How the One Big Beautiful Bill Act Changes Real Estate and Business Tax Planning in 2026

On July 4, 2025, President Trump signed the One Big Beautiful Bill Act into law. For real estate investors and business owners, its most consequential provision was the permanent resolution of a question that had shaped estate planning conversations for years: what happens to the elevated estate and gift tax exemption.

The OBBBA did not create new planning opportunities. It made the planning framework stable — which, for long-term wealth transfer, is worth a great deal.

The TCJA had temporarily set historically high exemptions that were scheduled to expire on December 31, 2025, reverting to roughly half their value. The OBBBA made those elevated exemptions permanent and set new figures effective in 2026. Understanding precisely what changed, and what the legislation does not address, is the starting point for updating any estate plan built around the prior uncertainty.

The New Exemption Amounts

Beginning in 2026, the federal estate and gift tax lifetime exclusion is $15 million per individual and $30 million for married couples filing jointly. The Generation-Skipping Transfer Tax exemption was adjusted to the same level. Inflation adjustments begin in 2027.

For context: in 2025, the TCJA exemption was approximately $13.99 million per individual and $27.98 million for married couples. The OBBBA increases those amounts rather than simply preserving them, while also removing the expiration date entirely. The prior fear, a reversion to approximately $7 million per person, is no longer operative.

Key considerations

• The 2026 exemption is $15 million per individual and $30 million per married couple — an increase from the 2025 TCJA level, not a rollback
• Inflation adjustments begin in 2027 — the exemption will grow over time rather than remaining static
• The GSTT exemption was adjusted to match the unified estate and gift exemption

What This Means for Planning Already Completed

Gifts made under the elevated TCJA exemption before the OBBBA passed are not subject to clawback. The IRS had previously confirmed this position, and the permanent law reinforces it. Strategies that were executed in 2024 or early 2025 under sunset urgency — irrevocable trust funding, family limited partnership transfers, direct gifts — remain valid and fully effective.

Estate plans built entirely around the sunset assumption — particularly those that were rushed in late 2024 and early 2025 as the December 2025 deadline approached — may now benefit from a review. Some strategies that were accelerated to beat a deadline that ultimately didn't materialize may have trade-offs that would have been managed differently under a stable framework.

Key considerations

• Prior gifts under the elevated exemption are protected — no clawback risk under the permanent law
• Plans built specifically around the sunset urgency should be reviewed to confirm they remain optimal now that the framework is stable and the exemption is higher
• Investors who deferred estate planning entirely because of legislative uncertainty can now proceed on a confirmed, stable foundation

What the OBBBA Does Not Change

The permanence of the elevated exemption resolves one specific uncertainty. Several other aspects of estate and tax planning remain unchanged and continue to require attention.

The federal estate tax rate remains 40 percent on the value above the exemption. For real estate investors and business owners whose estates exceed $15 million per individual — or who expect appreciating assets to push them above that threshold over time — federal estate tax exposure remains a real planning consideration.

Stepped-up basis for inherited assets remains in place. For real estate investors who have accumulated significant deferred gain through 1031 exchange chains, this provision continues to make long-term holding through death one of the most tax-efficient wealth transfer strategies available. The OBBBA did not change this.

Key considerations

• Federal estate tax rate remains 40 percent above the exemption — the exemption is higher, but the rate is unchanged
• Stepped-up basis on inherited assets is unchanged — appreciated real estate held through a lifetime of 1031 exchanges continues to pass to heirs with no carryover capital gains liability
• NJ does not impose a separate state estate tax under current law — the planning focus for NJ-based investors remains on federal exposure

The Role of Business Valuation Under the New Framework

For owners of closely held businesses planning wealth transfers, the higher permanent exemption creates an environment where more business equity can be transferred without triggering estate or gift tax. However, the precision of those transfers depends on accurate, defensible business valuations.

Without a current valuation, it is not possible to know how much of the exemption is being used, whether a transfer is appropriately sized, or what discount for lack of control and marketability may apply to minority interests. The OBBBA's higher exemption does not reduce the importance of accurate valuation — it changes the dollar threshold at which that valuation becomes the binding constraint.

Key considerations

• Higher exemptions mean more business equity can be transferred tax-free — but only with a defensible valuation establishing the transferred interest's fair market value
• Minority interest discounts for lack of control and marketability remain a relevant planning tool — applied to transferred business interests, they reduce the taxable value of transfers
• IRS scrutiny of gift transfers involving closely held business interests does not diminish under higher exemptions — defensible valuations remain essential audit protection

How to Choose the Right Approach for Your Situation

The OBBBA has made the estate planning framework more stable, not simpler. For investors and business owners above the new exemption threshold, the strategies that reduce estate exposure — irrevocable trusts, family limited partnerships, charitable remainder trusts, and coordinated 1031 exchange planning — remain available and fully relevant. They can now be planned deliberately rather than under artificial deadline pressure.

For investors whose estates are comfortably within the new exemption, the primary planning focus may shift toward income tax efficiency — managing capital gains, depreciation recapture, and stepped-up basis rather than estate tax mitigation.

A permanent exemption at $15 million per individual is a meaningful change. But permanence does not mean planning is optional — it means planning can be done on the right terms, for the right reasons, without a legislative deadline driving the calendar.

Conclusion

The One Big Beautiful Bill Act established a permanent federal estate and gift tax exemption of $15 million per individual, effective in 2026, with inflation adjustments beginning in 2027. It removes the sunset that had created urgency around wealth transfer planning and raises the threshold above the 2025 TCJA level. What it does not change: the 40 percent estate tax rate above the exemption, the value of stepped-up basis for inherited real estate, or the importance of accurate business valuations for gift and estate tax planning.

A structured planning discussion can review your current estate plan against the permanent framework and identify which strategies remain optimal and which may benefit from adjustment in light of the new exemption levels.

General Disclosure