Update of Potential Passage of Tax Cuts and Jobs Act of 2017

May 15, 2025

House Republicans released their proposed tax cuts and related spending cuts package on May 12, 2025. This package includes a permanent increase of the Estate Tax Exemption to $15MM, which (if enacted) means the exemption will no longer be cut in half at the end of this year, along with various other tax cuts. House Republicans hope to pass this legislation quickly, but it appears that it will be more difficult to pass this bill than initially anticipated.

There are numerous factions within the Republican Party with different priorities that all need to approve any bill due to the extremely narrow majority that the Republicans hold in the House. Some House Republicans have stated that they will not vote for a bill that increases the deficit, while others have criticized proposed spending cuts because those cuts will disproportionately impact constituents in their districts. Many of the proposed spending cuts are also unpopular based on polling data. Additionally, Republicans from blue states want to eliminate any caps on the State and Local Tax Deduction, while Republicans from red states oppose eliminating the cap on this deduction or otherwise support more limited relief with regard to this deduction. These are illustrations of the opposing viewpoints Republicans have with regards to this legislation, and even if these different factions in the House can come to an agreement, the legislation still must pass the Senate, with several Senate Republicans already criticizing the proposed cuts to Medicaid.

Due to these internal disagreements and the narrow majority the Republicans hold in the House, there is still uncertainty concerning whether the proposed legislation can ultimately be enacted and, if it is enacted, what the legislation will ultimately look like. Thus, while we are continuing to monitor the proposals as they are released, it is important for clients to prepare for the possibility that at least some of the tax benefits they have received under the Tax Cuts and Jobs Act of 2017 could be eliminated or otherwise reduced after 2025. Continuing to plan for this possibility will allow clients to act quickly later this year if the legislation does not pass or certain tax benefits are not ultimately extended.

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