Looking ahead to 2027 and to 2029: what could change for your finances.

In the November 3 midterms, Democrats flipped both chambers of Congress, winning at least 54 Senate seats and more than 250 House seats. New members will be sworn into office in January, and if history proves a guide, there will be legislative gridlock.  

Looking further out, the question becomes what another Democratic win in 2028 could mean for your taxes and legacy plans in 2029 and beyond.  While nothing is certain, it’s possible that taxes on high earners, capital gains, and large estates will rise.   

Our advice: Start with your goals, not politics. Consider whether and how you can gift and aim to complete any planning before the end of 2028. 

Where things stand today.

Currently, you can give during life, or bequeath upon death, up to $15 million ($15.48 million in 2027) without federal estate or gift tax. Amounts above that are taxed at 40%. You can also give up to $19,000 per person each year in 2026 ($20,000 in 2027). The top tax rate on investment gains is 23.8%, and heirs usually get a “step-up,” which resets the cost basis of an inherited asset so they owe less tax when they sell it. These rules have no end date, but a future Congress and President could change them.

What the Democrats have proposed in the past. 

• Higher income taxes: Extra taxes on income over $1 million, with top rates of 43% to 49%. 
• Higher taxes on investment gains: Raising the 23.8% top rate; one idea would take it to 35.8%. 
• Ending the step-up: Heirs could owe tax on gains that built up during your lifetime. 
• Estate and trust taxes: Lower amounts you can pass on tax-free, and a yearly tax on trusts worth more than $50 million. 
• Business taxes: Taxing fund managers’ “carried interests” like regular income, and raising the 21% corporate rate. 
• Relief for middle-income families: A larger child tax credit, earned income tax credit, and standard deduction. 

A closer look at wealth taxes.  

A yearly tax on net worth is not seen as likely. The US has never had one, there is strong political opposition, and there are questions about whether it is constitutional. More likely topics include a higher estate tax rate, a lower tax-free amount, and limits on some trust and valuation strategies. The three wealth tax proposals below have been put forward in the past, but again, we view them as unlikely to become law. 

• The Ultra-Millionaire Tax Act, proposed by Sen. Elizabeth Warren in 2026, would charge a yearly 2% tax on net worth between $50 million and $1 billion, and 3% above $1 billion. 
• A graduated annual wealth tax of 1% to 8%, proposed by Sen. Bernie Sanders during the 2020 presidential campaign, would have begun at $32 million of net worth for married couples.  
• A 5% annual wealth tax on individuals worth at least $1 billion, also proposed by Sen. Sanders, In 2026. 

Many proposals would also close loopholes involving trusts, for example by counting trust assets as yours or combining trusts from the same family. Future bills could look different, so treat these as examples, not predictions. 

What you can do. 

Good planning starts with your goals, not a prediction about politics. If you have been thinking about planning, aim to complete it before the end of 2028. Early planning tends to be more thoughtful and easier to adjust than work rushed against a deadline. 

• Can you gift? Gifts are generally irrevocable, so confirm you would still have enough assets and income for your own lifestyle and long-term needs. 
• How should you gift? Outright gifts, trusts, and charitable vehicles carry different tax, control, and family implications. Gifted assets generally keep your tax basis, while assets held until death generally receive a basis step-up. 
• Does it fit your goals? The best gifts are driven by purpose rather than tax savings alone. 

It may also help to review estate documents and beneficiary designations, the timing of any liquidity events, and ways to build flexibility into trusts. Our Wealth Planning Group (WPG) can help clients think through these questions, working alongside your advisor, attorney, and tax professional.