rules may vary widely.
What This Means for Your Planning
The enactment of the One Big Beautiful Bill Act (OBBBA) directly impacts the tax landscape for high-net-worth individuals and families. The stability of the higher exemption and the elimination of the scheduled 2026 reduction necessitate a prompt review of existing wealth transfer strategies.
These changes create specific planning implications for families and businesses that may involve:
- Reviewing Lifetime Gifting: Assessing strategies for transferring assets during life, now under the permanent $15 million federal exemption.
- Updating Trust Structures: Evaluating current documents (especially trusts drafted specifically to aggressively use the exemption before the expected 2026 "cliff") to ensure they still meet long-term objectives.
- Asset Positioning: Considering how to position appreciating assets for future generations in light of the new, higher exemption floor.
- Business Succession: Analyzing the new rules' effect on the ability to transfer ownership of a family business tax-efficiently.
Who Benefits Most from These Changes?
The Caregiver Generation (Ages 45-60)
You're managing aging parents' affairs while simultaneously planning for your own children's futures. The stable, higher exemption gives you breathing room to consolidate inherited assets, plan for potential Medicaid needs for your parents, and structure your own estate without rushing decisions during an already overwhelming time.
The Responsible Saver (Ages 60-75)
You've done everything right: maxed out retirement contributions, paid off the mortgage, built a diversified portfolio. Now your combined estate sits between $8-18 million. Under the old cliff scenario, half of that would have faced estate tax exposure in 2026. The new law protects your decades of disciplined saving.
Why Review Your Plan Now, Even With the Higher Exemption
"Permanent" in tax law means "until Congress changes it." While the Big Beautiful Bill eliminates the scheduled 2026 reduction, future administrations and congressional majorities could always revisit these rules.
More importantly, your life doesn't stop changing. Reviewing your estate plan now, while the rules are clear and stable, ensures you're protected regardless of what comes next:
Review is critical if:
- Your estate has grown significantly since your last plan update
- You created aggressive gifting strategies specifically to beat the 2026 cliff (these may no longer serve your goals)
- You have trust formulas tied to the exemption amount that may need adjustment
- Your children or grandchildren's circumstances have changed
- You've added business interests, real property, or investment accounts
- It's been more than 3 years since your last estate plan review
The best time to review your estate plan is when you have clarity, not during a crisis. If you have questions about how these changes affect your planning, our team is here to help. Give us a call at (919) 443-3035, or click here to schedule a free case assessment call.
Frequently Asked Questions
1. Does the Big Beautiful Bill eliminate the 2026 estate tax “cliff”?
Yes. The law removes the scheduled drop in the federal exemption. Starting in 2026, the exemption is set at $15 million per person with inflation adjustments going forward.
2. My estate is around $10 million. Do I still need an estate plan?
Absolutely. Even though you're now below the federal exemption, you still face potential issues without proper planning: probate costs and delays, lack of incapacity planning if you become unable to make decisions, potential family disputes, and inefficient asset transfers. Estate planning is about more than just taxes.
3. Do families still need to update older estate plans because of this change?
Many should. Plans drafted around the expected 2026 reduction may use formulas or tax strategies that no longer fit the new rules. A review can help ensure the plan still works as intended.
4. Does the new law change how lifetime gifts are taxed?
No. Lifetime gifts still count toward the same unified exemption. Gifts that exceed the exemption remain subject to tax, and the annual exclusion rules stay the same.
5. We aggressively gifted assets in 2024-2025 to beat the cliff. What now?
Don't panic. The IRS has confirmed that gifts made using the higher exemption amounts won't be "clawed back" when exemptions change. However, you should review whether those aggressive strategies still serve your goals now that the pressure has lifted.
6. Are step-up in basis rules affected?
No. The Big Beautiful Bill does not change step-up in basis. Assets that pass at death still receive a basis adjustment for capital gains tax purposes.
7. Does North Carolina have its own estate or inheritance tax?
No. North Carolina still has no state-level estate or inheritance tax. Families with property in other states should check those rules separately.
8. Can the $15 million exemption be changed by a future Congress?
Yes. While the Big Beautiful Bill makes the exemption "permanent" (meaning it has no sunset clause like the 2017 Tax Cuts and Jobs Act did), any future Congress could pass new legislation changing these rules. That's why many families are still considering strategic gifting to lock in wealth transfer now while the window is clearly open.
