Sweeping legislative changes often bring a wave of uncertainty, especially when they affect sensitive areas like estate planning. The One Big Beautiful Bill Act (OBBBA), signed into law in July, introduces several major updates, but understanding these changes now creates opportunities for smarter long-term planning. With the right guidance, families can adjust their strategies to take advantage of new provisions and prepare for potential challenges.

Fewer Estates Owing Federal Tax

One notable shift is that only about 0.25% of estates will now owe federal estate tax. While this significantly reduces the number of families affected at the federal level, state-level estate or inheritance taxes may still apply. Reviewing your state’s tax rules remains an important step in keeping your plan up to date.

Medicaid Reform and Long-Term Care Planning

The OBBBA includes $1 trillion in federal Medicaid cuts, along with new work and volunteer requirements and more rigorous eligibility verification. These changes may make qualifying for long-term care assistance more difficult. Families should consider private long-term care insurance or asset protection strategies to ensure access to needed support down the road.

Estate and Gift Tax Exemption Increase

Starting January 1, 2026, individuals will be able to pass on $15 million—$30 million for couples—free of federal estate tax, with annual inflation adjustments. This eliminates earlier uncertainty about phased reduction schedules and gives families a clearer target for planning future transfers.

Medicare Budget Impact

Delays to Medicare cost-sharing assistance rules until 2034, combined with potential cuts of up to $490 billion, could result in higher out-of-pocket expenses or fewer available providers. If PAYGO rules activate, these reductions may affect coverage options, making it even more important to plan for medical costs as part of your overall estate strategy.

Social Security Tax Changes

The OBBBA introduces a temporary deduction of up to $6,000—or $12,000 for couples over 65—subject to income limits. This change could increase the number of seniors who pay no tax on their Social Security benefits. However, this deduction expires in 2028 unless lawmakers extend it, so planning ahead is essential.

No Other Structural Estate Tax Changes

Apart from the higher exemption amount, the overall structure of estate, gift, and GST taxes remains unchanged. Key provisions from the 2017 Tax Cuts and Jobs Act continue to apply, preserving familiar planning frameworks while allowing room to incorporate the new exemption rules.

While the OBBBA introduces complexity, it also creates an important window for proactive planning. Now is an ideal time to revisit your estate documents, review your long-term care strategy, and check in on your tax plan to ensure it aligns with the new law. Reaching out to a trusted advisor can help you craft a strategy tailored to your family’s unique needs and financial goals.