Estate Planning After the One Big Beautiful Bill: What Collectors and Creators of Art Need to Know

On July 4, 2025, Congress passed the One Big Beautiful Bill Act (OBBBA)—a tax law that permanently reshapes estate and income tax planning. For those with significant art collections, the law presents both opportunities and urgent planning considerations. Below, we break down how the law affects those in the art world.

Estate and Gift Tax: Higher Exemption, New Planning Window

The OBBBA permanently increases the lifetime estate, gift, and GST tax exemption to $15 million per individual (indexed for inflation starting in 2026). This is a critical change for families with high-value illiquid assets—especially fine art, collectibles, and closely held interests.

Why This Matters for Art Owners:

• If your estate includes highly appreciated or non-income-producing assets like artwork, the larger exemption reduces liquidity pressure at death.

• Families who previously exhausted their exemption under the 2017 rules now receive a new exemption window, even if they previously used their full exemption.

• Portability remains in place—allowing surviving spouses to use unused exemption amounts.

  
  

Strategy Considerations:

• Use the renewed exemption to make lifetime transfers to irrevocable trusts, particularly for appreciating or legacy-intended assets.

• Consider gifting art interests to intentionally defective grantor trusts (IDGTs) or charitable lead trusts (CLTs) for income/estate tax benefits.

• Reassess existing GRATs, SLATs, and FLPs holding artwork for valuation opportunities and potential restructuring.

  
  

Income Tax: Rate Certainty for Planning Around Creative Income

For those who create art, license intellectual property, or receive income from resale royalties, the OBBBA provides welcome clarity:

• The lower income tax brackets from the 2017 TCJA are now permanent, with the top marginal rate fixed at 37%.

• The 20% qualified business income (QBI) deduction for certain pass-through income is preserved and extended.

• The SALT deduction cap is expanded to $40,000 through 2029, offering relief to high-income residents in high-tax states.

  
  

Planning Tips:

• Use income-smoothing tools (e.g., installment sales, trusts, deferred comp arrangements) to avoid bracket creep.

• Consider forming a business entity for art-related business income to maximize QBI benefits.

• Evaluate deductions for studio space, art storage, and business expenses.

  
  

Special Planning Considerations for Art & Collectibles

Wealth tied up in art presents unique challenges for estate administration and valuation. Under the OBBBA, traditional tools remain available, but coordination is key:

• The step-up in basis at death is preserved, which is favorable for heirs who may prefer to sell inherited artwork.

• Valuation discounts remain permissible for fractional interests in art held through LLCs or trusts—though scrutiny is increasing.

• Gifts of tangible property should be considered and IRS appraisal standards accounted for.

  
  

Philanthropy and Foundations

For families with private foundations or donor-advised funds (DAFs) that hold or accept art, the OBBBA maintains favorable treatment:

• No major changes to foundation excise tax, qualified distributions, or DAF rules.

• Deductions for gifts of appreciated tangible personal property are preserved, but compliance (e.g., Form 8283, qualified appraisals) remains critical.

  
  

Let’s Plan Ahead—With Your Collection in Mind

With the One Big Beautiful Bill now in place, you should review your estate plan to optimize your tax position, transfer legacy assets, and protect your artistic or collectible estate.

Contact our office today to schedule a strategy session focused on lifetime gifting of art and collectibles, planning for family foundations or museum donations, succession planning for creative professionals and collectors, and structuring trusts that preserve artistic intent and maximize tax benefits.