Kyl would not disclose the details of his proposals.
Sources close to the matter told The Hill last week that lawmakers are looking to give taxpayers the option of prepaying their estate tax. The levy would be set at 35 percent for those worth more than $3.5 million, however the exemption would ultimately increase over time to $5 million and would not be indexed for inflation. Prepayment trusts would pay a lower rate.
It is unclear how the gift tax would be addressed. Kyl recently told The Hill that he would like the rate to mirror the estate tax.
The senator said the proposal will be fully compliant with pay-as-you-go rules, which stipulates that anything more expensive than the House-passed estate tax bill must be offset.
The lower chamber recently passed legislation creating a 45 percent tax on estates worth more than $3.5 million. Kyl could need approximately $80 billion in offsets if he goes with the aforementioned plan.
"We're finding offsets for the cost above and beyond the cost of the House-passed bill," Kyl said, adding, "It's a question of finding the last offsets that we need."
Kyl said the fate of his estate tax bill would likely be tied to legislation aiding small businesses that is being created by Senate Finance Chairman Max BaucusMax BaucusFive reasons why Tillerson is likely to get through Business groups express support for Branstad nomination The mysterious sealed opioid report fuels speculation MORE (D-Mont.).
"Whether that means they're combined, or dealt with in parallel, or some other way, we'll have to see," he said, adding, "They're both generally trying to help small business folks and the object here is to get them both passed."