Major legislative changes often lead to confusion, especially when they affect sensitive areas like estate planning. The One Big Beautiful Bill Act (OBBBA), signed into law in July, certainly brings sweeping updates. The good news is that understanding these changes now can help you strengthen long‑term plans and take advantage of new opportunities.
Estate and Gift Tax Exemption Increase
Beginning January 1, 2026, individuals can transfer up to $15 million—or $30 million for couples—without incurring federal estate taxes. These figures will adjust annually for inflation, offering welcome clarity after years of uncertainty surrounding phased reductions.
Medicare Budget Impact
Delays to key Medicare cost‑sharing assistance rules until 2034 and potential cuts approaching $490 billion may lead to higher out‑of‑pocket costs or reduced provider availability if PAYGO rules trigger reductions. It’s important to anticipate how these shifts could affect future medical planning.
Social Security Tax Changes
Some seniors may benefit from a temporary new deduction—up to $6,000 for individuals or $12,000 for couples over age 65—if they fall under certain income thresholds. This may increase the number of retirees whose Social Security benefits remain untaxed. However, the deduction expires in 2028 unless renewed.
No Other Structural Estate Tax Changes
Beyond the higher exemption amount, the broader framework of estate, gift, and GST taxes remains unchanged. Many core provisions from the 2017 Tax Cuts and Jobs Act continue to be locked in place.
Fewer Estates Owing Federal Tax
Only about 0.25% of estates are expected to owe federal estate tax under the new law. Even so, families should stay alert to state‑level estate or inheritance taxes, which may still apply depending on where they live.
Medicaid Reform and Long‑Term Care Planning
The OBBBA includes $1 trillion in federal Medicaid cuts, new work or volunteer requirements, and tighter eligibility verification. These changes could make qualifying for long‑term care support more challenging. Private long‑term care insurance and asset protection strategies may become increasingly important.
While the OBBBA adds complexity, it also creates a window for proactive, strategic planning. Now is an ideal time to revisit your estate documents, long‑term care strategy, and tax considerations. Working with a trusted advisor can help ensure your plan reflects your family’s needs and the evolving legal landscape.
