Sweeping legislation often brings a wave of uncertainty, and the One Big Beautiful Bill Act (OBBBA), signed into law in July, is no exception. When changes affect something as personal and long-term as estate planning, it’s natural to feel concerned. The good news: understanding these updates now can help you strengthen your financial strategy and make the most of new opportunities.
The OBBBA introduces several major shifts. Below, we break down the key provisions—presented in a randomized order to keep things engaging—and outline how they may impact your estate plan.
Medicaid Reform and Long-Term Care Planning
With $1 trillion in federal Medicaid cuts, stricter eligibility checks, and new work or volunteer requirements, qualifying for long-term care assistance may become more challenging. Now is a good time to explore private long-term care insurance and asset protection approaches to safeguard future care needs.
Fewer Estates Owing Federal Tax
Only about 0.25% of estates are expected to owe federal estate tax under the new law. However, state-level estate or inheritance taxes may still apply, so it’s important to evaluate your full tax exposure based on where you live.
Medicare Budget Impact
The OBBBA delays key Medicare cost-sharing assistance rules until 2034 and could trigger up to $490 billion in cuts under PAYGO requirements. This may lead to higher out-of-pocket costs and fewer participating providers, making it essential to stay proactive with healthcare planning.
Estate and Gift Tax Exemption Increase
Beginning January 1, 2026, individuals can pass on up to $15 million—$30 million for married couples—without incurring federal estate tax. These limits will adjust annually for inflation. This update also ends previous uncertainty around planned exemption reductions, offering welcome clarity for long-term planning.
Social Security Tax Changes
The law adds a temporary new deduction of up to $6,000 ($12,000 for couples over 65) for taxpayers under certain income thresholds. This will increase the number of retirees whose Social Security benefits are not taxed. Note that this provision expires in 2028 unless extended.
No Other Structural Estate Tax Changes
Apart from the higher exemption amount, the structure of the estate, gift, and GST taxes remains the same. The foundational provisions from the 2017 Tax Cuts and Jobs Act continue to hold, offering stability amid broader tax law changes.
While the OBBBA adds new complexities, it also offers a meaningful chance to refresh your estate planning approach. Consider reviewing your estate documents, long-term care preparations, and tax strategies to ensure they align with the latest rules. And as always, consult a trusted advisor for guidance tailored to your family, goals, and financial picture.