Pennsylvania families face significant changes to estate planning strategies after the passage of the One Big Beautiful Bill Act (OBBBA) in July 2025. This sweeping legislation introduces new savings accounts for children, permanently increases federal estate tax exemptions, and creates opportunities that require careful consideration for families building their legacies.
At Ruggiero Law Offices, our Pennsylvania estate planning attorneys understand how these new provisions offer both opportunities and considerations that may reshape how you approach wealth transfer, tax planning, and providing for future generations.
Understanding Trump Accounts for Pennsylvania Families
The One Big Beautiful Bill Act introduces Trump Accounts, tax-advantaged investment accounts designed specifically for children under 18.
Trump Account Contribution Limits
Along with $1,000 in seed money for children born between 2025 and 2028, these special trusts allow parents to contribute up to $5,000 each year until the child reaches age 18. The funds must be invested in diversified stock market funds that track U.S. stock indices. Employers may also contribute up to $2,500 per year without counting as taxable income to the employee.
Tax-Deferred Investment Gains
Trump Accounts grow tax-deferred, meaning investment gains are not taxed while funds remain in the account. However, contributions are made with after-tax dollars, so there is no immediate tax deduction. Account holders can access funds once they reach age 18, at which point withdrawals are taxed as regular income.
Compared to Other Estate Planning Tools
While 529 plans offer tax-free withdrawals for qualified education expenses, Trump Accounts provide broader withdrawal options but lack the tax-free treatment of qualified 529 withdrawals. A Pennsylvania family might use both tools strategically.
Parents can create trusts with specific distribution terms, asset protection features, and tax strategies tailored to their family's needs. However, trusts require more administrative oversight and legal costs to establish and maintain than Trump Accounts.
Permanent Federal Gift and Estate Tax Changes
The OBBBA makes substantial changes to federal estate and gift tax exemptions that affect Pennsylvania families with significant assets. Starting in 2026, the federal estate and gift tax exemption will permanently increase to $15 million per individual and $30 million for married couples, with annual inflation adjustments.
The Generation-Skipping Transfer (GST) tax exemption aligns with the increased estate tax exemption, making multigenerational wealth transfers more efficient. The annual gift tax exclusion remains at $19,000 per recipient for 2025, with future adjustments for inflation.
These higher exemptions mean many Pennsylvania families who previously faced federal estate tax concerns may no longer need to worry about these taxes. However, Pennsylvania imposes its own inheritance tax, which operates independently of federal changes.
New Income Tax Relief for Seniors
New tax relief measures in the OBBBA affect estate planning strategies by allowing seniors to preserve more wealth during their lifetimes while reducing pressure to make early gifts to children or grandchildren purely for tax reasons. Pennsylvania families can now focus on wealth transfer timing based on family needs rather than immediate tax reduction requirements.
Taxes on Social Security Benefits
Approximately 90% of Social Security beneficiaries are now exempt from paying federal income taxes on their benefits, reducing the tax burden for many Pennsylvania retirees. This change allows seniors to retain more of their Social Security income, potentially reducing their need to draw from other retirement accounts or investment assets during their lifetimes.
Up to $12,000 Tax Deduction
Individuals aged 65 or older with incomes under $75,000 receive a $6,000 tax deduction. Married couples earning under $150,000 receive a combined $12,000 deduction. These deductions phase out entirely for individuals earning over $175,000 and couples earning over $250,000.
Strategic Considerations for Pennsylvania Families
The OBBBA creates both opportunities and decisions that require careful analysis within the context of each family's broader estate planning goals. Pennsylvania families should consider how these federal changes interact with state laws and their personal circumstances.
Families establishing Trump Accounts should consider how these accounts fit within their overall estate planning strategy. The accounts may complement traditional estate planning tools rather than replace them. A Pennsylvania business owner might establish Trump Accounts for grandchildren while using trusts for larger asset transfers and business succession planning, for example.
Pennsylvania's inheritance tax applies to most transfers to non-spousal beneficiaries, regardless of federal estate tax changes. Families must plan for both federal and state tax implications when developing wealth transfer strategies. Additionally, Pennsylvania's income tax treatment of trust distributions may influence which tools work best for families in the Commonwealth.
Working With Pennsylvania Estate Planning Attorneys
The changes introduced by the OBBBA require careful evaluation within each family's unique circumstances. Several provisions have specific effective dates and sunset clauses.
Families with existing estate plans should review how OBBBA changes affect their current strategies. Higher federal exemptions might eliminate the need for certain trust structures while creating opportunities for new approaches to wealth transfer and tax planning.
At Ruggiero Law Offices, our experienced Pennsylvania estate planning attorneys can help you evaluate how these changes affect your family's goals and develop strategies that take full advantage of new opportunities.