The Estate and Gift Tax Limits After Passage of the One Big Beautiful Bill represent one of the most significant and permanent changes to federal wealth transfer rules in recent history. Enacted on July 4, 2025, the legislation increases federal estate, gift, and generation-skipping transfer tax exemptions beginning in 2026 and removes years of uncertainty around expiring tax provisions. While these changes offer powerful planning opportunities, they do not eliminate the need for thoughtful estate planning—particularly for families subject to state estate taxes such as those in Illinois.
Federal Estate and Gift Tax Limits After Passage of the One Big Beautiful Bill
Beginning January 1, 2026, the federal estate tax exemption and lifetime gift tax exemption each increase to $15 million per individual. With portability, married couples may transfer up to $30 million during life or at death without incurring federal estate or gift tax. The generation-skipping transfer (GST) tax exemption also increases to $15 million per person, allowing families to pass wealth to children and grandchildren without repeated transfer taxes at each generational level. Estate and gift taxes are unified under a single exemption system, making lifetime and testamentary planning closely interconnected.
The Estate and Gift Tax Limits After Passage of the One Big Beautiful Bill also provide renewed flexibility for individuals who already used their full lifetime gift exemption under prior law. In 2026, such individuals may gift an additional $1,010,000, while married couples may gift $2,020,000, without triggering gift tax. These lifetime exemptions exist alongside the annual gift tax exclusion, which remains $19,000 per recipient per year, or $38,000 per recipient for married couples. When used consistently, annual exclusion gifts can significantly reduce taxable estates while shifting future appreciation to beneficiaries.
Illinois Estate Tax Compared to Missouri
Despite the generous federal Estate and Gift Tax Limits After Passage of the One Big Beautiful Bill, state estate taxes remain a critical consideration. Illinois continues to impose a state estate tax with a $4 million exemption per individual, and the state does not allow portability between spouses. This means that an Illinois estate well below the federal exemption may still owe state estate tax if planning is not properly structured. The Illinois Attorney General outlines these estate tax rules and filing requirements in detail, underscoring the importance of state-specific planning.
By contrast, Missouri does not impose a state estate tax or inheritance tax. Missouri residents therefore benefit fully from the increased federal exemptions without additional state-level transfer taxes. However, even in states without an estate tax, planning remains essential to address probate avoidance, incapacity planning, and orderly asset distribution.
For families in both states, customized strategies are critical. At A.H. Steinmetz, Ltd., our Estate & Gift Tax Planning services help clients coordinate federal and state considerations while aligning estate plans with long-term family goals.
Planning Opportunities and Next Steps
The permanence of the Estate and Gift Tax Limits After Passage of the One Big Beautiful Bill allows families to move away from reactive planning and toward long-term strategies. High-net-worth individuals and business owners may now consider irrevocable trusts, dynasty trusts, and lifetime gifting programs with confidence that the underlying rules are stable. Even for families well below the federal exemption, estate planning remains essential to avoid probate, plan for incapacity, and ensure assets pass according to intent.
Comprehensive planning often includes revocable living trusts, powers of attorney, and healthcare directives. Our Estate Planning and Revocable Living Trusts services are designed to provide clarity, protection, and peace of mind regardless of estate size.
Conclusion
The Estate and Gift Tax Limits After Passage of the One Big Beautiful Bill provide unprecedented federal tax certainty, but they do not replace the need for state-aware and individualized estate planning. Illinois residents, in particular, must account for the state’s $4 million estate tax exemption, while Missouri residents can focus more heavily on federal law and non-tax considerations. Reviewing your estate plan now ensures you fully benefit from these changes while protecting your family’s legacy. To discuss how these developments affect your plan, contact A.H. Steinmetz, Ltd. to schedule a consultation.
