Effect of the OBBB

The per-person exemption equivalent for estate and gift taxes has been increased to $15 million, and will continue to be indexed. That is an increase of $100,000 or 7.14% from the previous $13.99 million. 

For a hypothetical married couple with one child, based on $100,000 of income, we calculate that the combined effect of the increase in the standard deduction and the increased child credit will be a savings of $740. 

For a hypothetical married couple over age 65, based on $100,000 of income, but disregarding the untaxed part of social security benefits, we calculate that the combined effect of the increase in the standard deduction and the new "senior deduction" will be a savings of $2,000. That new deduction is phased out over $150,000 of income, but very slowly. The deduction does not get back to the previous level of $2,000 until they reach a combined income of $880,000. 

Note that, contrary to many published reports and contrary to the claims of the President, the OBBB made precisely zero changes to the rules governing taxation of social security benefits. Of course, since social security is a big part of the income of any recipient, the new senior deduction will incidentally affect that income, too, but there are no changes to taxation of social security benefits otherwise. 

Other resources: 

Barnes Dennig on the new Car Loan Interest Deduction

Updates on Federal and state limits

 Last last year, the IRS announced the annual updates to certain key figures: 

$13.99 million - the lifetime per-person estate and gift tax exemption equivalent 

$19,000 - annual gift tax exclusion amount, per donor and per donee. If a gift is made that exceeds this limit, a gift tax return needs to be filed, but no gift tax will be payable unless the lifetime limit is exceeded. 

In mid-February, the Michigan Treasurer announced the 2025 figures that apply to several of the provision for estates and trusts under the Estate and Protected Individuals Code. The key items: 

$51,000 - The first annual increase for small estates, collection of funds by affidavit, and money that may be paid to a parent or guardian of a minor without having to name a conservator. 

The full updates, and the amounts that have applied over the past 20+ years, are found here.