What you need to know about possible tax policy changes

Tax legislation is a top priority for Republicans in Congress this year. Many of the provisions of the 2017 Tax Cuts and Jobs Act (TCJA) are set to expire at the end of 2025. With Republicans controlling both chambers of Congress, they are attempting to address the TCJA, and other tax policy, through the “budget reconciliation” process. This process allows Republicans to pass legislation by a simple majority vote in the House and the Senate instead of requiring a typical “super-majority” 60 votes to pass legislation in the Senate.

Deliberations are well underway. The White House and Congress aim to pass legislation by July 4. As legislators debate, the bill’s details and timing of potential enactment could change.

We summarize the latest here: Where tax policy stands, highlights of what’s likely coming, and six actions to consider taking now, regardless of the tax bill’s fate.

The latest developments in tax policy

On May 22, the House of Representatives passed a bill that would extend, or make permanent, many provisions of the TCJA scheduled to expire at the end of 2025. It also includes numerous other Congressional Republican and Trump administration tax policy priorities. The bill now heads to the Senate, where Republican members will consider which provisions of the House bill they will keep, which they will remove and which they will change. The upper chamber is expected to alter at least several provisions of the House-passed bill, a development that would necessitate resolution between the chambers before the final bill can be passed.

Most of the tax bill’s provisions would apply prospectively only, with an effective date of January 1, 2026, in most cases. The vast majority of the proposals that would take effect in 2025 are taxpayer-friendly.

Next, our suggested actions that individuals can take now, regardless of the bill’s fate. Speak with your tax advisor about which actions may be right for you. Your J.P. Morgan team can work with you and your tax advisor to help identify tax planning actions that are best suited to your personal circumstances and long-term financial goals.

Six actions to consider taking now 

1. Think about gifting this year

This year, the law allows individuals to transfer up to $13.99 million ($27.98 million for married couples) free of estate, gift and generation-skipping transfer (GST) taxes. These exclusion amounts are scheduled to revert to pre-TCJA levels after 2025—roughly half the current amounts. 

The bill would permanently increase the exclusion amounts to an inflation-indexed $15 million ($30 million for married couples) beginning in 2026, with inflation adjustments in future years. 

Action to consider: Gift before the reversion, if you can. If you have the ability and desire to do so, we recommend making gifts up to your gift and GST tax exclusion amounts. There is no guarantee Congress will pass a permanent increase, or this version of it. If Congress does not act, the scheduled reduction effective starting January 1, 2026, would apply. 

2. Consider whether you should frontload deductions this year so that you’re prepared if the proposal to limit itemized deductions is enacted

Effective January 1, 2026, the value of each dollar of itemized deductions would be capped more broadly for taxpayers in the top (37%) income tax bracket. This limitation would apply to a broad range of itemized deductions, including charitable contributions, state and local taxes, and investment interest expense. 

Action to consider: Consider whether 2025 might be a good year to frontload charitable deductions. If this provision is enacted, all else being equal, a charitable contribution made by a top-bracket taxpayer in 2025 would be more valuable than the same contribution made in 2026. If you’re unsure which charity you want to support, but would like to use the deduction this year, consider donating to a donor-advised fund (DAF). Tax deductions for donations to DAFs are immediate, but the payout from the DAF to another charity does not have to be.

3. If you have a private foundation, consider ways to mitigate potentially higher taxes on its net investment income

Private non-operating foundations (which primarily provide grants to public charities) are generally tax-exempt—except for taxes on unrelated business taxable income (UBTI) and a 1.39% excise tax on their net investment income. ¹ Private operating foundations (which devote most of their income to the active conduct of charitable activities) are exempt from the excise tax on investment income if they meet certain criteria. 

If this language becomes law, large private foundations would see the excise tax on net investment income increase, beginning with the taxable year after the date the bill is enacted.

Action to consider: First, review the impact the proposed change would have on any private foundations you have created and funded, and any you help manage. You may then develop strategies to minimize the increased excise tax in the event it becomes law.

