As we continue our breakdown of the new tax legislation, several provisions in the next section of the “One Big Beautiful Bill” affect estate planning, mortgage deductions, disaster losses, and the alternative minimum tax. While some of these updates are technical, they carry significant implications for families, homeowners, and individuals with larger estates or business income.
Here’s a closer look at what’s changing starting in 2026.
Estate and Gift Tax Exemption Increased to $15 Million
The estate and gift tax exemption—previously scheduled to revert to approximately $6 million per individual in 2026—will now be permanently set at $15 million per person.
What this means: High-net-worth individuals and business owners now have a much larger window to transfer wealth tax-free. Estate planning strategies, especially those involving trusts, lifetime gifts, or business succession, should be revisited in light of this change.
Alternative Minimum Tax (AMT) Relief for High Earners
The AMT exemption amounts and phaseout thresholds, which were temporarily increased in 2017, are being extended beyond 2025. Additionally, the bill:
Adjusts the income levels at which AMT begins to phase out
Increases the phaseout rate from 25% to 50%, which accelerates the reduction of the exemption as income increases
Applies a new inflation indexing method for these thresholds
What this means: While fewer taxpayers will be subject to AMT thanks to the higher exemption levels, high-income individuals with significant deductions or incentive stock options should continue to review potential AMT exposure annually.
Mortgage Interest Deduction Extended (With a Twist)
The bill keeps the current cap on mortgage interest deduction (up to $750,000 of mortgage debt) beyond 2025. It also reinstates a provision allowing mortgage insurance premiums to be treated as deductible interest.
What this means: Homeowners—especially first-time buyers with smaller down payments—can once again deduct mortgage insurance premiums, which can provide meaningful tax savings.
Casualty Loss Deduction Expanded to State-Declared Disasters
Previously, personal casualty losses were only deductible if they occurred in federally declared disaster areas. The bill now expands this deduction to include State-declared disasters as well.
Covered events now include:
Hurricanes, tornadoes, fires, floods, earthquakes, and more
Disasters declared by a Governor or the D.C. Mayor, not just the President
What this means: Taxpayers affected by disasters that don’t meet federal criteria may now still be eligible to deduct their losses. This is especially helpful in states prone to wildfires, flooding, or severe storms.
Key Takeaways
Estate planning needs to be re-evaluated. The higher exemption could change the urgency or structure of planned wealth transfers.
AMT changes offer relief, but vigilance is still required. Business owners and high-income earners should continue to assess exposure annually.
Homeowners gain back a useful deduction for mortgage insurance premiums.
Disaster relief becomes more accessible, even for events not federally recognized.
These changes go into effect starting in 2026, but now is the time to plan. Whether you're managing generational wealth, navigating the housing market, or recovering from a disaster, these updates can affect your bottom line.
Our firm is here to help you understand how the evolving tax code applies to your specific situation. Stay tuned as we continue reviewing additional provisions.