Senate Vs. House Tax Bills: Key Differences Impacting Estate Planning In 2025
Senate vs. House Tax Bills: Key Differences Impacting Estate Planning in 2025
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 (TCJA). 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 January 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 (SALT) deduction. The House bill proposes raising the SALT cap to $40,000 per year for taxpayers with adjusted gross income (AGI) 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 (GILTI), foreign-derived intangible income (FDII), and the base erosion and anti-abuse tax (BEAT), 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:
Tax laws are subject to frequent changes and modifications. Proactive, flexible planning remains the best defense against evolving legislation.
Top Ten Keywords:
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
15 minutes ago
- Yahoo
These Artificial Intelligence (AI) Stocks Are Quietly Outperforming the Market
Two AI stocks have crushed the broader market in the past year, and they seem primed for more upside. Fast-growing demand for AI tools in cloud-based services is helping these companies attract new customers. 10 stocks we like better than Twilio › Artificial intelligence (AI) stocks have been in fine form on the market in the past few years, and that's not surprising, as this technology has supercharged the growth of many companies. Thanks to huge investments in AI hardware such as semiconductors, as well as the rapidly growing adoption of AI software to boost productivity, it is estimated that overall spending on AI could hit a massive $628 billion by 2028. This explains why investors have been buying AI stocks hand over fist. However, there are certain AI stocks that have significantly outpaced the broader stock market, and importantly, they still have the potential to deliver more upside. Let's take a closer look at these two names that aren't all that popular, but have been outperforming the market in the past year. Twilio (NYSE: TWLO) stock is up an impressive 115% in the past year as of this writing, easily outperforming the 11% gains clocked by the Nasdaq Composite over the same period. The good part is that Twilio still trades at an attractive 26 times forward earnings and 4 times sales, even after its terrific surge in the past year. The valuation makes buying Twilio stock a no-brainer right now, especially considering how AI now plays an important role in accelerating its growth. Twilio's application programming interfaces (APIs) allow its clients to connect with their customers through various channels such as voice, text, email, video, chat, and others. Twilio points out that its customer engagement platform is used by more than 300,000 enterprises globally. Specifically, the company ended the first quarter of 2025 with more than 335,000 active customer accounts, an increase of 7% from the previous year. This huge customer base is a key reason why one can consider buying Twilio stock right now, as it gives the company the opportunity to cross-sell its AI offerings to a big pool of customers. Twilio has been offering multiple AI tools to customers, such as generative AI-powered assistants that can help tackle customer service queries autonomously, integrating human-like conversational AI assistants to talk to customers in real time and derive critical insights from customers' data with the help of AI. The growing demand for these AI services helps Twilio win more business from existing customers. This is evident from the five-percentage-point jump in fiscal 2025 Q1's dollar-based net expansion rate compared to the first quarter of 2024. The higher customer spending, along with an increase in Twilio's customer base, are the reasons why it has raised its full-year organic revenue growth guidance to 8% from the earlier forecast of 7.5%. This combination of higher customer spending, along with an increase in the customer count, explains why analysts expect a 24% increase in Twilio's earnings this year, followed by impressive growth over the next couple of years as well. Assuming Twilio indeed generates $6.21 per share in earnings after a couple of years and trades at 30 times earnings at that time (in line with the tech-laden Nasdaq-100 index's forward earnings multiple), its stock price could jump to $186. That would be a 59% jump from current levels. So, investors can expect more upside from this AI stock going forward, which is why it would be a smart idea to consider buying it while it trades at attractive levels. Snowflake (NYSE: SNOW) share prices have jumped an impressive 64% in the past year despite bouts of volatility, and a closer look at the price chart will tell us that the stock has made a sharp move up in the past couple of months. Importantly, more upside in Snowflake stock cannot be ruled out, as fast-growing adoption of the company's AI-focused data cloud tools is helping it build a robust revenue pipeline for the future. Snowflake's data cloud platform enables customers to safely store their data in a single platform, which can then be used to derive insights and build applications. The company's AI-specific tools are now helping customers get more out of their data. They can apply large language models (LLMs) to their data to build applications such as AI agents, generative AI assistants, and search documents through natural language prompts, among other things. These offerings are turning out to be a hit among Snowflake customers, with nearly 45% of its 11,600-strong customer base using its AI tools every week in the previous quarter. Additionally, AI is helping Snowflake attract more customers. This is evident from the 19% year-over-year increase in its customer count in Q1 of fiscal 2026. This combination of an increase in Snowflake's customer base, along with the growing adoption of its AI tools, is the reason why its remaining performance obligations (RPO) increased by an impressive 34% year over year in the previous quarter to $6.7 billion, which was better than the 26% growth in its product revenue to just under $1 billion. The strong growth in its revenue pipeline encouraged management to increase its fiscal 2026 revenue guidance as well. What's more, Snowflake's earnings are expected to increase by a third in the current fiscal year to $1.10 per share. Consensus estimates project faster growth over the next couple of fiscal years. That won't be surprising, as Snowflake's ability to win more business from its existing customers and an improvement in its overall customer count should allow it to continue improving its revenue pipeline, especially considering that it sees its total addressable market growing to a whopping $342 billion in 2028. In all, Snowflake investors can expect more upside from this cloud stock following the impressive gains that it has delivered in the past year, driven by a new catalyst in the form of AI. Before you buy stock in Twilio, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Twilio wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $659,171!