Shifts in control of the White House and Congress likely will mean tax law changes for both individuals and businesses.
How Will the Election Results Affect Taxes?
The results of the November 5 election are expected to have a significant impact on taxes. Many provisions from President-Elect Donald Trump’s Tax Cuts and Jobs Act (TCJA), enacted during his first term, are set to expire at the end of 2025. However, there is now a greater chance that these provisions will be extended. Additionally, Trump has proposed several new tax changes during his campaign. Here’s a summary of potential tax law changes:
Expiring Provisions of the TCJA
Some TCJA provisions, such as lower individual tax rates, a higher standard deduction, and a larger gift and estate tax exemption, are set to expire. Trump has expressed a desire to make the individual and estate tax cuts permanent but is open to revisiting the $10,000 cap on the state and local tax (SALT) deduction.
Business Taxation
Trump has proposed reducing the corporate tax rate from 21% to 20%, or potentially lower for companies manufacturing products in the U.S. He also seeks to reinstate the immediate deduction for research and development expenditures.
Individual Taxable Income
Trump has suggested eliminating income and payroll taxes on tips for restaurant and hospitality workers, and excluding overtime pay and Social Security benefits from taxation.
Housing Incentives
While Trump has hinted at potential tax incentives for first-time homebuyers, specifics remain unclear. His platform proposes reducing mortgage rates by cutting inflation, slashing regulations, and opening federal lands for new home construction.
Tariffs
Trump has advocated for higher tariffs on imports, including a baseline 10% tariff and a 60% tariff on imports from China. He has also proposed a 100% tariff on certain imported cars.
Which extensions and proposals will become law depends on various factors, including Congressional approval.
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