What May Happen With The Trump Presidency and Republican Congress

With the election behind us and President-elect Trump winning his second term and having a Republican Congress, we begin to see what some of the emerging tax policies are.  Tax reform should be in a high priority position as we move into 2025 and tax reform discussions should commence in the near future.  Key to these discussions are many points that Trump raised as part of his campaign promises as well as the upcoming expiration of many of the Tax Cuts and Jobs Act (TCJA) legislation from  2017.

At this point in time we do not have a detailed tax plan but do have some indications as to where tax legislation might be headed in early 2025.  With Republican control of both the House and Senate, this might cause an accelerated tax policy reform early in Trump’s term.  Even with control, budget reconciliation similar to what was done in 2017 would have to be achieved in order to eliminate the legislative filibuster.  Furthermore, House and Senate Republicans would have to vote on party lines in order to pass legislation.

Even though the legislation and how to handle the expiration of TCJA provisions is not clear at this point, both businesses and individuals (including partnerships and other flow through entities) should focus on how some of the proposals affect them and their choice of business entity form.   This could have an impact on tax liabilities in 2025, 2026, and beyond.

Highlights of Trump’s proposals including TCJA extenders to date include (based upon what we know as the date of this publication):

• 15% corporate tax rate for domestic manufacturing/20% for other
• Extending the current FDII 13.125% corporate tax on export of goods and services
• Maintaining the current GILTI tax rate of  10.5% on controlled foreign corporations
• Extending the 20% deduction for pass through entities on Qualified Business Income
• Reinstating 100% bonus depreciation
• Keeping the interest expense limitations under TCJA
• Keeping the amortization of R & D expense under TCJA or change to expensing
• Making permanent the individual tax rate reductions under TCJA
• Lowering the capital gains tax rate for individuals to  15%
• Exempt social security payments from tax
• Exempt tip income from tax
• Eliminating the SALT cap as is included in TCJA
• Increasing interest expense on mortgages
• Increasing tariffs

The landscape is not yet clear but planning and reviewing strategies and tax structuring in light of these changes can be very productive.  As time goes on there will be more to add to this highlights list as the legislation becomes more clear.

WebsterRogers stands ready to assist in navigating and planning for this change.  For more insights and help in developing a migration of tax law strategy and planning specifically designed for your needs, please reach out to your WR relationship manager or connect with one of our team of experts.

Strategic Tax Advisory Review (STAR) Team

David Zaiken, Director of Tax Consulting, dzaiken@websterrogers.com

Kathleen Holston, Director, State & Local Tax, kholston@websterrogers.com

Kirby Millwood, Partner, Estate & Trust, kmillwood@websterrogers.com

Stephen Holladay, Tax Partner, sholladay@websterrogers.com

Kevin Wise, Tax Director, kwise@websterrogers.com

Sarah Polson, Tax Director, spolson@websterrogers.com

Forrest Short, Tax Supervisor, fshort@websterrogers.com