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $891,722!* Now, it's worth noting Stock Advisor's total average return is 995% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 9, 2025 Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Snowflake and Twilio. The Motley Fool has a disclosure policy. These Artificial Intelligence (AI) Stocks Are Quietly Outperforming the Market was originally published by The Motley Fool Sign in to access your portfolio
New York Post
15 minutes ago
- New York Post
Rhode Island lawmakers pass bill to ban sales of assault weapons
Rhode Island's Democratic-controlled state House on Friday approved legislation that would ban the sale and manufacturing of many semiautomatic rifles commonly referred to as assault weapons. The proposal now heads to the desk of Democratic Gov. Dan McKee, who said in a post on the social platform X on Friday evening that he plans to sign the bill into law. If that happens, Rhode Island will join 10 states that have some sort of prohibition on high-powered firearms that were once banned nationwide and are now largely the weapon of choice among those responsible for most of the country's devastating mass shootings. Advertisement 3 Rhode Island's state House approved legislation that would ban the sale and manufacturing of assault weapons. AP Gun control advocates have been pushing for an assault weapons ban in Rhode Island for more than a decade. However, despite being a Democratic stronghold, lawmakers throughout the country's smallest state have long quibbled over the necessity and legality of such proposals. Advertisement The bill only applies to the sale and manufacturing of assault weapons and not possession. Only Washington state has a similar law. Residents looking to purchase an assault weapon from nearby New Hampshire or elsewhere will also be blocked. Federal law prohibits people from traveling to a different state to purchase a gun and returning it to a state where that particular of weapon is banned. Advertisement Nine states and the District of Columbia have bans on the possession of assault weapons, covering major cities like New York and Los Angeles. Hawaii bans assault pistols. 3 Two men inspected AR-10s for sale at the Belle-Clair Fairgrounds & Expo Center Gun Show in Belleville, Ill. REUTERS Democratic Rep. Rebecca Kislak described the bill during floor debates Friday as an incremental move that brings Rhode Island in line with neighboring states. 'I am gravely disappointed we are not doing more, and we should do more,' she said. 'And given the opportunity to do this or nothing, I am voting to do something.' Advertisement Critics of Rhode Island's proposed law argued that assault weapons bans do little to curb mass shootings and only punish people with such rifles. 'This bill doesn't go after criminals, it just puts the burden on law-abiding citizens,' said Republican Sen. Thomas Paolino. Republican Rep. Michael Chippendale, House minority leader, predicted that if the legislation were to become law, the US. Supreme Court would eventually deem it unconstitutional. 'We are throwing away money on this,' he said. It wasn't just Republicans who opposed the legislation. David Hogg — a gun control advocate who survived the 2018 school shooting in Parkland, Florida — and the Rhode Island Coalition Against Gun Violence described the proposed ban as the 'weakest assault weapons ban in the country.' 'I know that Rhode Islanders deserve a strong bill that not only bans the sale, but also the possession of assault weapons. It is this combination that equals public safety,' Hogg said in a statement. 3 A crowd of gun-rights advocates filled the State House rotunda in Rhode Island in March to protest a proposed ban on the manufacture and sale of assault-style weapons. David DelPoio/The Providence Journal / USA TODAY NETWORK via Imagn Images Advertisement Elisabeth Ryan, policy counsel at Everytown for Gun Safety, rejected claims that the proposed law is weak. 'The weakest law is what Rhode Island has now, no ban on assault weapons,' Ryan said. 'This would create a real, enforceable ban on the sale and manufacture of assault weapons, just like the law already working in Washington state, getting them off the shelves of Rhode Island gun stores once and for all.' Nationally, assault weapons bans have been challenged in court by gun rights groups that argue the bans violate the Second Amendment. AR-15-style firearms are among the best-selling rifles in the country. The conservative-majority Supreme Court may soon take up the issue. Advertisement The justices declined to hear a challenge to Maryland's assault weapons ban in early June, but three conservative justices — Samuel Alito, Neil Gorsuch and Clarence Thomas — publicly noted their disagreement. A fourth, Brett Kavanaugh, indicated he was skeptical that the bans are constitutional and predicted the court would hear a case 'in the next term or two.'
Bloomberg
18 minutes ago
- Bloomberg
Charting the Global Economy: Key Central Banks Hold on Rates
Central bankers in the US, UK and Japan held the line on interest rates this week as officials attempt to gauge the impact of tariffs, uncertainty about economic activity and war in the Middle East. While the median forecast from US Federal Reserve officials showed two interest-rate cuts by the end of the year, seven policymakers — up from four at the March meeting — indicated they see no reduction.
