The Tax Implications of the 2024 Election Results

President Trump will return to office in 2025 as the 47th president. Additionally, Republicans will control the Senate and are projected to control the House of Representatives with a slim majority.

With control over all three branches of government, the Trump Administration and the Republican Party may enact significant tax legislation impacting businesses and individuals. This could potentially happen through the “budget reconciliation” process, which requires only a simple majority in the Senate. Here is what you need to know.

Tax Cuts and Jobs Act Extensions

President Trump previously presided over the Tax Cuts and Jobs Act (TCJA) of 2017, one of the largest tax reform packages of the last 70 years. Many TCJA provisions are set to expire at the end of 2025, including reductions to the individual income tax rates and the Qualified Business Income (QBI) deduction for businesses (lowering the top federal rate from 37% to 29.6%).

During the 2024 campaign, President Trump advocated making permanent both the individual rate cuts and QBI deduction.

The current permanent rate for C corporations is a flat 21%, but President Trump has indicated he may favor lowering this rate for companies focused on domestic production activities. Alternatively, some politicians favor raising this rate as a revenue raiser.

The Estate and Gift Tax Exclusion is currently around $13.5 million per individual ($27 million for a married couple), but this exclusion is scheduled to revert to roughly $7 million per individual ($14 million for a married couple) after 2025.

The TCJA exclusion amount (or a modified amount) may now be extended or become permanent under the new administration.

One controversial aspect of the TCJA is the $10,000 “cap” on the deduction for state and local taxes (SALT Cap). The SALT Cap affects taxpayers in both democratic- and republican-leaning states. President Trump stated he is in favor of perhaps repealing the SALT Cap or expanding the deduction (by, for example, allowing a married couple a $20,000 deduction). Given the bi-partisan opposition (at least by some House members), it is possible the SALT Cap will either end or be expanded during the new administration.

Democratic proposals to institute a “wealth tax” on unrealized gains are now unlikely to become law, as are proposals to significantly increase individual or corporate income tax rates.

Need for Revenue

Some Republican members of the House of Representatives emphasize that significant revenue raisers must accompany any extension of the TCJA provisions to minimize the impact on fiscal deficits, at least with respect to proposals that go beyond the extension of TCJA.

On the campaign trail, President Trump highlighted trade policy, including the use of tariffs, as a possible revenue source. Additionally, portions of the Inflation Reduction Act (IRA) could be targeted for repeal — including certain energy credits — to raise revenue. However, aspects of the IRA are popular with both political parties, and every effort will be made to protect projects that are initiated by the end of the year.

What Comes Next?

Extending the TCJA, either fully or partially, is expected to be a major focus in 2025. While some are discussing passing it within the first 100 days post-inauguration, budget reconciliation may delay this until the latter half of the year.

Meanwhile, tax legislation could be passed before President Trump’s inauguration. In this so-called “lame duck” session, disaster relief for recent hurricanes, floods, and wildfires may include new tax provisions — like full bonus depreciation, immediate expensing of R&D costs, ending the Employee Retention Credit, and relaxing interest expense limitations.

Our team of professionals is here to help you make sense of evolving tax legislation.