Family Business Legacy Act of 2025

This bill proposes to amend the Internal Revenue Code of 1986 by establishing a new estate tax deduction for bequests made to certain tax-exempt organizations. Its primary purpose is to reduce the value of a taxable estate by allowing deductions for transfers to specific types of non-profit entities, thereby alleviating the estate tax burden on such bequests. The deduction would apply to organizations exempt under Section 501(a) and described in paragraphs (4), (5), or (6) of Section 501(c), including civic leagues, social welfare organizations, labor, agricultural, horticultural organizations, and business leagues . Property received through powers of appointment by these organizations would also qualify as a deductible bequest. However, the deductible amount will be reduced if death taxes are payable from the bequest, and the deduction cannot exceed the value of the transferred property included in the gross estate. Deductions for certain split-interest transfers are disallowed unless they meet specific qualified interest requirements. These amendments are set to apply to estates of decedents dying or transfers made after December 31, 2025.