Year-End Tax Planning After OBBBA: What Trusts & Estates Clients Need to Know Heading into 2026
Have I mentioned that this is my favorite time of year? Temperatures fall, spirits rise, and I spend a few weekends decorating my yard and home for the holidays. There’s real magic in this season—but I’ve never been one to ignore reality. For me, that means turning at least part of my attention to tax planning as the year winds down and a new one begins.
Some years Congress tweaks the tax laws at the margins. Other years, it rewrites large portions of the playbook. 2025 was very much the latter.
On July 4, 2025, sweeping tax legislation—dubbed the One Big Beautiful Bill Act (“OBBBA”)—was signed into law. Its passage sent ripples throughout the estate planning and wealth management world. In large part, OBBBA extended or made permanent many provisions of the Tax Cuts and Jobs Act of 2017 that were previously scheduled to sunset at the end of 2025.
While a comprehensive analysis of OBBBA is well beyond the scope of this article, below are some of the most relevant changes for trusts and estates practitioners—and their clients—as we close out 2025 and head into 2026. Notably, many of the most impactful changes relate to income tax planning, rather than estate or gift taxes.
Estate Tax Planning Highlights
For 2026, OBBBA establishes the following thresholds:
Applicable Exclusion Amount: Increases from $13.99 million (2025) to $15 million
GST Exemption: Increases from $13.99 million (2025) to $15 million
Annual Exclusion for Present Interest Gifts: Holds steady at $19,000
Annual Exclusion for Gifts to a Noncitizen Spouse: Increases to $194,000
Not long ago, we expected the Applicable Exclusion and GST Exemption to revert at the end of 2025 to roughly $5 million (indexed for inflation from a 2011 base year). OBBBA eliminated that sunset entirely and replaced it with a new, higher $15 million base amount, indexed annually for inflation.
For most Americans, this change will have little practical impact. However, for families with estates approaching or exceeding these thresholds, the next several years present a meaningful opportunity to implement sophisticated, high-end estate planning strategies under a far more favorable tax regime.
Income Tax Planning Changes to Watch
Standard Deduction Increases for 2026
Married Filing Jointly: $32,200 (up from $31,500)
Single: $16,100 (up from $15,750)
Head of Household: $24,150 (up from $23,625)
OBBBA also increased the expected standard deduction for 2025 taxpayers, continuing the trend toward fewer households benefiting from itemizing.
SALT Deduction Expansion
State and Local Tax (SALT) deduction cap: Increased to $40,000
Phaseouts begin: Modified Gross Income over $500,000
Additional Noteworthy Provisions Under OBBBA
OBBBA also:
Permanently eliminates miscellaneous itemized deductions (with a limited expansion for educator expenses)
Simplifies overall limitations on itemized deductions for high-income taxpayers
Permits an above-the-line charitable deduction of $1,000 ($2,000 for married taxpayers)
Imposes a new charitable deduction “floor” for itemizers—charitable deductions are allowed only to the extent they exceed 0.5% of Adjusted Gross Income
Permanently eliminates personal exemptions
Temporarily allows a $6,000 “senior deduction” for qualified individuals age 65 and older, with phaseouts beginning at $75,000 AGI ($150,000 for joint filers)
Allows an automobile loan interest deduction of up to $10,000 if the vehicle is assembled in the United States
Expands tax-free savings accounts for minors, often referred to as “Trump accounts”
Planning Takeaways for 2026
As clients plan for 2026, it’s critical to reassess deduction strategies in light of the higher standard deduction and new limitations on itemized deductions. One notable example is charitable giving.
The new 0.5% AGI “floor” on charitable deductions makes bunching charitable contributions more attractive. By consolidating multiple years of giving into a single tax year, taxpayers are more likely to exceed the floor and maximize their deduction.
This strategy pairs particularly well with a Donor-Advised Fund (DAF). A large, deductible contribution to a DAF allows for an immediate income tax deduction, while the assets can remain invested and grow tax-free. The donor can then recommend grants to their favorite charities over time, maintaining a consistent pattern of giving.
Example:
If a client typically gives $20,000 per year, they may be better off taking the standard deduction annually. However, if they instead contribute $100,000 to a DAF in one year—representing five years of giving—they can claim a significant deduction in that year while continuing to support charities at $20,000 per year through the DAF.
With thoughtful planning, clients can achieve both their charitable goals and a more favorable tax outcome.
As we look ahead, here’s hoping everyone enjoys a happy, healthy, and prosperous 2026. And as always, now is an excellent time to revisit your tax and estate planning strategies to be sure they still align with both the law—and your goals.
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