Predictions for Post Election Tax Law Changes
Regardless of your position on the election results this week, the important component for tax practitioners is the potential for tax law changes either before the end of the year or coming with the administrative change in January. A lame duck session of congress could be seeking to push Democratic agendas through before the end of the year with Republicans sweeping the law making bodies next year.
The most immediate concern for tax practitioners is whether any proposed changes could affect 2024 returns being filed in 2025. Based on historical precedent and the legislative process timeline, major tax law changes would be unlikely to impact 2024 returns retroactively.
However, practitioners should consider several key areas when advising clients and considering planning for 2025. The following are based previous tax positions that were touted by the Trump team and predictions for what may be coming down the pipeline.
Proposed Individual Tax Changes:
- Potential extension of Tax Cuts and Jobs Act (TCJA) provisions set to expire after 2025 but Trump has historically favored extension
- Previously stated goals of expanding standard deduction amounts
- Possible modifications to individual tax brackets
- Proposed elimination of estate tax, or least an extension of the current higher exemptions
Business Tax Considerations:
- Signals of reducing corporate tax rate, potentially returning to 21% or lower
- Possible expansion of qualified business income deduction (Section 199A)
- Enhanced expensing provisions for capital investments and research and development
- Strengthened domestic manufacturing incentives
Planning Implications for 2024 Returns:
- Standard Returns: Proceed normally with 2024 tax planning and preparation using current law but keep a close eye on congress at year end
- Complex Returns: Consider flexible planning strategies that can adapt to potential changes, nothing is set in stone right now
- Business Returns: Document basis for accounting method choices and capitalizations
- Estate Planning: Review current structures while maintaining flexibility for future changes
Practical Considerations:
- New legislation typically requires Congressional approval and implementation time
- IRS guidance and form revisions would follow any major changes
- System updates and practitioner training would precede implementation
- Late season law changes from a lame duck session could delay the start of tax season
Key Action Items for Practitioners:
- Continue normal tax season preparation using current law
- Monitor legislative developments closely
- Document planning discussions with clients
- Consider adding flexibility to long-term planning strategies
- Review engagement letters to address potential law changes
Given the political dynamics and legislative process, significant changes would likely target tax years 2025 and beyond rather than 2024 returns. However, practitioners should maintain awareness of developing proposals and their potential implementation timeline.
Remember to consider state tax implications, as states may respond differently to federal changes. Additionally, practitioners should maintain clear client communications about the uncertain nature of potential changes and document all planning discussions.
This overview reflects potential scenarios based on historical patterns and stated positions. Practitioners should continue monitoring official sources and professional organizations for updates as the political and legislative landscape evolves.
Christine Gervais is a licensed CPA, using her skills to help businesses grow and achieve their fullest potential. Christine has a Master’s degree in accounting from Southern New Hampshire University in addition to holding her CPA license for over a decade. Notably, Christine is a nationally recognized speaker providing education to other CPAs on how to best serve clients as well as instruction on a wide variety of topics for business owners on how to maximize success. Christine prides herself on the value she can bring to clients with her extensive tax knowledge and provides strategic, forward-thinking financial strategies to help clients grow. When not behind her desk, you can find Christine spending quality time with her daughter and stepson or tending to the family’s excessively loved farm animals.
Subscribe to the TPN Newsletter!
Like what you're reading?
Subscribe to our FREE newsletter and we'll deliver content like this directly to your inbox.