Proposed Federal Tax Legislation: The One, Big, Beautiful Bill Act
Posted by Cheryl A. Jankowski on June 05, 2025
Please note that the articles dated June 2025 reflect proposed tax legislation as it stood at the time of publication.
Legislation
In a significant move to address the impending changes to the federal gift and estate tax exemptions, the U.S. House of Representatives recently passed The One, Big, Beautiful Bill Act. This proposed legislation aims to provide clarity and stability for individuals concerned about potential tax liabilities.
The bill proposes to permanently increase the federal gift and estate tax exemption to $15 million for individuals and $30 million for married couples, starting in 2026. These amounts will continue to be adjusted annually for inflation, ensuring they remain relevant over time.
Next Steps and Legislative Process
The One, Big, Beautiful Bill Act is currently under consideration by the Senate. It is expected to undergo changes before a final vote. If the Senate amends the bill, it will return to the House for approval before being sent to the President for final approval.
The bill has sparked debates among Senators, particularly regarding its tax provisions and proposed spending cuts. Despite these disagreements, changes to the estate tax rules are anticipated this year.
Background of the Tax Cut and Jobs Act
The Tax Cuts and Jobs Act (TCJA), enacted in 2017, brought substantial changes to the federal gift and estate tax exemptions. It effectively doubled the exemption amounts, providing significant tax relief. As of 2025, the exemption amount stands at $13.99 million for individuals and $27.98 million for married couples, thanks to annual inflation adjustments. However, the TCJA's provisions are set to expire after 2025, reverting the exemption amounts to pre-TCJA levels. This looming deadline has created uncertainty for many wealthy individuals whose estates could be subject to higher taxes hence the proposed legislation.
Under the TCJA, the federal gift and estate tax exemption was increased from $5 million to $10 million per individual, with annual indexing for inflation. Estates that exceed the exemption amount are taxed at rates up to 40%. Similarly, cumulative lifetime taxable gifts that surpass the exemption are also taxed at up to 40%.
The annual gift tax exclusion allows individuals to make certain gifts up to a specified amount ($19,000 per recipient for 2025) without affecting their lifetime exemption. Gifts exceeding this exclusion reduce the lifetime exemption dollar-for-dollar.
Additionally, the unlimited marital deduction permits tax-free transfers between spouses, provided the surviving spouse is a U.S. citizen.
Implications for Estate Planning
For individuals concerned about the potential impact of these changes on their estate plans, it is advisable to consult with an estate planning professional from Lumsden McCormick. Understanding how the proposed legislation might affect your specific situation is crucial to making informed decisions, protecting assets, and preserving a legacy.
Please note that the tax law discussed in this article is currently proposed and has not yet been enacted.
for more information
Cheryl has extensive experience working with business owners and individuals on minimizing taxes, with a focus on succession planning. With a thoughtful approach, Cheryl helps clients explore their long-term goals and plan accordingly. Leveraging Cheryl’s expertise in this area, the goal is to implement plans that achieve the wishes of the client and provide for tax-efficient transitions. Cheryl’s passion for working with corporations and individuals has allowed her to become a trusted business advisor. She has worked with clients not only in the Western New York region but also throughout the country. The breadth of this experience has allowed her to collaborate with other professional advisors to ensure that plans are flexible and innovative in the ever-changing world in which we live. Cheryl started her career with the Firm in 1991 and rejoined in 2019 adding additional strength to the tremendous talent of the Lumsden McCormick tax team.