The Tax Cuts and Jobs Act of 2017 (TCJA) extended significant tax benefits to high-net-worth families by increasing the federal estate tax and gift tax exemption from $7 million to approximately twice that amount. The bad news, however, was that the increase was set to sunset in 2026.
But the One Big Beautiful Bill Act (OBBBA), which was signed into law by US President Donald Trump on July 4, 2025, put in place a permanent exemption allowing for $15 million per individual and $30 million for couples. In addition, the OBBBA indexes the exemption threshold for inflation annually.
While the provisions of the OBBBA promise to lower tax liabilities for high-net-worth families, those families will want to consider certain factors in order to ensure they are maximizing reductions to their tax bill.
Tax strategies will need to become more efficient
Establishing an indexed exemption limit is meant to keep the amount up to date with the economy. However, experts feel indexing it to inflation won’t be optimal for many high-net-worth families.
“By increasing the threshold from $27.98 million under the TCJA to $30 million under the OBBBA, the federal government didn’t take a step that supports the financial growth high-net-worth families generally expect to experience through passive and active income based on market gains and the economy,” says Evan Paul, Managing Partner of Paul Advisory and Legal Group, PLLC. “As a result, people need to consider more sophisticated strategies if they are going to continue to maintain a tax-efficient structure.”
Paul is a seasoned wealth management and asset protection expert with over a decade of experience guiding high-net-worth individuals, entrepreneurs, and business owners through complex financial landscapes. He specializes in strategic tax planning, trust structures, and risk mitigation, helping clients preserve wealth while optimizing their financial outcomes.
Generally, the annual inflation rate in the US is expected to be between 2 percent and 3 percent, with Federal Reserve activity aimed at preserving that rate. But some reports show that high-net-worth investors expect a rate of return 17.5 percent above inflation. Those who are able to achieve that level won’t find much relief in the OBBBA’s provisions, as Paul points out.
Baby boomers will need to revisit their tax planning strategies
The new estate tax provisions in the OBBBA come into play as the US grapples with a major generational shift. Dubbed the “Silver Tsunami,” the shift involves Baby Boomers reaching retirement age and assuming a new role in the economy, which is expected to involve transferring wealth to younger generations.
“The group most impacted by the new estate tax provisions will be the Baby Boomers, who hold the majority of wealth in the US,” Paul explains. “It is important that those in that demographic explore the proper estate planning strategies, taking proactive planning steps to ensure they get maximum benefits from the exemption.”
Baby Boomers establishing estate planning strategies will need to determine whether the new thresholds serve their purposes, while those who already have strategies in place may need to revise them to optimize their tax breaks under the new law. In both cases, Baby Boomers may need to explore advanced strategies to minimize tax liabilities for themselves and their heirs.
“For individuals and families who anticipate that their net worth will exceed the applicable estate and gift tax exemption, proactive planning becomes essential,” Paul explains. “In those cases, specialized strategies can be deployed to manage exposure. One example is an estate freeze, which allows current asset values to be locked in for transfer-tax purposes, effectively capping future estate tax liability while preserving the economic upside for heirs as those assets continue to appreciate over time.”
Minimizing tax burdens could require adopting advanced tax strategies
By indefinitely extending the benefits introduced by the TCJA, the OBBBA provides a better estate tax framework than what high-net-worth families would have faced if the benefits had been allowed to sunset. However, maximizing tax efficiency in the new legal landscape will also involve carefully considering how the exemption interacts with other tax provisions.
For example, to ensure money saved on estate taxes isn’t offset by money lost to capital gains tax, families must carefully consider the right timing for transitioning assets. Families should also consider how trusts could help reduce their estate tax obligations under the new tax rules.
“High-net-worth individuals will likely need to consider advanced strategies as they look to update estate planning strategies to address the recent changes in tax law,” Paul says. “Leveraging tools such as deferred sales trusts, Nevada grantor trusts, and even offshore trusts can be beneficial in creating the most tax-efficient structure.”
The changes brought about by the OBBBA serve as a reminder that tax laws are constantly in flux. To maximize overall efficiency, taxpayers must practice regular and proactive tax planning to ensure strategies are optimal for the current landscape.
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