The reconciliation bill that we discussed in March continues to advance through Congress, and the contours of the final legislation are becoming clearer. While the bill is not yet law and significant changes remain possible, business owners and their advisors should understand the current trajectory and begin contingency planning for the most likely outcomes.
Current Status
As of mid-May 2025, the House has passed its version of the reconciliation package, and the Senate is developing its own approach. The two chambers will need to reconcile their differences in conference, and the final bill must pass both chambers before being sent to the President. The timeline remains uncertain, but leadership in both chambers has expressed a goal of completing the legislation before the August recess or, at the latest, before the end of the calendar year.[1]
Key Provisions Taking Shape
Individual Rate Extensions
Both chambers appear committed to making the TCJA's individual rate reductions permanent or, at minimum, extending them for several years. The 37 percent top rate and the expanded brackets are likely to continue beyond 2025. The question is whether the extension will be permanent or temporary, and whether any modifications to the bracket structure will be made.
Section 199A
The qualified business income deduction under § 199A is widely expected to be extended, potentially with an increased deduction percentage (from 20 percent to 23 percent, as proposed by the House). The details of the limitations—the wage and property limitations, the specified service trade or business (SSTB) phase-out, and the taxable income thresholds—remain subject to negotiation. Business owners who rely on the § 199A deduction should model both the current law and the proposed changes.[2]
Estate Tax Exemption
The higher estate tax exemption ($13.99 million per person in 2025) is expected to be extended, though the duration remains uncertain. If the extension is permanent, it will reduce the urgency for advanced estate planning techniques like GRATs, IDGTs, and valuation discount strategies. If the extension is temporary, the planning window will simply be extended rather than eliminated. Until the legislation is enacted, our advice remains the same: do not delay estate planning based on expectations of what Congress might do.[3]
SALT Deduction
The state and local tax deduction cap has been one of the most contentious provisions. The House bill proposes increasing the cap from $10,000 to $30,000 for individuals earning under $400,000. Senate proposals vary. A SALT cap increase will particularly benefit taxpayers in high-tax states, but Mississippi taxpayers—who face relatively low state and local tax burdens—will see a more modest impact. The pass-through entity tax election under Mississippi law provides an alternative path around the SALT cap for business owners.[4]
Bonus Depreciation
Restoring 100 percent bonus depreciation appears to have strong bipartisan support. The current phase-down (40 percent for 2025) is widely viewed as harmful to business investment, and retroactive restoration to 100 percent is a likely outcome. Businesses that are deferring capital expenditures in anticipation of the restoration should weigh the tax benefit against the business cost of delay.
What Business Owners Should Do Now
The worst approach is to wait for final legislation before making any decisions. Many of the planning opportunities available in 2025—Roth conversions, retirement plan contributions, entity restructuring, estate planning—have deadlines that will arrive before the legislation is finalized. Business owners should continue to plan under current law while remaining flexible enough to adjust if the law changes.
Specifically, we recommend modeling key decisions under both scenarios (TCJA extension and TCJA sunset), maximizing contributions to retirement plans at current rates, completing estate planning transactions that make sense regardless of the exemption level, and reviewing entity structure to ensure it remains optimal under either outcome.[5]