Recent legislation—the One Big Beautiful Bill Act—introduces sweeping changes to estate, tax, and business planning. For families and business owners, understanding these tax law changes is essential for effective long-term planning. Below are the highlights most relevant to estate planning and wealth management.
1. Estate and Gift Tax Exclusion Amounts
Beginning January 1, 2026, the federal estate, gift, and generation-skipping transfer (GST) tax exclusion will rise to $15 million per individual (indexed annually for inflation).
For high-net-worth individuals, this higher threshold creates expanded opportunities to transfer wealth to heirs with far greater certainty. Notably, this increase comes without a scheduled sunset provision, giving families confidence in their long-term planning strategies.
2. Increased State and Local Tax (SALT) Deduction
The cap on the SALT deduction—previously reduced to $10,000 under the 2017 Tax Cuts and Jobs Act—will now increase to $40,000, indexed for inflation through 2029.
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For taxpayers with Adjusted Gross Income (AGI) above $250,000 (single) or $500,000 (married filing jointly), the deduction reverts to a $10,000 minimum.
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Beginning in 2030, the deduction cap will sunset back to $10,000 for all taxpayers.
This temporary increase provides meaningful relief for taxpayers in high-property-tax states like Illinois.
3. New Charitable Deduction Limits
Charitable giving will also see significant adjustments:
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Only contributions above 0.5% of AGI will qualify for deductions.
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Standard deduction filers are limited to $1,000 (single) or $2,000 (married) in charitable deductions.
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Cash contributions may still be deducted up to 60% of AGI (avoiding the drop to 40% that had been proposed).
Planning opportunity: Donors may wish to accelerate charitable contributions in 2025 to maximize deductions under current rules.
4. Expanded Qualified Small Business Stock (QSBS) Exclusion
The law also expands the benefits of the QSBS gain exclusion, creating more favorable treatment for small business owners and investors:
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Tiered holding periods: 50% exclusion after 3 years, 75% after 4 years, and 100% after 5 years.
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Higher gain limits: Exclusion cap rises from $10 million to $15 million, or 10x the taxpayer’s basis, whichever is greater.
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Increased asset threshold: Companies with up to $75 million in assets (up from $50 million) now qualify.
These expanded rules apply only to shares issued after July 4, 2025. Shares issued before that date remain under the old framework.
What This Means for You
With these changes taking effect over the next few years, now is the right time to revisit your estate plan, charitable strategies, and business succession planning. Adjusting early ensures you take full advantage of the new law’s benefits while avoiding costly oversights.
As a Naperville estate planning attorney, I help individuals and families understand how tax law changes affect their Illinois estate, wealth transfer, and business planning goals. Proactive planning today can mean significant tax savings tomorrow.
If you’d like to review how these updates impact your estate plan, please contact the Law Offices of Robert J. Varak to schedule a consultation.
Key Takeaways: The One Big Beautiful Bill Act
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Estate and Gift Tax Exclusion: Increases to $15 million per individual starting in 2026.
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SALT Deduction: tax law changes raised to $40,000 through 2029; reverts to $10,000 in 2030.
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Charitable Giving: Stricter limits on deductions; 2025 may be the year to accelerate contributions.
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QSBS Exclusion: Expanded holding periods, higher gain limits, and broader eligibility for small businesses.
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Planning Action: Consult with an estate planning attorney now to adjust before these provisions take effect.