As Congress debates the “Big Beautiful Bill” — the next round of significant tax legislation, estate planners and their clients are paying close attention. The Senate Finance Committee and the House have each advanced their versions of the 2025 tax bill, both aiming to make permanent many provisions from the 2017 Tax Cuts and Jobs Act. However, important differences could significantly impact estate and tax planning for high-net-worth families.
Core Differences: Estate And Gift Tax Exemption
Both the House and Senate bills propose making the TCJA’s estate and gift tax exemption permanent, rather than reverting to the 2017 law on Jan. 1, 2026 . The House version sets the exemption at $15 million per individual (indexed for inflation after 2025), up from the current $13.99 million. The Senate version closely aligns with this, though the specifics of inflation adjustments may vary. Both bills retain the 40% tax rate on estates above the exemption.
For those with substantial estates, this is good news. The possibility of the exemption reverting to pre-TCJA levels in 2026 has prompted a surge in lifetime gifting and trust planning. If either bill passes, the urgency for immediate action may lessen, but the opportunity to remove future appreciation from one’s taxable estate remains compelling.
SALT Deduction: A Major Divergence
One of the most significant differences for high-net-worth taxpayers is the treatment of the state and local tax deduction. The House bill proposes raising the SALT cap to $40,000 per year for taxpayers with adjusted gross income under $500,000, providing substantial relief to residents of high-tax states. In contrast, the Senate bill retains the current $10,000 cap, although this could change as negotiations continue.
For clients in Massachusetts and other high-tax areas, the House version offers a clear advantage. Greater deductibility of state and local taxes would improve after-tax cash flow and could influence decisions about property ownership and residency.
Business And Individual Tax Provisions
The two bills also differ in their treatment of business taxes. The House bill extends certain deductions, such as those for research and development, on a temporary basis, while the Senate would make these extensions permanent. For business owners and family offices, the Senate’s approach offers more predictability.
On the individual side, the House increases the standard deduction and child tax credit and introduces “Tax-Advantaged Savings Accounts” for newborns with government contributions and tax-advantaged growth. The Senate bill offers a larger deduction for seniors and a pared-back child tax credit, along with permanent extensions of the Trump-era tax cuts.
International Taxation And Debt Limit
The Senate bill proposes more extensive changes to international tax provisions, including rules around global intangible low-taxed income, foreign-derived intangible income, and the base erosion and anti-abuse tax, as defined under the Internal Revenue Code. It also includes a higher debt limit increase than the House bill, which may affect future fiscal policy.
Estate Planning Strategies: Next Steps
For estate planners and their clients, the prospect of a higher, permanent exemption is reassuring but not a reason for complacency. Here’s what you should consider:
- Review And Update Your Plan: Even with a higher exemption, lifetime gifts and trust strategies can still remove future appreciation from your estate, locking in today’s benefits.
- Monitor The Legislative Process: The final bill may differ from either current version. Flexibility is key.
- Consider State-Specific Impacts: The House’s higher SALT cap could make a meaningful difference for residents of Massachusetts and other high-tax states.
- Work With Your Advisors: Coordinate with your estate planning attorney and tax professionals to tailor your strategy to both current law and future possibilities.
Tax laws are subject to frequent changes and modifications. Proactive, flexible planning remains the best defense against evolving legislation.
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