Estate planning attorneys and accountants are immersed in unpacking the new tax law, as it has changes impacting estate, tax and business planning, says a recent article, “Understanding the One Big Beautiful Bill Act: Key Tax Changes for Business Owners and Estate Planning Clients” from The National Law Review. Here are some of the highlights:
Estate and Gift Tax Basic Exclusion. This is the number high-net-worth and business owners have been waiting for since work started on the bill. Beginning January 1, 2026, the federal estate, gift, and generation-skipping transfer tax amount will be $15 million for U.S. taxpayers and will be indexed for inflation in subsequent years. Wealthy individuals will be able to transfer wealth to their heirs, and with no sunset provision, long-term and gift tax planning can be done with greater certainty.
State and Local Tax (SALT) Deduction Increases. The 2017 Tax Cuts and Jobs Act lowered the deduction to $10,000, but the new law raises this deduction to $40,000, indexed for inflation through 2029. Suppose your AGI (Adjusted Gross Income) is higher than $250,000 for singles, $500,000 for married couples filing jointly; the added $30,000 drops to a floor of $10,000. The cap sunsets to $10,000 starting in 2030.
Limits to Charitable Deductions. Only contributions higher than 0.5% of the AGI will be deductible. For those taking the standard deduction, charitable deductions will be limited to $1,000 for singles and $2,000 for married couples. Cash gifts may continue to be deductible for up to 60% of the AGI, instead of dropping to 40% as per the TCJA. 2025 may be the year to accelerate charitable contributions.
Expanding Business Qualifying for the Qualified Small Business Stock (QSBS) Gain Exclusion.
Before the new tax law, small business owners and investors meeting specific requirements were permitted to exclude up to 100% of the gain upon the sale or exchange of QSBS. Under the new law, more investors will qualify because of three changes:
- There is now a tiered exclusion for stock not meeting the five-year holding period: 50% if held for three years, 75% for four years and 100% for five years or more.
- The amount of gain eligible for exclusion increases from $10 million to $15 million (or ten times the basis, whichever is greater.
- The gross asset threshold to be considered a small business increases from $50 million to $75 million.
Note these exclusions apply to shares issued after July 4, 2025. If you own shares issued before this date, the old rules apply.
If summer is your slow season, this is a perfect time to consult with your estate planning attorney and see how these and other changes brought about by the new tax law will impact your estate, tax and gift planning.
Reference: The National Law Review (July 16, 2025) “Understanding the One Big Beautiful Bill Act: Key Tax Changes for Business Owners and Estate Planning Clients”