Love or Hate Trump, His New Tax Bill Is Good News for Estate Planning
I don’t get political on this blog, so this is neither about praising nor criticizing Donald Trump. My goal is simply to explain what the new law does and why it matters for estate and tax planning. Regardless of your view of the former president, the One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, introduces changes that are undeniably favorable for many individuals and families when it comes to preserving wealth.
On July 4, 2025, President Donald Trump signed the One Big Beautiful Bill Act (OBBBA) into law, marking a sweeping transformation of the U.S. tax system. The OBBBA not only makes permanent many provisions of the 2017 Tax Cuts and Jobs Act (TCJA) but also introduces a host of new benefits for individuals and businesses, creating a long-term framework for planning and wealth management.
One of the most impactful changes is the permanent increase in the estate, gift, and generation-skipping transfer (GST) tax exemptions. Beginning in 2026, the exemption will rise to $15 million per individual, indexed for inflation, with the 40% tax rate unchanged. Married couples can transfer up to $30 million free of estate tax, and the GST exemption will match this expanded amount. Since Connecticut follows the federal exemption, its estate tax exemption will also increase to $15 million per person in 2026, providing residents with significant planning opportunities at both the state and federal levels.
What does this really mean in everyday terms? If you die with an estate—defined as everything you own, from stocks and bank accounts to your home—worth under $15 million, your children will not pay estate tax in Connecticut when they inherit. In Massachusetts, by contrast, the exemption is only $2 million, a substantially lower threshold. Many clients in Connecticut ask me as a lawyer, “What about the inheritance tax?” The answer is simple: if your estate is under $15 million, there is no estate tax. For married couples, even more can be passed on tax-free, although the surviving spouse’s estate will be taxed when they eventually pass. In these situations, careful estate planning is critical to maximize exemptions and use strategies such as trusts to minimize taxes and preserve wealth for future generations.
This expansion offers unprecedented flexibility for high-net-worth individuals, especially those who had already used up their prior exclusions. With the increased thresholds, they can make additional tax-efficient gifts and leverage strategies like irrevocable trusts to minimize tax liabilities. Importantly, these higher limits reduce the risk of disputes with the IRS on hard-to-value assets by providing a larger cushion in case of audits. While the new rules are favorable, experts caution against procrastination: future political shifts could undo these provisions, so timely action remains crucial.
For individuals and trusts, the OBBBA permanently locks in the reduced TCJA income tax rates and avoids a return to the higher pre-2017 brackets. It also eliminates the “marriage penalty” for most brackets. Meanwhile, the standard deduction will increase starting in 2026: $31,500 for joint filers, $23,625 for heads of household, and $15,750 for singles or married individuals filing separately, all indexed for inflation.
The treatment of state and local tax (SALT) deductions changes significantly. For 2025, the cap retroactively increases to $40,000, phasing out for taxpayers with modified adjusted gross income (MAGI) over $500,000. Before 2030, high-income taxpayers will face a 30% reduction in their deduction based on income above the threshold, though the deduction cannot fall below $10,000. Beginning in 2030, the cap reverts back to $10,000.
Families also benefit from long-term relief. The Child Tax Credit is permanently set at $2,200 per qualifying child, indexed for inflation, with $1,400 refundable. Education savings accounts expand as well: 529 plans now cover a wider range of K-12 and postsecondary expenses, from tuition and tutoring to educational therapies and credentialing programs. The annual K-12 expense cap doubles to $20,000 after 2025.
The OBBBA also introduces “Trump accounts,” a new tax-deferred savings vehicle for children. Contributions are capped at $5,000 annually, indexed for inflation, with eligibility tied to citizenship and a Social Security number. A federal pilot program grants $1,000 to children born between 2025 and 2028, and accounts will be automatically established if parents do not open them.
Charitable giving rules see significant updates. Individuals must now reduce their charitable deduction by 0.5% of their adjusted gross income, though the 60% limit for cash gifts to major charities is made permanent. Non-itemizers can deduct up to $1,000 ($2,000 for joint filers), while corporations face a new 1% floor on their deductions, with unused amounts eligible for a five-year carryforward.
The personal exemption deduction, suspended under the TCJA, is permanently eliminated. However, taxpayers 65 and older will enjoy a temporary $6,000 deduction per qualified individual for tax years 2025 through 2028, subject to income phaseouts.
Investors and business owners also gain from OBBBA’s refinements. The exclusion percentage for Qualified Small Business Stock (QSBS) is expanded, enhancing tax advantages for investing in small businesses. The Qualified Business Income (QBI) deduction is restructured with a new $400 minimum deduction, a $1,000 minimum income requirement, and higher phase-in thresholds—$75,000 for single filers and $150,000 for joint filers—indexed for inflation beginning in 2026.
Taken together, the OBBBA represents one of the most significant tax code overhauls in decades. By cementing provisions of the TCJA and layering in new incentives, the law creates lasting opportunities for wealth preservation, business investment, and family financial planning. For high-net-worth individuals and business owners, the message is clear: the window for strategic action is open, but proactive engagement is essential to secure maximum benefit under these new rules.
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