The One Big Beautiful Bill Act (OBBBA) is a federal tax law that contains hundreds of tax and spending provisions. Whether they’re good or bad is a matter of perspective and depends on your tax bracket.
The Good
One of its flashier accomplishments is the creation of a new, permanent, $15 million estate, gift, and GST (generation-skipping transfer tax) exemption. For married couples, the exemption rises to $30 million. Going forward, the amount will be adjusted for inflation.
Because the exemption is now permanent, many attorneys and their clients need to review their existing estate plans, since many traditional tax optimization techniques may be unnecessary, and, even worse, may even create disadvantages.*
If you’re not in the market for a $15 million tax exemption, you’re not alone. Few people are. But even if you’re not a high-net-worth individual, there are ways you can benefit from OBBBA’s provisions:
- For taxpayers who make less than $500,000 per year, OBBBA raises the cap on state and local tax deductions to $40,000. But you should use that while you can: After five years, the cap reverts to $10,000.
- Our January and February 2026 blogs (find them on our website at sgwlawfirm.com) discussed OBBBA’s tax deductions for tips, overtime pay, seniors, and Trump accounts (which allow parents to create tax-deferred accounts for their children born between January 1, 2025, and December 31, 2028).
- OBBBA includes a permanent $200 increase in the child tax credit.
- OBBBA established significant changes to charitable contribution deductions beginning January 1, 2026. For non-itemizers who contribute directly to charities, a $1,000 deduction ($2,000 for married couples) is now available.
Learn more about The Working Families Tax Cut Act, and Trump Accounts Explained.
The Bad
- For non-itemizers who contribute directly to charities, contributions to donor-advised funds will not qualify.
- For taxpayers who itemize, charitable deductions are now allowed only to the extent they exceed 0.5% of adjusted gross income.
- Under OBBBA, non-grantor trusts and estates entirely payable to charities can no longer avoid income taxes. This change requires further clarification from Congress and careful attention from executors and trustees.
- For foreign migrant workers, there is a 1% tax on remittances (non-commercial transfers of money from the country where they’re working to their homeland).
- OBBBA created a tax hike on investment income from college endowments. That means “colleges subject to the tax increase will have less funding available to educate students, especially poorer members of their student population,” write Eugene Steuerle, Sandy Baum, and Jill S. Manny on governmentwedeserve.substack.com. In addition, the higher rates contemplated in the OBBBA will exacerbate incentives for affected institutions to avoid the tax using a range of tax avoidance strategies, further adding to tax code complexity and potentially detracting from universities’ core mission.”
- OBBBA does away with clean energy tax credits from the Biden era and repeals a tax on silencers (a muzzle device that suppresses the blast from a gun).
The Ugly
OBBBA increases the United States debt ceiling by $5 billion.
OBBBA cuts 2% of Medicaid spending.
Learn more about Long Term Care and Medicaid Planning.
OBBBA expands requirements for SNAP benefits (formerly known as food stamps) recipients.
The Congressional Budget Office (CBO) estimates that OBBBA will increase the U.S. budget deficit by $2.8 trillion by 2034,” says the Wikipedia OBBBA entry, “will cause 10.9 million Americans to lose health insurance coverage, and increases the budget of the Immigration and Customs Enforcement (ICE) from $10 million to $100 million by the year 2029.”
*A Word on Revising and Restructuring Existing Trusts
Now that OBBBA has made the higher exemption permanent, formula clauses in old wills or trusts may inadvertently direct large portions of an estate into tax-driven trusts, leaving less for a surviving spouse or heirs than intended. Clients should review whether their existing documents make sense and are structured properly to avoid delays, court involvement, and confusion.
Need help with estate and trust planning? Contact an experienced attorney today at Sussan Greenwald & Wesler
609-409-3500
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