Current Trends - Big Bill, Big Changes - Episode 212
- Jenny Rozelle, Host of Legal Tea
- 2 days ago
- 7 min read
Hey there, Legal Tea Listeners – This is your host, Jenny Rozelle. Welcome back for another episode, which is a “current trends” topic where we talk about things going on currently that are relevant and pertinent to my estate and elder law world, and/or maybe things I’ve seen on the news or stumbled across on social media. Well today’s episode is definitely both of those things, because today we are going to talk about the One Big Beautiful Bill and its general impact on the fields of estate and elder law. Now, before I go on, I’m just going to call it the “Bill” from here on out … for two reasons. First, because saying that over and over again, is like a tongue twister and second, because the name is just silly and I can’t say it without laughing. Like I said at the end of last episode, the Bill, which was recently passed and signed by President Trump, was a gazillion pages (actually like 870 pages in long), and do know – we are not talking about EVERYTHING that is in it. We are going to focus on just how it impacted the worlds of estate and elder law – since that is what this podcast is on!
Let’s first chat about the Bill, more generally speaking, just to make sure we get the basics out of the way. So the One Big Beautiful Bill was a comprehensive spending and tax package that made its way through Congress earlier this year of 2025. It had quite a journey on Capitol Hill, with the House initially passing it by a narrow margin of 215 to 214 back in May. The Senate then made amendments and passed their version 51-50, which required the House to vote again on the modified bill, and they approved it 218-214. President Trump signed it into law on July 4th, 2025. It basically combined multiple things into a large single package … it included tax provisions, increased funding in some areas, along with spending reductions in other areas to help offset the increased funding.
As the Bill relates to the worlds of estate and elder law, there are two primary things I wanted to bring you all up to speed on: first, it extended the historically high estate and gift tax exemption levels and second, it imposed cuts to Medicaid which will not begin until next year (2026). So, let’s first start with the Bill’s impact on taxes.
You may remember that back in 2017, the Tax Cuts and Jobs Act (TCJA) nearly doubled the lifetime estate and gift tax exclusion—from $5.49 million in 2017 to $11.18 million in 2018. Since then, it has been adjusted annually for inflation. However, it was always meant to be temporary, set to expire at the end of 2025 and revert to the old limits (again, adjusted for inflation). Well, that has officially changed. The Bill made not only that sunset provision come off the table—the exemption is actually going up. Starting January 1, 2026, the lifetime estate and gift tax exclusion will increase to $15 million per person, or $30 million for married couples. Like before, this amount will continue to be adjusted for inflation—but this time, the increase is permanent.
The Act also includes several other tax changes worth knowing that I think are kind of good to mention on this topic. If taxes are boring to you, just tune out for like 3 minutes … okay, so, according to the law firm of Barron, Rosenberg, Mayoras, and Mayoras, the changes worth knowing are: (1) The current federal income tax brackets (10%, 12%, 22%, 24%, 32%, 35%, and 37%) will remain in place. Without this change, rates would have increased in 2026. (2) The standard deduction was due to expire, but it is not only staying—it’s increasing. For 2025, it will be $15,570 for individuals, $31,500 for married couples, and $23,625 for heads of household. (3) The 20% deduction for qualified business income (QBI) from pass-through entities—which was set to expire—has also been made permanent. (4) Taxpayers over 65 using the standard deduction will now be able to take an additional deduction of $6,000 per person through 2028. This extra benefit starts phasing out once individual income exceeds $75,000 or joint income exceeds $150,000. Okay, I think those are the only ones I’m going to mention here. There were a lot of other tax changes, that’s for sure.
So… What Does This Mean for Your Estate Plan? The most immediate impact is that fewer estates will be subject to federal estate tax. Before this law passed, many families were rushing to make large gifts or set up irrevocable trusts before the higher exclusion expired. That urgency has now eased—especially since fewer than 0.1% of estates are expected to be taxable under the new thresholds. Though, I have to mention … the amount of estates that the higher exclusion amount applied to was also VERY small. I’ve talked about that on here before … FEDERAL estate taxes actually impacted not many people BEFORE the Bill and AFTER the Bill. Though, I should mention that there are some states out there that still have a STATE estate tax, so just a heads up about that. All this talk is about the FEDERAL estate tax. So, that could still be a planning factor for some families that live in those states that have a state estate tax.
