House Passes Budget Blueprint: Details Still Pending
PLANNING MATTERS
April 15, 2025
Presented By David Radoccia CFP ®, ChFC ® and George Warburg CFP ®, APMA ®
HOUSE BUDGET BLUEPRINT: TAX CUTS & SPENDING DETAILS STILL PENDING
House Republicans narrowly approved the Senate’s budget framework by a 216-214 vote last Thursday1, setting the stage for extending Trump-era tax cuts and raising the debt ceiling. It is important to note that specific tax and spending provisions remain undefined.
Our opinion is that the Tax Cuts and Jobs Act (TCJA) provisions will likely be extended, and possibly modified, uncertainty remains about whether these extensions will be temporary or permanent.
Looking to learn more about the ‘TCJA’ – Tax Cuts and Job Acts?
Here is an article from Investopedia that breaks it down.
STANDARD DEDUCTIONS AND SALT CAP
The higher standard deductions have benefited approximately 90% of taxpayers who no longer itemize deductions. These amounts would likely continue increasing with inflation if TCJA provisions are extended.
House Republicans have indicated the state and local tax (SALT) deduction cap could increase from $10,000 to $30,000, providing relief to homeowners in high-tax states like New York and New Jersey. Some Republican representatives from these states have made this a condition for their support.
ESTATE AND GIFT TAX OUTLOOK
The generous estate and gift tax exemption (currently $13,990,000 per individual) will likely continue with annual inflation adjustments, though complete repeal of the estate tax isn’t expected.
BENEFITS FOR TAXPAYERS AND SMALL BUSINESSES
The extension represents positive news for most taxpayers, particularly small businesses that can continue utilizing the 20% Qualified Business Income deduction. Nationally renowned tax expert, Ed Slott of Ed Slott & Co., suggests expanding this benefit to more service-oriented businesses like financial advisors, accountants, and lawyers that currently face income restrictions. “Most small businesses have grown accustomed to these substantial deductions. Losing them would significantly disrupt their tax planning,” Mr. Slott explained2.
TAX PLANNING RECOMMENDATIONS
While we await how the extension of these provisions will be funded, or funded at all, given the imbalance between tax revenue and record high debt levels, taking advantage of lower tax rates now may make sense.
Some considerations would include:
- Roth conversions
- Increased gifting for wealthy individuals concerned about future estate taxes
- Accelerating income into lower tax brackets
- Shifting retirement contributions from traditional 401(k)s to Roth 401(k)s
As always, please contact us with any questions.
The Financial Planning Team,
PensionmarkMeridien
Whether you’re planning for a comfortable retirement, seeking tax effective strategies, saving for a child’s education, or building a lasting legacy, our team of experienced CFP® professionals are here to guide you every step of the way.
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This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.
Neither Pensionmark Financial Group, LLC (“Pensionmark”) nor its advisers provide tax advice. Please consult with an appropriate tax professional. Advisory services offered by Pensionmark Financial Group. Securities offered by Pensionmark Securities, LLC, member FINRA/SIPC. Pensionmark Financial Group, LLC is affiliated through common ownership with Pensionmark Securities, LLC.
Citations:
1. PBS, April 10, 2025
2. Think Advisor, April 11, 2025