For years, many successful business owners have been preparing for the potential reduction of the federal estate and gift tax exemption — a change that was scheduled to occur at the end of 2025. This drop, originally part of the Tax Cuts and Jobs Act of 2017, would have significantly lowered the amount of wealth that could be passed on to future generations free of estate tax.
But as of July 4, 2025, those plans have changed. The One Big Beautiful Bill Act (OBBBA) has officially been signed into law, permanently altering the estate tax landscape for high-net-worth families and business owners.
What changed?
Under previous law, the federal estate and gift tax exemption — which is $13.99 million per individual in 2025 — was scheduled to revert to an estimated $7 million in 2026, adjusted for inflation. This would have impacted many more estates and forced more families into liquidity planning or rushed wealth transfers.
The OBBBA overrides that sunset. Beginning in 2026, the federal exemption will be locked in at $15 million per individual, indexed for inflation. For married couples, this means up to $30 million can be passed on tax-free, offering more certainty and planning flexibility for legacy-minded entrepreneurs.
- Source: IRS inflation adjustments and Tax Cuts and Jobs Act summary – IRS.gov
- Legislative summary based on OBBBA updates and expert legal analysis via Bloomberg Tax and the Tax Foundation
Why it still matters
While this change may ease immediate concerns, it doesn’t eliminate the complexity that comes with estate planning, particularly for business owners. Here’s why:
1. Business wealth is often illiquid
Ownership shares, commercial real estate, equipment, and intellectual property are not easily converted into cash. Even with a higher exemption, families could still face liquidity issues depending on the structure of the estate.
2. Valuation gaps create risk
If a business is undervalued or improperly appraised, heirs may be surprised by unexpected taxes or legal hurdles. Accurate, up-to-date valuations are essential.
3. Legacy goals require more than numbers
It’s one thing to pass on wealth; it’s another to pass on vision, leadership, and continuity. The estate tax is only one piece of a much larger conversation about business succession and multi-generational stewardship.
What to consider going forward
Even with higher exemptions in place, wealthy businessowners should continue to evaluate:
- Ownership structures and shareholder agreements
- Buy-sell provisions tied to death or disability
- Liquidity planning to cover taxes and expenses
- Gifting strategies, trusts, and charitable vehicles
- Alignment between business succession and estate documents
Tax law may evolve again as it always does. The key is having a flexible, proactive strategy that’s revisited regularly.
Discovery Point Wealth Advisors specializes in helping business owners plan for complex transitions, manage multi-generational wealth, and think strategically about their legacy.
If you'd like to discuss how the OBBBA could affect your current estate plan or business structure, we're here to help you think through what comes next — no pressure, just clarity.
Together, we can work to keep you on-track toward your financial goals.
Request a consultation to learn more.
Read more articles by Richard Brent Dvorak