When the Tax Cuts and Jobs Act (TCJA)* — famously dubbed the One Big Beautiful Bill Act, now called the Working Families Tax Cut Act — was signed into law, it reshaped the estate and gift tax landscape almost overnight. The ripple effects are still very much in play, especially as sunset provisions approach and clients reassess long‑term plans.

This post breaks down what changed, what’s still in effect, and how tax professionals can guide clients through smarter estate planning decisions in today’s environment.

 

A Quick Refresher: What the TCJA Changed for Estate Planning

The most headline‑grabbing estate planning change under the TCJA was the doubling of the federal estate, gift, and generation‑skipping transfer (GST) tax exemption.

  • Pre‑TCJA (2017): $5.49 million per individual
  • Post‑TCJA: Indexed for inflation and significantly higher (over $13 million per individual in recent years)

For many taxpayers, this effectively removed federal estate tax from the equation — at least for now.

But that’s a big caveat.

 

The 2026 Sunset: Why Estate Planning Is Back on the Table

One of the most critical aspects of the TCJA is that many provisions are temporary. Unless Congress acts, the estate and gift tax exemption is scheduled to revert to roughly half its current level after 2025.

For clients with growing estates, this creates both:

  • Urgency – to act while higher exemptions are available
  • Uncertainty – about what the rules will look like long‑term

Tax pros are in a prime position to help clients model scenarios and make informed decisions before the window potentially closes.

Key Estate Planning Strategies to Discuss with Clients

1. Lifetime Gifting While Exemptions Are High

The IRS has confirmed that gifts made under the higher exemption amounts will not be “clawed back” if exemptions later decrease. This makes lifetime gifting a powerful strategy right now.

Common approaches include:

  • Large outright gifts to heirs
  • Gifts to irrevocable trusts
  • Leveraging annual exclusion gifts in combination with lifetime exemptions

2. Reviewing Existing Estate Plans

Many estate plans drafted before 2018 may no longer align with current tax realities.

Watch for:

  • Formula clauses tied to exemption amounts
  • Trust funding provisions that could unintentionally overfund bypass trusts
  • Plans that focus solely on federal estate tax while ignoring income tax efficiency

A review can prevent unintended consequences and align documents with today’s rules.

3. Shifting Focus From Estate Tax to Income Tax Planning

With fewer clients subject to federal estate tax, basis planning has taken center stage.

Topics to revisit:

  • Step‑up in basis at death
  • Timing of asset transfers
  • Whether gifting appreciated assets still makes sense

TaxAct software tools can help illustrate the income tax impact of different planning strategies — an increasingly valuable part of the conversation.

4. Don’t Forget State Estate Taxes

Even if federal estate tax isn’t a concern, state‑level estate or inheritance taxes may still apply.

Professionals should:

  • Confirm applicable state thresholds
  • Coordinate state and federal planning strategies
  • Flag potential exposure early to avoid surprises

 

How TaxAct Professionals Add Value Beyond Compliance

Estate planning isn’t just for attorneys and wealth managers. Tax pros play a critical role by:

  • Identifying planning opportunities based on real tax data
  • Stress‑testing scenarios using current and projected law
  • Coordinating with legal and financial advisors
  • Helping clients act proactively—not reactively

By understanding the post‑TCJA landscape, tax professionals can position themselves as trusted advisors during a period of significant transition.

 

For tax professionals, staying ahead of these changes isn’t just good tax planning — it’s good client service.

For more information to help you stay on track during tax season, download the most recent version of our Season Readiness Guide.

 

* The One Big Beautiful Bill Act, OBBBA, is now also being referred to by lawmakers as the Working Families Tax Cut Act. You may see one or all names used, but they refer to the same set of tax changes.

Disclaimer: This article is for informational purposes only and not legal or financial advice.