Between competing presidential visions and soon-to-sunset provisions, tax planning has taken on an unusual urgency.

Change is inevitable, but sometimes it can come all at once. For high net worth taxpayers, a deluge could be on the way.

Over the next 18 months, a pair of interlocking factors could have significant tax implications. There’s the U.S. election, which could usher in new policies depending on the outcome of the presidential and congressional races. And there’s the looming expiration of elements of the 2017 federal tax legislation, which would result in a return to generally higher income, gift and estate tax rates. Those changes are set to occur without any federal action — new legislation would be needed to modify or prevent them. 

High net worth taxpayers stand to be especially affected. Not only does a larger share of their income fall into the highest brackets, but many families could be impacted by alterations to gift and estate taxes. These taxpayers also tend to have more complex finances, meaning that even small changes can ripple through their wealth plans.

All of that pending change makes now a good time to review your planning with your Private Wealth Advisor. Though the end of 2025 may seem far off, starting early provides more time to think through and implement any changes to your plan. Early action can also help avoid what’s expected to be a last-minute crush among lawyers, accountants and other financial professionals. Even in the unexpected event that the 2017 tax cuts currently set to expire in 2026 are instead made permanent with no other changes, a review can help your plan stay on track and up to date.

Expiring provisions mean the tax code is almost certainly going to change.

Unlike many tax changes, the sunset provisions in the Tax Cuts and Jobs Act aren’t a new bill in front of Congress. Rather, they were baked into the original law to help it meet certain rules for how it would impact the federal budget. That’s an important detail: These changes will happen unless the government takes action. They can’t die in committee or be phased out of a bill.

There are many changes tied to these impacted provisions, but three are of particular import for high net worth investors. First, the highest bracket of income taxes will revert to 39.6% from 37%. Second, the lifetime exemption for gift and estate taxes will be halved, to about $7 million. This is the amount of money you can gift, or give away, to individuals over the course of your life and after your death before gift and estate taxes kick in. With the estate and gift tax rate at 40%, this can significantly impact accumulated wealth. Finally, some good news — the $10,000 cap on state and local tax, or SALT, deductions would go away.

Planning for the future can bear fruit, even if the worst doesn’t come to pass.

When reviewing your wealth plan ahead of these changes, it’s important to keep in mind that the goal isn’t to create a plan perfectly suited for a specific environment. Rather, it’s to create an all-weather plan designed to meet your needs even in a variety of scenarios. Balancing your risk against your expected return is always critical — as great as it can feel to see an aggressive position pay off, the pain of loss on an ill-considered choice is often keener. Your final plan should be designed to work no matter which direction the tax regime shakes out after 2025.

That holistic approach is even more important given the uncertainty surrounding these potential changes and whether their scheduled sunset will occur. For example, it’s impossible to know if income tax brackets would revert to their former levels or if unlimited SALT deductions would return. Your wealth plan should make allowances for these changes without relying on them. For example, a higher income tax rate shouldn’t push you out of taxable bonds if you need regular cash to sustain your lifestyle — but it should inform your approach to your portfolio.

If you were already contemplating certain steps, you might want to begin undertaking them sooner than later. If, for example, you were already planning to leave a significant amount of money to a loved one, you could set up a trust to do so now, potentially limiting how much of those assets could fall outside a lower exemption. 

Nevertheless, you shouldn’t warp your plan to take advantage of tax exemptions just because they exist. Fundamentally, you never want to be in a position where you regret an action after the fact. You should be confident in your plan and it should reflect your goals, especially because many planning tools can be difficult — or even impossible — to undo. 

Your Private Wealth Advisor, in coordination with our Wealth Advisory Group, can help you understand your situation and can walk you through potential options.