Alrighty, so that’s all I’m going to mention on the tax changes from the Bill. I want to shift now to talking about the Bill’s cuts to Medicaid (since in elder law, we do a lot of Medicaid work and Medicaid planning). It was one of the most talked-about—and debated—pieces of the Bill actually. The legislation is expected to reduce Medicaid spending by around $1 trillion over the next ten years, which has sparked concern among healthcare advocates, seniors, and families alike.
According to Elder Law Answers, much of the public conversation has centered around new work requirements that could cause millions of adults to lose their Medicaid coverage. We are not going to talk about that here, because the type of Medicaid that elder law attorneys really focus on are for folks above 65 and navigating long-term care. The bigger story might be what’s not getting as much attention: how these funding cuts could affect these long-term care services that millions of over-65 seniors rely on due to age, illness, or disability. In the U.S., Medicaid is actually the single largest payer of long-term care—covering services like nursing home stays, in-home caregiving, and community-based supports.
Now, the rollout of the Medicaid cuts will not be immediate. Many Medicaid-related changes will happen gradually. The first big shift begins January 1, 2026, but it really does not impact those not in the elder law space – rather, it’s the part that affects the folks under the age of 65 with the work requirements. Most of the deeper Medicaid funding cuts and structural changes will not fully kick in until late 2026 and beyond. In fact, some of the most significant impacts may not be felt until 2027 or later. States have some discretion—they can roll out changes a bit early or delay a bit—which means the timing and impact will vary depending on where you live.
What does this mean for long-term care? It depends. We will have to wait and see the real impact. Medicaid is a federal-state partnership, which means each state runs its own program within broad federal rules. States decide what services to cover, how generous the eligibility rules are, and whether to include optional various programming. If state budgets get tight, some may respond by restricting access or cutting services—especially optional ones like in-home support. That could potentially push more people into nursing homes, since facility-based care is federally required while home care isn’t.
In short, depending on where you live, relying on Medicaid to cover long-term care might become a bit of a gamble. A major example of what I am talking about: starting in 2028, there will be a $1 million cap on home equity for those applying for Medicaid long-term care—without any adjustments for inflation. That means homes that were possibly once safe as “exempt assets” may no longer qualify, which is especially concerning in higher-cost housing markets. All of this to say .. Now is a good time to review your plan for paying and affording long-term care. Consider whether options like irrevocable trusts or long-term care insurance could help you stay protected if Medicaid eligibility rules or services change in your area.
So, as we start to wrap up … big picture—this Bill brings some real changes to the landscape of estate and elder law planning. The good news is that the higher estate and gift tax exemption is not only sticking around but going up. That takes some pressure off families who felt rushed to make big moves before the old law expired at the end of this year (2025). But on the flip side, the Medicaid cuts coming down the pipeline could create a lot of uncertainty, especially when it comes to long-term care. And with those changes rolling out slowly and varying by state, it’s more important than ever to keep an eye on your planning, so make sure you have a solid relationship with an estate and elder attorney.
Finally, it is important to keep in mind that this legislation passed by the slimmest of margins—just a single vote in both the House and the Senate—and has been highly controversial from the start. The debates surrounding it weren’t just about tax rates or spending levels; they reflected deep divisions in how different lawmakers view lots of different topics – like the role of government support programs like Medicaid, and how tax policy should treat wealth transfer across generations. Because of that, this law is far from settled. Depending on how future elections go, we could very well see attempts to scale back, revise, or even repeal parts of it. We’ve seen major shifts in estate tax law before—sometimes swinging back and forth with changes in political leadership—and there’s no guarantee that what’s “permanent” today will still be in place five or ten years from now. That’s why it is so important NOT to treat your estate plan as a “set it and forget it” kind of thing. Regularly reviewing and updating your plan ensures that you’re not just reacting to changes after the fact, but staying proactive—so your wishes, your assets, and your loved ones are protected no matter what direction the law takes in the future.
Alrighty, let’s wrap this episode up, shall we? Next week, we’re back to the “celebrity estate planning” type of episode – so, for this episode, I’m going to dive into the estate of Lauren Bacall (Buh-call) … an American actress as well as a fashion and Hollywood icon. So yeah, next week will be on her, Lauren Bacall, so tune in for that next week, Legal Tea Listeners. Talk to you then!
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