March 31, 2025 — As is typical following a Presidential election, it feels like all of the air is taken out of the room with discussions around the Tax Cuts & Jobs Act (TCJA) expiration, DOGE, and a federal Republicans trifecta—but do not discount or ignore all of the current and potential activity we will see at the state level in 2025. At Finseca, we represent a profession of more than 500,000 financial professionals who empower clients to achieve financial security by creating holistic financial plans. Research from Ernst & Young confirms that Americans who leverage permanent life insurance, investment savings, and annuities in their financial plans achieve better outcomes. It is the people we represent and the work that they do every single day that drives our state legislative and regulatory engagement.
But, from a state perspective, we cannot look ahead to activity in 2025 without looking back at some highlights from the 2024 election. While Republicans held all 23 of their current trifectas (meaning one party controls the Assembly, Senate, and Governor’s office), Democrats saw two trifectas (Minnesota and Michigan) return to divided government after only holding their previous trifecta status for two years. Further, some ballot initiatives gave us insight into what to expect in the future on a couple of fronts—taxes and long-term care.
We are beginning this year with virtually every state legislature in session and each of the legislators in those states as far from re-election as possible—which is why the first year after a large election is when we expect to see the most activity. Let’s look at what keeps the state advocacy team at Finseca up at night.
Budgets
There is one glaringly large difference, (well, actually a few but we will focus on one today) between how states operate and how the federal government operates. States MUST have a balanced budget year-to-year—they can’t raise the debt ceiling and they can’t use creative accounting practices—which is why Finseca will be keeping a very close eye on state budget activity this year. Which leads to….
…Taxes
While states can balance budgets in any number of ways, there are two tax concepts we will be paying special attention to:
Sales Tax Expansion—after seeing proposals introduced or discussed in Kentucky, Nebraska, Louisiana, and Minnesota, the continued threat of assessing sales tax on financial or investment advice remains one of the largest threats to the work this profession does every day. Finseca will continue to advocate against any tax that negatively impacts consumer access to holistic financial planning.
Wealth Tax—in 2024, six different states introduced legislation that would assess income tax on unrealized capital gains and/or net worth and many of those same proposals from 2024 are being introduced again in 2025. So far, Governor’s remain resistant of these proposals because it would put their state at a competitive disadvantage to neighboring states but if one state takes the first step, others can follow.
Standards Of Conduct
We will begin this year by continuing to make steady progress on the adoption of the NAIC Best Interest for Annuities Standard. We ended 2024 with 48 states having adopted the standard, and the final two—New Jersey and Washington D.C. should be across the finish line shortly. The NAIC standard and its wide adoption continues to demonstrate the success that can be had with ensuring the important balance of consumer protection while ensuring consumer access to advice.
This leads us to the only state that has not adopted the NAIC Best Interest for Annuities Standard—New York, which has adopted its own standard—Reg. 187 (Suitability and Best Interest in Life Insurance Transactions). Since the implementation of Reg. 187, data show that new policies and premiums in New York have lagged behind the rest of the country. Finseca has been relentless in advocating for changes to ensure that New Yorkers have access to financial advice without repetitive regulatory burdens impacting advisors.
To that end, in January, the NY Department of Financial Services (DFS) issued clarifications around two pain points advisors have faced since Reg. 187 took effect:
- Simplified Information for Term Policies: Basic term policies in New York no longer require extensive data collection (liabilities, assets, net worth, risk tolerance, etc.), aligning with practices in the other 49 states.
- Streamlined Training Requirements: Producers are no longer required to complete duplicative Reg. 187 training for each carrier, reducing redundant hours of training. Our work in New York is not done, though, and we will continue to push for regulatory and legislative changes that achieve the balance needed between consumer access to advice and protections.
Long-Term Care
Washington, the only state that has a publicly funded long-term care program, had Washington Cares upheld by over 55 % of the vote in November. With the program continuing for the foreseeable future—expect legislation to pass that would allow individuals who opted out of the program to opt back in, plus efforts to develop private sector solutions for coverage after the state benefit runs out. While copy-cat legislation has been introduced in some states, none has seen movement at this time and we aren’t expecting activity in 2025. But, as Medicaid budgets soar—funding for long-term care will continue to be discussed, and Finseca believes innovative private sector products can and should be part of the solution.
The Balance Between State & Federal Activity
Even with the federal government changing hands, we expect there to be the constant balance we have become used to. Where the federal government doesn’t move, states will. Further, where blue states feel a Trump administration is moving too far to the right—they will work on the legislative and regulatory front to balance what they perceive to be imbalances.
At the end of the day, Finseca’s state advocacy priorities will remain the same:
- Promote a holistic approach to financial security
- Preserve and expand consumer choice
- Adopt tax policies that inspire long-term planning
- Foster a thriving financial security profession
We will spend 2025 as we have every year, in partnership with our fellow joint trades (ACLI, NAIFA, IRI, and NAFA) to activate as necessary to achieve our mission Financial (Fin) Security (Sec) for All (A).
Media Contact
Maggie Seidel – (c) 202-718-7774 | mseidel@akappfinseca-org
About Finseca
At Finseca, we know that financial security improves people’s lives and protects their livelihoods and future wellbeing. We are rising to the challenge of increasing financial security for all. Finseca represents the men and women of the financial security profession who dedicate themselves to delivering financial security to their clients every day.
