At Bequest Estate Planning, we typically focus on helping families protect their legacies through wills, trusts, and other planning strategies. While many of our clients don't face federal estate tax issues—thanks to the current $13.99 million per individual ($27.98 million per married couple) exemption—we know many of you are curious about what's happening with tax policy in Washington.
President Trump's "One Big Beautiful Bill Act" (yes, that's the actual name) passed the House in May 2025 and is under debate in the Senate. While this massive tax package touches everything from business deductions to Social Security benefits, there are several provisions that could impact the families we serve. Let's break down what you need to know.
The Estate Tax: Good News for Wealthy Families
Here's the headline for high-net-worth families: the bill would permanently increase the federal estate tax exemption to $15 million per person starting in 2026. For married couples, that means a combined $30 million exemption, up from the current $27.98 million.
To put this in perspective, under current law, the exemption was set to drop dramatically to around $7 million per person in 2026. This bill would not only prevent that cliff but actually increase the protection. While this doesn't affect many families we work with, it's certainly welcome news for those with substantial assets who were worried about the upcoming changes.
Tax Changes That Could Affect Everyone
Even if you're not worried about estate taxes, several provisions in this bill could impact your overall financial picture:
The Good News
No tax on tips and overtime: If you or family members work in service industries, qualified tips and overtime pay would be tax-free from 2025-2028
Bigger standard deduction for seniors: An additional $4,000 deduction for taxpayers over 65 (though this phases out at a 4% rate starting at $75,000 for single filers and $150,000 for married couples)
Auto loan interest deduction: Interest on car loans for US-made vehicles would be deductible, up to $10,000
Enhanced Child Tax Credit: The credit increases from $2,000 to $2,500 per child through 2028
The State and Local Tax (SALT) Situation
This is where things get interesting for many of our clients. The bill would raise the SALT deduction cap from $10,000 to $40,000 for married couples earning up to $500,000 (the deduction phases down at a 30% rate above this threshold, returning to the $10,000 cap at higher income levels). However, it also closes some workarounds that certain business owners have been using to get around the SALT cap.
If your property tax bill has grown over the last couple of years and you have been feeling the pinch from the SALT cap, this could provide some relief—assuming your income falls within the limits.
What's Likely to Change in the Senate?
Let's be realistic: the Senate rarely passes House bills unchanged, and this one is no exception. Several provisions are already generating debate:
The Price Tag: With a $3.8 trillion price tag over ten years, fiscal hawks in the Senate are likely to demand either more spending cuts or scaled-back tax benefits to reduce the deficit impact.
Energy Tax Credits: The House bill makes deep cuts to green energy tax credits from the Inflation Reduction Act, including eliminating some wind and solar credits just 60 days after enactment. Senate moderates from both parties may push back on this aggressive timeline.
International Tax Provisions: The bill includes retaliatory measures against countries with "unfair foreign taxes" (like digital services taxes), which could escalate into trade disputes. Some senators are signaling this section needs work.
What the Experts Are Saying
Tax policy analysts have mixed views on the bill's economic impact. The Tax Foundation estimates it would increase long-run GDP by 0.8% and create nearly 1 million jobs—modest but positive growth. However, they note the bill "leaves economic growth on the table" by sunsetting some of the most pro-growth provisions like bonus depreciation.
The concern among many economists is the deficit impact. Even accounting for economic growth, the bill would add $1.7 trillion to the deficit over ten years. As one analysis noted, this higher debt burden means that while the economy grows, American incomes don't grow as much because more money flows to foreign debt holders through interest payments. Bottom line: the cost of borrowing for most Americans will stay high or grow as a result of this bill.
So who benefits? While middle-income families see the biggest benefits initially (thanks to extended TCJA provisions), by 2034, higher-income taxpayers benefit most from the permanent changes. The lowest earners actually see a slight decrease in after-tax income by 2034, primarily due to tighter rules around tax credits.
What About Your Estate Planning?
While tax policy grabs headlines, remember that good estate planning goes far beyond tax savings. The fundamentals remain the same:
Have a will: Even with higher exemptions, you still need to designate guardians for minor children and ensure your assets go where you want them to go
Consider trusts: These aren't just for the ultra-wealthy—they can provide privacy, asset protection, and help avoid probate
Keep beneficiaries updated: Life changes, and so should your planning
Plan for incapacity: Powers of attorney and advance directives for health care are crucial regardless of tax policy
The Reality Check
Here's the thing about tax legislation: it's complicated, and it changes. This bill still needs to pass the Senate, where modifications are likely. Even if it becomes law exactly as written, future Congresses can—and often do—change tax rules again.
That's why we always tell clients at Bequest Estate Planning to focus on what they can control: having solid estate planning documents in place, keeping them updated, and making sure their families are protected regardless of what happens in Washington.
Looking Ahead
The Senate has set a target date of July 4th for final passage. We'll be watching closely and will update you on any developments that could affect your planning.
In the meantime, if it's been more than a few years since you've reviewed your estate plan, or if you've had major life changes (marriage, divorce, new children, significant changes in assets), now is a good time to schedule a review. Tax policy will come and go, but having a solid plan in place provides peace of mind regardless of what happens in Washington.