One Big Beautiful Bill estate planning

Estate Planning Under the One Big Beautiful Bill Act

Navigating the OBBBA’s Estate Tax and Personal Planning Provisions

On July  4, 2025, President Trump signed the One Big Beautiful Bill Act (OBBBA), reshaping the tax landscape for individual taxpayers and business owners alike. While much of the media spotlight has fallen on business incentives and corporate tax breaks, this legislation contains provisions that demand careful consideration by anyone focused on long-term wealth transfer and personal tax strategy. Today, we’ll walk through some of the estate-planning and individual-tax highlights of the OBBBA—and explain why now is the moment to revisit your legacy plan.

[TABLE OF CONTENTS]

A Bigger Exemption: Locking in Up to $15 Million Per Person

Under the OBBBA, the federal estate tax exemption climbs from nearly $14 million to $15 million per individual, indexed for inflation. For married couples, that means as much as $30 million can pass free of federal estate tax. This dramatic increase rewrites the playbook for gifting and trust planning. If your existing estate documents were drafted around the prior threshold, you may now have room to expand lifetime gifts, restructure trusts, or remove artificial spending limitations designed to accommodate lower exemptions. Advanced techniques like Dynasty Trusts or Spousal Lifetime Access Trusts (SLATs) suddenly become more attractive, since you can shelter larger sums now than before. Keep in mind, however, that legislatures periodically revisit exemption levels; acting quickly to “lock in” transfers under the new cap is essential if you want to cement these benefits for your heirs.

For those of you wondering if trust plans created years ago that were designed to reduce tax liability when the exemption threshold was much lower, the answer is that these plans are still worthwhile! Just because you might not need an irrevocable trust structure to avoid the estate taxes, there are several other reasons (control, asset protection, income management, among others) that make this a sound strategy.

SALT Relief—With a High-Income Cliff to Watch

One of the most discussed changes is the State and Local Tax (SALT) deduction cap rising to $40,000, up from $10,000. But before you celebrate, note the cliff: households with adjusted gross income above $500,000 lose the upgraded SALT benefit. That means an extra dollar of income could cost you thousands in taxes. For families teetering near that threshold, thoughtful income timing becomes critical. Deferring bonuses, accelerating charitable contributions, or strategically harvesting investment losses can keep you below the cliff and preserve the SALT break. From an estate-planning standpoint, you may even consider income-shifting from grantor to non-grantor trusts in favorable jurisdictions. As you map out gifting or trust distributions this year, coordinate with your financial team to model the impact of these income-dependent phase-outs on your overall tax picture.

A Temporary Win: No Tax on Tips and Overtime

Between 2025 and 2028, the OBBBA waives federal income tax on tips and overtime pay. For service-industry professionals, shift workers, and hospitality employees, this translates into more take-home pay—at least for a few years. From an estate-planning lens, the extra cash flow can be funneled into tax-advantaged vehicles such as 529 education plans or family trusts. Even if you’re not the one waiting tables, employers with tipped staff may want to revisit payroll strategies and consider enhanced retirement contributions on behalf of employees who now enjoy tax-free supplemental income.

For those of you thinking about converting your regular compensation payments to tips, Congress is way out in front of this issue. One easy guideline to follow is if your business is not eligible for the Qualified Business Income deduction (§199A), then you’re not eligible for the tip exemption either.

The “Trump Account”: A New IRA-Style Vehicle for Minors

Perhaps the most novel feature of the bill is the so-called Trump Account—a custodial savings vehicle operating much like an IRA but for minors. Parents, grandparents, and even employers can contribute up to $5,000 per year without triggering taxable income for the child. This opens the door for early, tax-efficient wealth accumulation and gives younger generations a firsthand education in saving and investing. For grandparents looking to gift beyond annual exclusion limits, Trump Accounts provide an additional avenue to transfer assets. If you’re building a multigenerational plan, talk with your estate counsel about integrating these accounts alongside traditional trusts and 529 plans.

For now, it’s looking like 529 plans are preferable to these new accounts.

Expanded 529 Plan Uses for K–12 Expenses

Finally, the OBBBA broadens qualified distributions from 529 plans to cover “additional expenses in connection with enrollment or attendance” at elementary and secondary schools. While the full Treasury guidance is still unfolding, early indications suggest costs like tutoring, transportation, uniforms, and technology for remote learning may qualify. For families who have long viewed 529s solely through the prism of college tuition, this change enhances flexibility—allowing these savings vehicles to address a wider array of educational needs and easing the financial burden of private-school or specialized programs.

Pulling It All Together

The One Big Beautiful Bill Act offers a rare convergence of short-term relief and long-term planning tools. Whether you’re sheltering assets from estate tax, squeezing every dollar of SALT relief out of your return, or funding a child’s first IRA-style account, the window to act is now. Updating trusts, accelerating gifts, refining income strategies, and allocating resources to new vehicles should all be on your to-do list before year-end.

The focus of planning now shifts from estate tax strategies to income tax planning, including capital gains management.

Ready to secure your family’s legacy and capitalize on these new planning opportunities?

Email us at hello@yolofskylaw.com or call (954) 466-5766 today to schedule your complimentary consultation with AJ Yolofsky and our estate-planning team. Let us help you turn the One Big Beautiful Bill Act’s benefits into lasting peace of mind.