Private foundations’ managers may need to reconsider their investments’ tax efficiency in light of any changes in tax treatment (e.g., by harvesting gains before the effective date, or once effective, implementing a tax-loss harvesting strategy). Private non-operating foundations may also consider making qualifying distributions of appreciated investments “in kind” (donating actual assets, rather than selling assets and donating the cash proceeds) to avoid the excise tax on the investments’ unrealized gains.

4. Consider whether your business would still qualify for a “SALT cap workaround”²

Since 2020, many pass-through business entities have organized or reorganized to take advantage of the uncapped deduction for state and local tax (SALT)—a benefit that has been available to businesses but not individuals. (For individuals, the SALT deduction is currently capped at $10,000.) 

The benefits of this so-called “SALT cap workaround” are enjoyed by the business’s partners, generally proportionate to their ownership. The bill proposes to do away with many applications of this so-called SALT cap workaround.

Action to consider: Businesses organized to take advantage of that deduction now may find it beneficial to consider whether to reorganize—as well as deciding when to do so—should this provision pass.

5. Revisit the qualified business income (QBI) deduction

The bill would expand, and slightly increase the rate of, the QBI deduction for certain businesses organized as pass-through entities—from 20% to 23%. The QBI deduction would also be expanded to include “qualified BDC interest dividends” attributable to lending activity.³

Action to consider: Examine whether income from your business or investments would qualify for QBI deductibility under the proposal—whether or not you currently enjoy the deduction. 

Doing this should include confirming the type of income generated; whether the activity qualifies; and how the business entity reports its pass-through details.

6. Bonus depreciation may be restored: Check its impact

In recent years, many business owners have taken advantage of temporary bonus depreciation to immediately expense significant portions of the cost of new and used qualifying business assets, such as aircraft, machines, equipment and vehicles, that are “placed in service.” In 2025, business owners can depreciate 40% of the cost of these assets; the eligible amount is scheduled to decrease 20% annually until it phases out by 2027.⁴ The bill would allow 100% bonus depreciation retroactively to qualifying business properties placed in service on or after January 20, 2025.

Action to consider: Consider whether the potential restoration of the 100% bonus depreciation might affect any plans to acquire qualified business properties this year. 

Remember, details could change as Congress debates specifics. Taking action solely on the basis of the bill may not be prudent, as it may never become law.

We can help

We at J.P. Morgan Private Bank, along with our government relations colleagues, tax policy experts, consultants and many others, are monitoring the tax legislation closely. Talk to your J.P. Morgan team about how best to prepare for various legislative outcomes. You can continue to monitor developments and follow the latest updates on our Tax Policy Hub.

JPMorgan Chase & Co., its affiliates, and employees do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal and accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any financial transaction.​

¹ “Unrelated business taxable income” (UBTI) is income received from an activity that constitutes a trade or business that is carried on regularly, and that is not substantially related to an exempt organization’s charitable purpose. Debt used to purchase or carry an investment not substantially related to an exempt organization’s charitable purpose can also give rise to UBTI.
“Net investment income” generally includes interest, dividends, rents, royalties and income from similar sources, and capital gain net income, reduced by ordinary and necessary expenses paid or incurred to earn this income. Net investment income does not include UBTI.

²For some owners of pass-through entities (PTEs)—including partnerships, S corporations and certain LLCs—this strategy may enable you to deduct, indirectly, state and local taxes paid by the PTE beyond the current $10,000 deduction cap on state and local taxes. 

³ This includes any dividend: (1) from a business development company (BDC) that elects to be treated as a regulated investment company for tax purposes; and (2) which is attributable to the BDC’s net interest income from a qualified trade or business. The QBI deduction also applies to qualified real estate investment trust (REIT) dividends and qualified publicly traded partnership income.

⁴ Certain jet aircraft may qualify for 60% bonus depreciation through the end of 2025, with a scheduled 20% decrease annually until it phases out by 2028.