The Tax Change Agenda
The latest on the tax landscape
With the current political alignment, Republicans have the opportunity to address the Tax Cuts and Jobs Act and other tax policies through the “budget reconciliation” process. This approach allows for the passage of tax legislation without requiring bipartisan support.
However, it is anticipated that any new tax legislation may not be enacted until the latter half of 2025. Historically, even when the same party controls both Congress and the White House, major tax legislation in the first year of a new President’s term can take several months to pass.
Our view:
• Regardless of potential legislative changes, we recommend our clients consider transferring wealth to future generations, provided they can afford it and think it’s a good idea to do so.
• We suggest revisiting existing estate plans and reviewing remaining estate and gift tax exclusion amounts to ensure that clients are well prepared for any changes.
• Taxpayers should remain informed on any developments and consult with their J.P. Morgan teams and tax advisors to assess any impacts on themselves, their families and their businesses.
What’s on the table?
Income tax rates
The current top ordinary income tax rate is 37%. However, on Jan. 1, 2026, it is set to rise to 39.6%. Additionally, four of the six other tax rates are scheduled to increase, with brackets dropping, resulting in tax increases for more than 60% of taxpayers.
Gift and state and gift tax exclusion amount
In 2025, the maximum amount a taxpayer can transfer to recipients without paying gift or estate tax is $13.99 million. Unless the law changes, this number will drop to an estimated $7.25 million in 2026.
State and local tax (SALT) deduction cap
Under the Tax Cuts and Jobs Act, taxpayers are limited to a $10,000 deduction for state and local taxes paid. The cap is scheduled to expire after 2025.
Mortgage interest deduction
Currently, interest paid on $750,000 of mortgage debt is deductible. This amount is scheduled to revert to $1 million in 2026.
What’s the process?
The “budget reconciliation” process allows lawmakers to pass tax and spending legislation by a mere majority in the House and Senate. This means that legislative priorities can be advanced without requiring broad bipartisan support. The House and Senate must agree on how much they’re willing to spend on tax policy changes over the budget window. They must then adopt a single budget resolution before advancing legislation under the budget reconciliation process.
Rick Barragan is the Managing Director,
Los Angeles Market Manager, for J.P. Morgan Private Bank.
[email protected] | (310) 860-3658
privatebank.jpmorgan.com/los-angeles
Source: “The Tax Change Agenda” by Adam Ludman, Head of Tax Strategy, Jordan Sprechman, Practice Lead, U.S. Wealth Advisory, BJ Goergen Maloney, Global Head of J.P. Morgan Private Advisory, March 3, 2025.
