Key Federal Legal Changes Affecting Your Estate Plan
2025 YEAR IN REVIEW
The past year has been one of the most significant in recent memory for estate planning, elder law, and business law. The enactment of the One Big Beautiful Bill Act (OBBBA) on July 4, 2025, along with important court decisions and regulatory changes, has reshaped the landscape for families, seniors, and small business owners. Whether you already have an estate plan in place or are just starting to think about one, these federal changes may directly affect your planning.
Below is a plain-language summary of the key developments and what they may mean for you.
Estate and Gift Tax: The Exemption Is Now Permanent
One of the most talked-about provisions of the OBBBA is the permanent increase to the federal estate and gift tax exemption. Under the new law, the exemption is now set at $15 million per individual and $30 million for married couples, indexed for inflation using 2025 as the base year. This applies to estates of individuals dying and gifts made after December 31, 2025.
The generation-skipping transfer (GST) tax exemption remains equal to the basic exclusion amount, and the rules for portability elections remain unchanged.
What this means for you: For most families, this dramatically reduces the likelihood of owing federal estate taxes. However, if you have a high-net-worth estate, it remains important to work with your attorney on tax minimization strategies. And because a future Congress could always revisit these numbers, there may still be value in using the exemption sooner rather than later.
Tax Benefits for Individuals
The OBBBA makes permanent several provisions from the 2017 Tax Cuts and Jobs Act and introduces new benefits:
Standard Deduction Doubled: $15,750 for individuals and $31,500 for married couples filing jointly.
Tax Brackets Preserved: The current bracket structure with a 10% bottom rate and 37% top rate is now permanent.
SALT Deduction Increase: The state and local tax (SALT) deduction is temporarily raised from $10,000 to $40,000 (indexed for inflation) through tax year 2029, phasing out for incomes exceeding $500,000.
Charitable Deductions for Non-Itemizers: Individuals who take the standard deduction can now deduct up to $1,000 ($2,000 for married couples filing jointly) in charitable contributions.
Senior Standard Deduction: An additional $6,000 standard deduction is available for individuals aged 65 and older between 2025 and 2028, phasing out at $75,000 (single) or $150,000 (married filing jointly).
Charitable Deduction Floor for Itemizers: For those who itemize, charitable deductions are now limited to contributions exceeding 0.5% of taxable income.
Medicaid and Long-Term Care: Important Changes Ahead
The OBBBA includes several provisions that directly impact seniors planning for long-term care in a nursing facility:
Home Equity Limit Raised to $1 Million: Effective January 1, 2028, Medicaid applicants seeking long-term care eligibility will not qualify if their home equity exceeds $1 million (not indexed for inflation). States retain flexibility for agricultural properties.
Retroactive Eligibility Reduced: Effective January 1, 2027, the retroactive eligibility period is reduced from three months to two months for traditional Medicaid enrollees.
CMS Streamlining Rule Suspended: The final rule aimed at simplifying Medicaid long-term care enrollment processes is suspended until 2035.
ABLE Accounts: The increased contribution limits for ABLE accounts are now permanent.
New Funding: Additional funding has been provided for home and community-based services and rural hospitals.
What this means for you: The home equity limit increase is good news for many applicants in jurisdictions where the prior limit was between $730,000 and $750,000. However, the reduction in retroactive eligibility means the timing of Medicaid applications will be more critical than ever. If you or a loved one may need long-term care, consult with an elder law attorney early in the process.
Small Business Tax Wins
Business owners benefit from several now-permanent provisions:
Pass-Through Deduction: The Section 199A 20% deduction for pass-through entities (LLCs, S-corps, partnerships, sole proprietorships) is now permanent.
100% Bonus Depreciation Restored: Full bonus depreciation for qualified property acquired and placed in service after January 19, 2025.
Section 179 Cap Increased: The deduction for business equipment has been raised from $1.5 million to $2.5 million.
R&D Expense Deduction: Domestic research and development expenses may be deducted in the year incurred.
Qualified Small Business Stock: Expanded exclusion of gain recognition for the sale of qualified small business stock.
What Should You Do Next?
These changes present both opportunities and potential pitfalls. Here are a few practical steps to consider:
Review your estate plan in light of the new permanent exemption amounts. Plans drafted with the 2026 sunset in mind may need updating.
If you or a loved one may need long-term care, begin planning early. The reduced retroactive eligibility window makes timing more important.
Small business owners should work with their tax advisors to take full advantage of the permanent deductions and depreciation benefits.