A provision in the new tax code could change the way Americans pass down their homes, and the wealth tied up in them.
The One Big Beautiful Bill Act (OBBBA) makes permanent what had previously been a temporary boost to the federal estate tax exemption. That exemption, often described by estate planners as a “coupon,” determines how much you can transfer to heirs tax-free.
For wealthy families—and especially those with significant real estate holdings—the change is a game changer. Before OBBBA, the exemption was scheduled to fall by nearly half in 2026, reverting to pre-2017 levels. Now, that rollback is off the table.
This new law provides breathing room not only for ultrahigh net worth individuals, but also for families whose property values have ballooned in expensive housing markets. For homeowners thinking about legacy, it might be time to revisit your estate plan and make sure it’s keeping pace with the tax code.
The estate tax 'coupon' just got bigger—permanently
One of the biggest changes in the OBBBA is the permanent expansion of the federal estate tax exemption. What was originally a temporary provision of the 2017 Tax Cuts and Jobs Act is now a lasting part of the tax code.
Starting in 2026, the federal estate tax exemption will increase from its current level of $13.99 million to $15 million per person, with annual adjustments for inflation moving forward. For wealthy families, that means a married couple can transfer up to $30 million tax-free without a looming expiration date.
Before the passage of the OBBBA, the exemption was set to drop by nearly half in 2026, reverting to pre-TCJA levels of around $7.2 million per person. The new law locks in a much higher baseline and eliminates the sunset clause entirely, giving estate planners and high net worth households long-term clarity.
For homeowners, this creates meaningful breathing room. Real estate—whether a primary residence, second home, or investment property—often represents the most valuable portion of an estate. Under the new exemption, more of that property can now be passed on to heirs without triggering the 40% federal estate tax, making this one of the most consequential provisions in the bill for families with significant real estate assets.
What this means for homeowners and heirs
The expanded estate tax exemption is particularly impactful for families whose estates include high-value real estate in expensive markets like California, New York, Florida, or Illinois, where a primary residence alone can be worth several million dollars.
The higher exemption also benefits those who have already used a portion of their lifetime exclusion through gifting. Starting in 2026, they’ll also benefit from expanded exemptions and less pressure to gift their estate to avoid risking a hefty estate tax bill.
Should you update your estate plan now?
You likely don’t need to redo the core components of your estate plan. But the expanded estate tax exemption is a significant enough shift that it’s worth revisiting the broader strategy behind your plan.
Homeowners, in particular, might consider placing appreciating assets like real estate into irrevocable trusts. Doing so can remove both the current value and future appreciation from your taxable estate, helping maximize the wealth passed on to heirs. However, this can come with gift tax implications, as well as capital gains trade-offs.
It’s also a good time to take a closer look at your beneficiary designations and trust structures. Even modest estates might benefit from reducing probate exposure or restructuring how assets are held to improve tax efficiency. While the new law offers more room for strategic planning, that flexibility matters only if your plan keeps up with the changes.
Not all taxes are federal: The state trap
While the federal estate tax exemption is rising to $15 million per person, many states continue to impose their own estate taxes with much lower thresholds—and those laws haven’t changed. In Illinois, for example, the state estate tax exemption remains at just $4 million per person. That means even if your estate is fully shielded from federal estate tax, you could still owe a significant amount at the state level.
This is especially important for homeowners whose estates are real estate–heavy. A primary residence, a vacation home, or rental properties can quickly push an estate past state exemption limits, triggering state estate taxes that might come as a surprise.
The clock isn’t ticking, but it could be
While the expanded estate tax exemption is now permanent under the One Big Beautiful Bill Act, permanence in tax law is never truly guaranteed. The exemption is safe for now, but a future Congress could choose to roll it back. That means there’s no looming Dec. 31, 2025, deadline like there was under the old rules, but it also doesn’t mean you should wait to act.
For high net worth individuals and families with valuable real estate holdings, strategic planning today can lock in significant benefits. Making large gifts now, transferring appreciating assets out of your estate, or updating trust structures can help secure the full advantage of the current law, even if political winds shift later. The window may be open indefinitely, but there’s no guarantee it stays that way.
Allaire Conte is a senior advice writer covering real estate and personal finance trends. She previously served as deputy editor of home services at CNN Underscored Money and was a lead writer at Orchard, where she simplified complex real estate topics for everyday readers. She holds an MFA in Nonfiction Writing from Columbia University and a BFA in Writing, Literature, and Publishing from Emerson College. When she’s not writing about homeownership hurdles and housing market shifts, she’s biking around Brooklyn or baking cakes for her friends.
By Allaire Conte
July 14, 2025
