Understanding the One Big Beautiful Bill Act: Estate Planning Insights for San Franciscans

Sweeping legislative changes can often stir confusion or concern, particularly when they affect sensitive areas like estate planning. While the One Big Beautiful Bill Act (OBBBA), enacted in July, introduces substantial changes, understanding them now can bolster your long-term planning in San Francisco.

Estate and Gift Tax Exemption

Starting January 1, 2026, individuals can pass on $15 million (or $30 million for couples) without facing federal estate tax, with annual inflation adjustments. This change ends earlier uncertainties about phased reductions. It's important for San Franciscans to be mindful of state-level taxes that may apply, even with these federal changes.

Medicaid Reform and Long-Term Care Planning

The Act brings $1 trillion in federal Medicaid cuts, new work/volunteer requirements, and stricter eligibility checks. In high-cost regions like the Bay Area, this might complicate qualifying for long-term care support. Consider exploring private insurance and asset protection strategies to better navigate these changes.

Social Security Tax Changes

A temporary new deduction of up to $6,000 ($12,000 for couples over 65) for those under certain income thresholds is part of the Act. This could increase the number of seniors in San Francisco with untaxed Social Security benefits, though it expires in 2028 unless renewed.

Medicare Budget Impact

Delays in key Medicare cost-sharing assistance until 2034, combined with potential $490 billion cuts, may lead to higher out-of-pocket costs and provider reductions in San Francisco if PAYGO rules enforce these cuts.

Estate Tax Structure

The Act leaves the structure of estate, gift, and GST taxes largely unchanged, apart from the increased exemption. San Franciscans should revisit their estate documents to ensure compliance with both state and federal regulations.

Although the OBBBA introduces complexities, it also opens up opportunities for proactive, strategic estate planning. We encourage San Franciscans to review their estate documents, long-term care plans, and tax strategies. Reach out to a trusted advisor to tailor guidance to your unique family and financial situation.