On July 4, 2025, President Trump signed into law the One Big Beautiful Bill, enacting significant changes to the federal estate tax system. The bill permanently increases the federal estate and gift tax exemption to $15 million per person, indexed for inflation beginning in 2026.
For years, estate planners and clients alike have been bracing for a potential drop in the exemption, set to occur in 2026. Many families took costly measures to “lock in” the higher amount before it disappeared. With the passage of this new law, that uncertainty is gone—and planning can now proceed with greater clarity.
What the New Law Does
- Permanently raises the federal estate and gift tax exemption to $15 million per individual
- Indexes these exemption amounts for inflation starting in 2025
- Eliminates the sunset provision that would have cut the exemption in half in 2026
This means fewer estates will be subject to federal estate tax.
Understanding Portability: $30 Million for Married Couples
Under current federal law, a surviving spouse can elect to use any unused portion of their deceased spouse’s exemption. This is known as portability. With the new exemption at $15 million per person, a married couple can effectively pass up to $30 million free of federal estate tax if the correct steps are taken upon the death of the first spouse..
How This Impacts Clients in Virginia and Maryland
While the federal landscape is now clearer, state estate tax laws still vary—and still matter.
- Virginia: No state-level estate or inheritance tax.
- Maryland: Imposes an estate tax with a current exemption of about $5 million. Maryland does recognize portability. If you live in or own property in Maryland, your estate could still face a significant tax bill—even if you’re far below the federal exemption. That’s why estate plans must always account for both federal and state law.
Who Should Revisit Their Estate Plan?
If Your Estate Is Under $15 Million (or $30 Million for Couples)
You may no longer need complex tax-motivated strategies to avoid federal estate tax. But planning remains essential to:
- Avoid probate
- Ensure your assets go where you intend
- Name guardians for minor children
- Prepare for incapacity
If Your Estate Is Over the Exemption Limits
You’ll still benefit from advanced strategies such as:
- Irrevocable trusts
- Lifetime gifting
- Charitable planning
Final Thoughts from Mathews Law
Americans should continue to focus on what really matters in estate planning: clarity, protection, and peace of mind. Estate planning is never one-size-fits-all. The law may have changed, but your life, your family, and your goals are uniquely yours.
At Mathews Law, we’re here to help you take full advantage of the new rules, preserve your legacy, and ensure your wishes are carried out.
If you’re wondering how this new law impacts your current plan—or whether now is the right time to create one—schedule a time to chat. We’ll help you move forward with clarity and confidence.