On May 9, 2025, House Republicans on the Ways and Means Committee unveiled the first piece of a broad new tax cut proposal that could have long-term implications for financial advisors and their clients. They released the entire bill to the public on May 12, 2025. The proposed legislation builds on the 2017 Tax Cuts and Jobs Act and outlines permanent and expanded benefits for individual taxpayers, small business owners, and high-net-worth families.
What’s in the House Proposal?
The bill includes several notable changes:
1. Income Tax Cuts
The proposal seeks to permanently extend the lower income tax brackets introduced in 2017 and add a one-year inflation adjustment in 2025 to further reduce taxes across all brackets except the top 37% rate.
2. Standard Deduction Increases
The doubled standard deduction — currently claimed by over 90% of taxpayers — would be made permanent. Additionally, there’s a temporary increase from 2025 through 2028:
- Individuals: $16,000 (up from $15,000)
- Heads of household: $24,000 (up from $22,500)
- Married couples: $32,000 (up from $30,000)
3. Child Tax Credit Expansion
The current $2,000 Child Tax Credit would become permanent, with a temporary increase to $2,500 per child from 2025 through 2028. It returns to $2,000 in 2029, with inflation indexing thereafter.
4. Small Business Relief
The Qualified Business Income (QBI) deduction for pass-through businesses would increase from 20% to 23% and be made permanent, with expanded income phase-in thresholds and inflation indexing beginning in 2026 (Bill reference: Section 110005, Page 8).
5. SALT Deduction Cap Increase
A proposed tripling of the state and local tax (SALT) deduction cap to $30,000 for couples earning less than $400,000 annually. This increase aims to provide relief to taxpayers in high-income-tax states.
6. 529 Education Savings Plan Eligible Expenses Expanded
This would permit parents to use money saved in 529 education savings accounts more liberally for K-12 education expenses. Currently, eligible education expenses only include K-12 tuition; the bill would expand that definition to other costs (i.e., tutoring, textbooks), including private school tuition and homeschool costs. This expansion reflects a broader push for school choice and is expected to benefit families seeking more educational options.
7. Estate and Generation-Skipping Tax Reforms
One of the most significant elements for high-net-worth families is the proposed increase in the estate tax exemption:
- Unified estate and gift tax exemption permanently raised to $15 million, indexed to inflation
- The generation-skipping transfer (GST) tax exemption is also raised to $15 million, with the same inflation adjustments
These changes would take effect starting in 2026.
The Joint Committee’s Actual Proposal
“The proposal permanently increases the unified estate and gift tax exemption to an inflation-indexed $15 million for taxable years beginning after December 31, 2025. Accordingly, the generation-skipping transfer tax exemption is also permanently increased to an inflation-indexed $15 million. The $15 million exemption amount is indexed for inflation with a base year of 2025. Accordingly, the exemption amount is $15 million for decedents dying and gifts made in calendar year 2026 and increases with inflation thereafter.”
What About the Senate Version?
On June 16, 2025, the Senate GOP introduced its version of the tax bill, presenting a similar but distinct vision for federal tax reform. While both chambers aim to extend tax relief and enhance economic incentives, there are several key differences advisors should be aware of:
1. No Sunsets, Clearer Permanence
The Senate bill locks in existing federal income tax brackets and boosts the standard deduction, but it notably removes sunset clauses. This is a departure from the House version, which includes temporary increases that phase out over time. The Senate also maintains the termination of personal exemptions.
2. Child Tax Credit: Smaller Boost
Unlike the House’s proposal to raise the Child Tax Credit (CTC) to $2,500 per child through 2028, the Senate bill proposes a more modest increase to $2,200 per child, with no phased reduction timeline yet defined.
3. Expanded Senior Deduction
The Senate bill introduces a $6,000 tax deduction for seniors, which is more generous than the House’s proposed $4,000 deduction. This could present new planning opportunities for older clients managing retirement income and medical costs.
4. Estate Tax Exemption for Couples: Nearly $30M
The Senate’s proposal aligns with the House version and would increase the federal estate tax exemption to $15 million per filer.. This would effectively allow couples to pass $29.99 million to heirs estate tax-free starting in 2026. With inflation indexing, that figure would continue to rise in future years.
Notably, the estate tax already affects a very small percentage of Americans. In 2019, only 8 out of every 10,000 descendants were subject to the tax (Institute on Taxation and Economic Policy, 2023).
5. Business and Investment Incentives
The Senate’s bill includes permanent incentives for businesses, including full expensing of investments in equipment and research and development. These provisions aim to further encourage growth among startups, manufacturers, and tech-focused companies.
What This Means for Financial Advisors
For advisors, the proposed legislation opens the door to meaningful conversations across tax planning, estate strategies, and business succession.
1. Uncertainty Around the Sunset but Stay Ahead with Ongoing Estate Planning
The increased estate and GST exemption to $15 million provides more breathing room for ultra-high-net-worth families, but it’s not yet law, and the current exemption is still set to sunset after 2025. Advisors should:
- Continue guiding clients to consider using today’s $13.99M exemption while it’s still in place
- Help clients weigh gifting now vs. waiting, especially if the legislation faces delays or changes
- Update estate plans in coordination with tax professionals once final thresholds are confirmed
2. Higher Standard Deduction May Reduce Itemizing But Elevates Strategic Gifting
For most clients, the enhanced standard deduction will further reduce the need to itemize. This makes strategic charitable giving, such as donor-advised funds or bunching deductions, even more relevant in comprehensive planning conversations.
3. Business Owners Stand to Benefit
With a larger and permanent QBI deduction, S-corp and partnership clients may see higher net income retention. Advisors should:
- Revisit entity structures in light of the potential 22% deduction
- Coordinate with CPAs to optimize compensation strategies and tax deferral vehicles
- Discuss reinvestment, liquidity, and succession planning as post-tax income increases
4. Child Tax Credit Expansion Supports Young Families But Is Temporary
The temporary boost to the Child Tax Credit may free up cash flow for families in the short term. Advisors working with younger clients can consider how this fits into:
- Budgeting and college savings strategies
- Cash flow planning amid inflation and economic uncertainty
- Coordinated tax strategies for dual-income households
5. SALT Dispute
Though the cap on the SALT deduction is proposed to see a substantial increase, which would provide tax relief to many clients in high-income states, it is a point of contention. So, the level of this deduction may resurface in future legislative discussions.
6. Educational Savings Planning
The expansion of 529 plans to include K-12 expenses offers new opportunities for clients with young children to save for educational costs, requiring adjustments to financial plans.
Stay Ahead of the Curve
While both versions of the proposal are still under debate, the trajectory is clear: tax reform will be a central issue heading into 2026. Financial advisors should be prepared to guide clients through potential changes and seize new opportunities as details are finalized. At Wealth.com, we’re closely tracking both House and Senate developments to ensure our platform reflects the latest regulatory landscape.
- To review the proposed House legislation in full, view the master bill here.
- To review the Senate Finance Committee’s legislation, view the bill here.
Curious how to bring estate planning into your practice or how these changes could impact your clients? Book a demo to see how Wealth.com can help you deliver deeper value through modern, compliant estate planning.
