For most of the last decade, estate planning for business owners has been haunted by a deadline. The Tax Cuts and Jobs Act doubled the federal estate and gift tax exemption starting in 2018, but that boost was always scheduled to expire on December 31, 2025, snapping the exemption back to roughly half its size. Lawyers built entire practices around "use it or lose it" gifting strategies timed to beat the sunset.
Then the sunset didn't happen. The One Big Beautiful Bill Act (OBBBA), signed into law in July 2025, permanently raised the federal estate and gift tax exemption to $15 million per person starting in 2026 — no expiration date, no scheduled rollback, indexed for inflation every year going forward. For a married couple using portability, that's $30 million that can pass to heirs free of federal estate tax.
If you own a business, that single change rewrites a lot of the planning you may have already done — or the planning you kept putting off because the rules seemed likely to shift again.
What Actually Changed
Under prior law, the exemption for 2025 sat at $13.99 million per person, and was set to fall to roughly $7 million in 2026 once the TCJA provisions expired. Section 70106 of the OBBBA instead raised the base exemption amount in the tax code from $5 million to $15 million per person, effective for deaths and gifts occurring after December 31, 2025, with no sunset clause attached.
A few practical details matter more than the headline number:
- The exemption is unified. Gifts you make during your lifetime and the value of your estate at death draw from the same $15 million bucket. Give away $4 million now, and you have $11 million left to shelter at death (before inflation adjustments).
- The annual gift exclusion is separate and stacks on top. In 2026, you can give up to $19,000 per recipient (roughly double that for a married couple splitting gifts) to as many people as you like, every year, without touching the lifetime exemption at all.
- Portability still requires paperwork. A surviving spouse can inherit whatever exemption their spouse didn't use, but only if the estate files Form 706 within the deadline — even when no tax is owed. Skipping that filing because "the estate isn't big enough to owe tax" is one of the most common ways families accidentally forfeit millions in future exemption.
- The generation-skipping transfer (GST) exemption moved with it. If your succession plan involves grandchildren, trusts for future generations, or dynasty-style planning, the GST exemption is also now $15 million per person.
- State estate taxes didn't move. Seventeen states plus DC still impose their own estate or inheritance tax, and most of those exemption thresholds are dramatically lower than the federal number — Oregon's exemption is $1 million, for instance, and several others sit in the $2–7 million range. A business that comfortably clears the federal exemption can still trigger a real state tax bill.
Why This Matters Even If You're Nowhere Near $15 Million
It's tempting to read "$15 million exemption" and conclude this is a problem for someone else. Two things make that conclusion premature for a lot of business owners:
Business value is illiquid and easy to underestimate. Owners routinely value their company based on last year's draw or a back-of-envelope revenue multiple, not a defensible appraisal. A profitable service business, a piece of commercial real estate held inside the company, accumulated retained earnings, and a book of long-term contracts can push an estate well past what the owner assumed — especially once a buyer's multiple, rather than the owner's personal comfort level, gets applied.
State exemptions bite long before the federal one does. If your business and personal assets clear $2–3 million and you live in a state with its own estate tax, the federal $15 million threshold is irrelevant to whether your heirs write a check. This is a case where knowing your state's rules matters more than knowing the federal headline.
The planning conversation for most small business owners isn't "how do I avoid a $15 million problem." It's "does my succession plan actually reflect what this business is worth today, and does my state create exposure the federal number doesn't."
The Planning That's Now Outdated
A significant amount of existing estate planning was built assuming the exemption would fall back to roughly $7 million in 2026. If any of the following describes your situation, it's worth a review rather than an assumption that the old plan still fits:
- Bypass or credit-shelter trusts with formula clauses tied to "the exemption amount" may now shelter far more of a married couple's estate into an irrevocable trust than intended, potentially leaving a surviving spouse with less direct access to assets than the couple meant.
- Gifting programs accelerated to beat the 2025 sunset — moving business interests into trusts, using valuation discounts on minority ownership stakes, or making large lifetime gifts under time pressure — may have used exemption that didn't need to be spent yet, and some of those structures are irrevocable.
- Buy-sell agreements funded and valued years ago, especially ones written around an assumed lower exemption or an outdated valuation multiple, deserve a fresh look alongside current life insurance coverage.
- Life insurance purchased specifically to cover an anticipated estate tax bill at the lower exemption level may now be oversized relative to actual exposure — worth revisiting with an advisor rather than continuing to pay for coverage a plan no longer needs.
None of this means those tools were wrong to use. It means the assumptions underneath them changed, and a plan built for a $7 million world doesn't automatically make sense in a $15 million one.
Succession Planning Moves Worth Making Now
Get a real valuation, not a guess. Whether you're transferring the business during your lifetime, funding a buy-sell agreement, or just trying to know where you stand, an owner's mental estimate of what the company is worth is rarely the number a court, the IRS, or a buyer would use. A professional valuation — updated periodically, not done once and filed away — is the foundation everything else in this article depends on.
Revisit buy-sell agreements and how they're funded. If you have co-owners, confirm the agreement's valuation method still reflects reality and that any life insurance funding the buyout is sized to the current, not historical, number.
Check portability even if you don't think you need it. Because portability requires an estate tax return to be filed, and because business valuations can move a "clearly under the threshold" estate closer to the line than expected, filing Form 706 for a deceased spouse's estate is often worth the cost even when no tax is currently due.
Look at your state, not just the federal number. If you're in one of the states with its own estate or inheritance tax, that's frequently the binding constraint for a business owner's estate, regardless of what Congress did with the federal exemption.
Document the succession plan itself, not just the tax structure. Who runs the business if something happens to you tomorrow? Who has signing authority? Where are the financial records, and can someone besides you make sense of them on short notice? Estate tax exemptions solve a tax problem; they don't solve the operational one of a business that grinds to a halt because only one person understood how the books worked.
That last point is where bookkeeping quietly becomes part of succession planning. A valuation is only as credible as the financial records behind it, and a successor — whether that's a family member, a co-owner, or a buyer — can only step in quickly if the business's finances are clear, current, and auditable. A general ledger nobody but the founder can interpret is its own kind of liability.
Keep Your Books Ready for Whatever Comes Next
A permanent $15 million exemption changes the tax math, but it doesn't change the underlying need for accurate, well-organized financial records — for a valuation, for a buy-sell agreement, for a lender, or for whoever inherits the business. Beancount.io offers plain-text accounting that gives you complete transparency and control over your financial data, with a version-controlled history any accountant, appraiser, or successor can pick up and understand. Get started for free and keep your books in a state that's ready for the next transition, whenever it comes.