On July 4, 2025, President Trump signed into law the Opportunity, Balance, and Better Budget Act, better known as the “Big Beautiful Bill.” One of the most consequential provisions in this sweeping legislation is Section 70106, which directly affects high-net-worth individuals and families by permanently extending and expanding the federal estate and gift tax exemption.

What Section 70106 Does

This section makes several key changes:

• Permanently extends the federal estate and gift tax exemption.
• Raises the exemption amount to $15 million per individual and $30 million per married couple starting in 2026.
• Indexes the exemption for inflation beginning in 2027 using 2025 as the base.

This provision ensures greater predictability for estate planning. Rather than facing a scheduled reduction in the exemption at the end of 2025, families now have clarity and increased flexibility when planning their estates.

What the Law Was Before

Under the 2017 Tax Cuts and Jobs Act (TCJA), the estate and gift tax exemption was temporarily doubled to approximately $13.99 million per person in 2025. The TCJA included a sunset provision, however. Without further action, the exemption would have reverted to $5 million per person in 2026.

Section 70106 eliminates this sunset. Instead of a reduction, the exemption increases to $15 million in 2026 and is further protected from erosion by inflation indexing beginning in 2027.

What This Means for Individuals and Families

For Estates Below the Threshold

If your estate is below $15 million (or $30 million for a couple), your assets can pass to heirs free of federal estate tax. While that eliminates federal estate tax liability for many, estate planning remains critical. A comprehensive plan ensures assets are distributed according to your wishes, avoids unnecessary probate, and prepares for potential incapacity.

For Estates Near or Over the Threshold

If your estate is valued near or above these new exemption limits, strategic planning remains essential. While the increased exemption provides more room, any value above $15 million (or $30 million jointly) will still be taxed.

Even those who previously used some or all of their exemption can benefit. Starting in 2026, the exemption increases to the new $15 million amount, allowing for additional tax-free gifts up to the new limit. An individual who has already gifted the full $13.99 million may now make an additional $1.01 million in gifts without being subject to the federal estate tax. High-net-worth individuals and families should continue evaluating options such as irrevocable trusts, charitable planning, or family limited partnerships to reduce taxable estate values and preserve wealth for future generations.

Portability and GST

Spousal portability remains intact, meaning a surviving spouse may use any unused portion of their spouse’s exemption, maintaining the ability to transfer up to $30 million tax-free. Similarly, the generation-skipping transfer (GST) tax exemption is matched to the $15 million amount and also indexed for inflation.

Next Steps for Estate Planning

1. Review Your Estate Plan

Estate plans based on older exemption amounts may need to be updated, particularly if they include formula-based trust funding clauses. With the new, higher exemption, existing plans may inadvertently allocate more to certain trusts than intended.

2. Reevaluate Gifting Strategies

The urgency that once surrounded the anticipated 2026 sunset has subsided. However, that doesn’t mean high-net-worth individuals should delay action. Lifetime gifting strategies (whether to children, irrevocable trusts, or charitable vehicles) can remove appreciating assets from the taxable estate and take advantage of the exemption while it’s available.

3. Consider Future Growth

The new exemption amounts are substantial, but many individuals’ estates may grow over time due to investment performance, business interests, or real estate holdings. Planning should account for long-term asset growth to avoid surprises.

4. Coordinate with State Laws

This federal change does not affect state estate or inheritance taxes, which may have significantly lower exemption thresholds. Your planning should integrate both federal and state-level considerations.

A Word of Caution

Although the new exemption is labeled “permanent,” future legislation could alter the landscape again. Individuals and families seeking to take advantage of the new exemption amount should act within the next two years, as a change in control of Congress could lead to the rollback of many “Big Beautiful Bill” provisions such as this one. Building flexibility into an estate plan through powers of appointment, trust protectors, or adjustable gifting strategies can help adapt to future changes as well.

Final Thoughts

The changes brought about by Section 70106 represent a favorable development for individuals and families concerned with estate taxes. By eliminating the sunset provision and setting a higher, inflation-indexed exemption, the law provides a more stable environment for wealth transfer planning.

If you would like to discuss how the new law affects your estate planning, please contact Robert Wolfson at (703) 284-7293 or rwolfson@beankinney.com.

This article is for informational purposes only and does not contain or convey legal advice. Consult a lawyer. Any views or opinions expressed herein are those of the authors and are not necessarily the views of any client.