By Nick Hopkins, CPA, CFP®
Partner, Director of Tax Services
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As Donald Trump looks to enter his second term as President, there will be an increased focus on future tax policy, as many of the provisions of the Tax Cuts and Jobs Act (TCJA) enacted in 2017 are set to expire at the end of 2025. Trump has said he will look to both renew and expand on the original provisions of the TCJA, which will impact both individuals and businesses. Below is an overview of some of the key tax components Trump outlined during his bid to secure a second presidential term:
Extension of TCJA Tax Cuts
Trump has stated he intends to make the individual income tax cuts from the TCJA permanent, ensuring a 37% top tax rate and preserving higher standard deductions, AMT exemptions, and estate tax thresholds.
New Tax Cuts and Exemptions
Trump has proposed exempting Social Security benefits, overtime pay, and tips from federal income taxes, potentially reducing the tax burden on retirees and workers. Additionally, his plans also suggest a deduction for auto loan interest, expanding the child tax credit to $5,000 per child, and either eliminating or raising the SALT deduction cap, which currently limits deductions to $10,000.
Business and Corporate Tax Changes
For businesses, Trump wants to reduce the corporate tax rate to 15% (down from 21%) for companies that manufacture within the U.S., while reinstating 100% bonus depreciation for business investments and also reinstating the immediate expensing of research and development expenses.
Tariff Increases
A key element of Trump’s economic plan is a 20% universal tariff on all imports and a 60% tariff on Chinese imports, aimed at boosting U.S. manufacturing but likely to raise consumer prices and increase the potential for trade retaliation.
Summary
Overall, Trump’s 2025 tax plan focuses on broad tax cuts, corporate incentives, and trade protections to help bolster U.S. manufacturing and ease burdens on individuals. In order for these proposals to be implemented, Trump will need Congressional support, particularly in the House and Senate, where fiscal conservatives often scrutinize measures that significantly raise deficits especially in light of the current U.S. deficit.
Even though Trump’s proposed tax plan will likely face substantial fiscal and legislative challenges, it does provide helpful insight into the President-elect’s priorities. We will continue to monitor the legislative agenda and provide further updates as the tax policy positions become more apparent.
For more information about these tax plans or ways Sponsel CPA Group can help you and your business, please call Nick Hopkins at 317-608-6699 or email him here.