Key insights
- President-elect Trump has put forth a wide variety of federal tax proposals that could significantly change the tax landscape for businesses, individuals, and estates.
- Election results are in, and significant federal tax changes remain likely in 2026 with the expiration of many provisions in the Tax Cuts and Jobs Act.
- Proactive tax planning and scenario modeling can help you stay ahead of the curve from a personal and a business perspective, regardless of where tax policy lands.
Start planning now for possible federal tax changes.
With Election Day behind us, and President-elect Donald Trump set to take office in January with a Republican majority in the Senate and the House, let’s recap the tax proposals that may be considered in the first part of 2025.
This includes potential impact on Tax Cuts and Jobs Act (TCJA) provisions set to expire at the end of 2025. TCJA brought about a lot of federal tax changes when it was enacted in 2017. Top individual tax rates dropped from 39.6% to 37%, the estate tax exemption was doubled, and some business owners received a 20% pass-through deduction. These tax provisions are set to expire at the end of 2025 unless Congress extends them, and that could mean substantial changes on the horizon for your tax and personal wealth.
Over the course of his campaign, Trump shared his stance on tax policies. The table below gives us a snapshot of what to expect in a Fiscal Year 2026 budget from the future Trump administration.
Trump’s tax proposals
Tax proposals have to pass through Congress to be enacted, though there’s value to review what has been proposed to weigh the potential tax impact.
| Corporate tax rates | Lower the corporate tax rate from 21% to 15% for companies that produce in the United States |
| Marginal tax rates | Make the lower TCJA top marginal tax rate of 37% permanent |
| Lifetime estate, gift, and GST exclusions | Make the TCJA exemptions ($13.6 million for 2024) permanent |
| Tariffs | Impose 10 – 20% baseline tariff on imports; 60% tariff on imports from China |
| Business tax credits | Repeal the Inflation Reduction Act |
| Child tax credit | $5,000 credit |
| Overtime wages | Exclude overtime wages from income tax |
| Tip income | Exclude tips from income tax |
| Social security income | Exclude social security income from tax |
When will we see tax policy changes?
With single-party control in Washington D.C., tax legislation could pass quickly. However, it could be slowed by concerns among Congressional leaders about the potential negative effects of tariff proposals on inflation. Additionally, with support for making various TCJA tax breaks permanent, there could be extended dialogue about the impact of resulting reduced tax revenue. Some leaders may support increasing the corporate income tax rate, while others would oppose. There may also be disagreement within the Republican Party over proposals to repeal parts of the Inflation Reduction Act. Due to this complexity, tax legislation may not be passed until late 2025.
However, both parties may find common ground on issues affecting small- to medium-size businesses, such as extending or reinstating 100% expensing for domestic R&D expenditures and bonus depreciation.
In addition, with the ongoing housing crisis and continued price inflation, there is interest on both sides in affordable housing programs and, to a lesser degree, child tax credit expansion. Also, given the hurricanes and severe storms that destroyed parts of the United States in 2024, the parties may reach a consensus on passing disaster relief. And not to be overlooked, there’s a good chance both parties could agree on legislation enacting a tax treaty between the United States and Taiwan thereby strengthening the U.S.’s semiconductor supply chain.
The new Congress is sworn in on January 3, 2025, and Trump takes his oath of office on January 20, 2025. We expect tax policy to be highly visible during the early stages of the new administration due to the TCJA provisions set to expire the end of next year.
How CLA can help with federal tax planning strategies
Although election results are in, the future of TCJA provisions are still uncertain, making tax planning and personal wealth strategies particularly complex. Proactive planning and scenario modeling can help you stay ahead of the curve from a personal and a business perspective, regardless of where tax policy lands.
CLA’s team uses modeling tools to plan for a variety of scenarios. For example:
- If you have a large estate, we look at how timing of gifts affects your taxable amount, how to address future appreciation, and why getting a valuation now could be critical.
- If you have a pass-through entity, we can help you understand your options for 2024 deductions and evaluate pros and cons of different entity structures for the future.
- For businesses, we can help you translate implications of purchasing decisions regarding bonus depreciation.
- For individuals, we can analyze itemized deduction strategies and crossover to state deductions and the alternative minimum tax, as well as understand how your tax liabilities interplay with your investment and retirement strategies.
Contact us
Start planning now for possible federal tax changes. Complete the form below to contact us to discuss proactive scenario planning tailored for your situation and needs.
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