This summer’s tax legislation—officially titled the One Big Beautiful Bill Act—brought clarity and certainty to estate planning by permanently increasing the federal estate and gift tax exemption to $15 million per individual (or $30 million for married couples), starting in 2026 and indexed for inflation thereafter.

For years, estate planners and families alike have watched the clock tick toward January 1, 2026—the date when the temporary increase under the 2017 Tax Cuts and Jobs Act (TCJA) was set to expire. Without congressional action, the exemption would have reverted to roughly $7 million per person, reducing the available tax-free transfer amount by nearly half. The passage of this new law eliminates that cliff, allowing individuals and families to plan confidently without a looming reduction in their lifetime gifting capacity.

Beyond simply extending the higher exemption, the law locks it in as permanent, removing the sunset clause that has long made long-term planning difficult. Inflation adjustments will continue, but now use 2025 as the base year, providing a more stable calculation going forward.

Another important piece of continuity is that the step-up in basis for capital gains tax purposes remains fully intact. This means that when someone inherits appreciated assets, like real estate or stocks, they receive a tax basis equal to the value of those assets on the date of death, effectively erasing any capital gains that accrued during the original owner’s lifetime.