Are you ready for the Super Bowl of tax?

The Tax Cuts and Jobs Act will expire on Dec. 31, 2025. This law contains two types of provisions to watch: those that will completely expire and those that may change, such as individual tax rates. The Congressional Budget Office estimates that extending these provisions could cost the federal government around $4 trillion.

Finseca has outlined five core tax priorities for 2025 aimed at helping more Americans achieve financial security.

1. Protect the tax treatment of life insurance, annuities and deferral. 

In 2016, then-candidate Donald Trump’s tax plan proposed taxing the inside buildup of these financial products. Similarly, President Joe Biden’s Greenbook and statements from senior Democratic leaders have suggested taxing capital gains at death or eliminating the step-up in basis. Although these ideas remain popular in certain circles, they have not gained significant support among moderates. However, with growing populist sentiment on both sides of the political spectrum, our profession must remain vigilant.

2. Promote a sustainable and bipartisan estate tax and other wealth-transfer policies.  

The TCJA temporarily doubled the exemptions for estate, gift and generation-skipping transfer taxes. Still, these increased exemptions expire at the end of 2025, reverting to 2016 levels, adjusted for inflation. Extending the current doubled exemptions is estimated to cost $100 billion over 10 years. Finseca will continue to push for a bipartisan solution, similar to the 2013 agreement that set the top estate, gift and GST tax rate at 40% and established unified lifetime exemptions for these taxes.

3. Preserve nonqualified deferred compensation and uses of corporate-owned and business-owned life insurance.

An early draft of the TCJA nearly wiped out the deferred compensation market by proposing to eliminate nonqualified deferred compensation plans as a revenue-raising measure. As we look to the future, we must recognize that threats to NQDC and COLI/BOLI can arise from various quarters, often due to a lack of understanding. Continued advocacy and education on these topics are essential.

4. Ensure carrier tax rates are balanced and fair.  

The TCJA permanently cut the corporate tax rate from 35% to 21%, and additional tax changes targeted the life insurance industry.

As lawmakers consider raising the corporate tax rate, reviewing the tax provisions specific to life insurance companies is critical. If the corporate tax rate increases, these industry-specific tax hikes should be adjusted to ensure more stable tax treatment for life insurance and prevent negative impacts on customers. Without such adjustments, carriers may reduce product offerings or make them less competitive and affordable.

5. Extend or make permanent Section 199A, the small business deduction.  

Section 199A, which provides the most significant tax relief in the profession’s history and offers numerous client planning opportunities, will expire at the end of December 2025. Currently viewed as a Republican initiative, Section 199A needs broader bipartisan support, including backing from Democrats, to ensure its sustainability beyond 2025.

The November election results will greatly impact the tax reform process. While Finseca continues to prepare for all outcomes, we believe these are the core tax priorities that will help our members continue to provide holistic planning for millions of Americans.

Jennifer Fox is vice president of federal affairs with Finseca. Contact her at [email protected].