By Michael J. Capozza, Esq.
The One Big Beautiful Bill Act, also known as “OBBA,” was signed into law earlier this year, bringing big changes to how your estate may be taxed at the federal level.
Estate taxes are a form of transfer tax. Unrelated to income taxes, an estate tax is a tax that may be due to the state or federal government based solely on the total value of the property owned or attributable to an individual at the time of his or her death. However, this tax is only due on the value of property in excess of the applicable “exemption” amount. This means that if an individual’s estate is worth less than the exemption amount, no estate tax is due.
For years, the federal estate tax exemption amount automatically increased to keep up with inflation year over year, most recently topping out at around $13 million for individuals. Under the prior law, the exemption was set to significantly decrease to nearly half that amount at the end of 2025 unless legislative action was taken.
The headline change of the OBBA for estate planners is an increase to the federal estate tax exemption. Starting January 1, 2026, individuals may leave up to $15 million to their heirs without paying federal estate taxes. For married couples, that number doubles to $30 million. This new change is permanent (unless changed by future laws), which provides more certainty in estate and legacy planning.
Estates valued under $15 million ($30 million for couples), will likely pass without federal estate tax. However, many states have their own estate or inheritance taxes, and the thresholds can be much lower. For example, in Massachusetts, the current state estate tax exemption is just $2 million. This means that for individual estates valued in excess of $2 million, an estate tax is likely to be owed to the Commonwealth of Massachusetts.
For those with an expected estate that currently exceeds $2 million, or which might grow significantly in the coming years, it is important to begin planning now. Even if taxes are not a concern, estate planning is still essential for controlling who inherits what, when, and how. Early coordination with an estate planning attorney and your accountant can ensure that legacy goals are achieved.
The OBBA’s high tax threshold provides good news for many families—but it also means that now is the perfect time to review your estate plan with fresh eyes.
Michael J. Capozza, Esq., (mjc@efclaw.com) is an Estate Planning and Administration Attorney at Egan, Flanagan and Cohen, P.C. Along with Ted Brown, Esq. (tcb@efclaw.com) and Paula Tredeau, Esq. ( pct@efclaw.com ), Attorney Capozza and the rest of the firm’s Estate Planning and Administration group are available to assist those concerned with their estate plan or to help families administer estates after a loved one passes. Nothing in this article constitutes legal advice or the formation of an attorney-client relationship. To have your specific circumstances reviewed by an attorney, please contact us today to schedule a consultation.
