Presidential Election 2024 - Donald Trump

President-Elect Donald Trump’s Tax Policy Proposals

With President-Elect Donald Trump’s win, many taxpayers and businesses may wonder how his proposed tax policy reforms will impact them. We’ve previously discussed his tax policies on the campaign trail in our Presidential Election comparison analysis. Now that he has won the vote, taxpayers should be mindful of his tax policy agenda and how they can successfully plan and execute their tax strategies to minimize any impact to them. While the proposals are relevant topics for tax advisors and their clients to be discussing, it will depend on whether Congress agrees with the proposals and for the legislative branch drafting up a bill for these to be realized.

What We Know Already

Donald Trump’s policies remain in line with the Tax Cuts and Jobs Act (TCJA) that he signed into law under his first term. Many of his tax cut proposals would be financed through universal baseline tariffs ranging from 10-20%, which would increase up to 60% for imported goods from China.

Individual Income Tax:

1. Expiring provisions of TCJA would become permanent
2. $10,000 state and local tax deduction cap would be eliminated
3. Proposals to offset personal income taxes with increased tariffs
4. Tips and overtime pay earned by workers would be exempt from income tax
5. Exempt Social Security benefits from income tax

Corporate Income Tax:

1. Decrease corporate income tax rate to 20%, with a preferential 15% rate for corporations who produce goods domestically

Excise Taxes:

1. Tax large private university endowments

How Might Taxpayers Plan if the Changes are Enacted

If we see any of the Trump proposals become reality, most middle and lower class taxpayers will not see a substantial change to their income tax liability. Individual taxpayers who itemize their deductions may see a helpful boost from the reinstated unlimited SALT deduction. Furthermore, corporations would see another tax rate cut from him.

Given that his policies are strongly in line with current tax law, there is limited tax planning required by taxpayers. However, consumers can largely expect to see the cost of goods to negatively impact their finances if the proposed tariffs are enacted.

Conclusion

These policies will remain talking points until Congress decides to include any in future legislation. At a minimum, these will give us an idea on which direction the tax code will shift if he has the opportunity to sign any policy changes into law. It is important for all taxpayers to have planning conversations with their tax advisors to see how they can navigate the possible changes to the tax code.