Save up to 74%
Subscribe to Kiplinger
Getting the right tax advice and tips is vital in the complex tax world we live in. The Kiplinger Tax Letter helps you stay right on the money with the latest news and forecasts, with insight from our highly experienced team (Get a free issue of The Kiplinger Tax Letter or subscribe). You can only get the full array of advice by subscribing to the Tax Letter, but we will regularly feature snippets from it online, and here is one of those samples…
Make no mistake: taxes fell on the Agfinisha in the November election, and the tax stakes are higher than usual. In fact, much of former President Donald Trump’s 2017 tax reform will expire at the end of 2025.
Most individual and wealth-affecting provisions of the Tax Cuts and Jobs Act expired in 2017, such as lower individual source of income tax rates, higher popular deductions, the higher tax credit for children, the $10,000 limit on state and local taxes. The deduction and increased exemption from the lifetime estate and gift tax is expected to end automatically after 2025.
Be a smarter, smarter investor.
Unless lawmakers act, those provisions will revert to the rules that were in effect for 2017. With the help of Congress, the next president will have to confront these expiring tax provisions.
Let’s see how Donald Trump wants to deal with this as well as look at other ways he wants to change the current tax system. I’ve pulled together these proposals from speeches he has made on the campaign trail, interviews he has given, his social media posts, the 2024 GOP Platform and other sources.
Above all, Trump wants to make the 2017 tax cuts permanent and pass more with even lower tax rates for individuals; He has not given details, such as whether he would reduce the tax rate. Current income tax source of 37%.
Rumors abound that Trump would push for a top long-term capital gains rate of 15%, down from 20% now, but he hasn’t confirmed this. The Project 2025 initiative, discussed below, proposes a top 15% long-term capital gains tax rate.
Trump backs his vice presidential pick, J. D. Vance, to offer parents an additional child tax credit of $5,000 per child, 250 percent on top of existing tax credits of $2,000 per child.
Hospitality and restaurant workers and other tipped employees would get a boon if Trump has his way. He’s proposing that tipped income be tax-free.
Another organization that Trump needs to take advantage of is overtime workers. He said at a rally that he was in favor of tax-free overtime.
Trump has also proposed abolishing the income tax on Social Security benefits. Under current law, Social Security recipients are taxed on up to 85% of their benefits, depending on the amount of their provisional income. Making Social Security benefits nontaxable would appeal to retirees, but would also put a big dent in the Social Security trust fund, from which benefits are paid.
Living U. S. citizens can take advantage of tax adjustments under Trump. The United States taxes its citizens on their international source of income, regardless of where they live. Expats can mitigate some of the threat of double taxation through foreign tax credits and other relief. how to exclude source of earned income and exclude housingArray
Trump says he favors ending double taxation on Americans living abroad. We don’t know exactly what that means. An advocacy organization representing American expatriates has for years pushed a regime that would tax expatriates on the U. S. source of income but not on the foreign source of income. They also need the United States to prevent taxing the American source of income of expats living in countries that tax their American source of income.
At a campaign rally in Detroit, Trump proposed to let individuals deduct the interest they pay on loans to buy a car. The personal interest deduction was eliminated in 1986, and now Trump seems to wants to bring it back in part. He hasn’t elaborated on whether this proposed write-off would be available only to people who itemize on Schedule A of the 1040, or whether he would make it an above-the-line tax deduction claimed on page 1 of the 1040.
Trump says he would use tax incentives and tax credits to promote homeownership. And in an effort to sway voters in storm-damaged parts of the country, he promises a tax deduction for the cost of generators acquired between September 1, 2024, and August 31, 2025.
Surprisingly, it turns out that Trump needs to either increase the $10,000 limit on the state and local tax (SALT) deduction or eliminate that limit entirely. Currently, taxpayers who itemize on Schedule A of Form 1040 can deduct their SALT deductions up to a maximum of $10,000. After 2025, unless lawmakers act, taxpayers will have to deduct the full amount of state and local taxes they pay, just as they did before 2018.
Trump’s economic policy advisers oppose any increase to the $10,000 limit and urge Trump to lower the exchange limit or end the SALT deduction entirely. Meanwhile, several Democrats and Republicans on Capitol Hill in high-tax states such as New Jersey, New York and Illinois are pushing to raise the $10,000 limit.
Trump floated the concept of getting rid of the $10,000 limit, which would allow stores to fully deduct state and local taxes again. set the limit of $10,000. Removing the cap would provide disproportionate benefits to higher-income taxpayers and charge the government significant profits that Trump and Congress would need to use for other proposed taxes. courteous.
When it comes to estate taxes, the 2017 tax reform law nearly doubled the federal gift and lifetime estate tax exemption. The estate tax exemption amounts to $13. 61 million for other people who died this year. After 2025, this figure will be minimized to the 2017 amount, adjusted for inflation. That’s about $7 million.
The 40% top estate tax rate wasn’t changed in the 2017 law. Since Trump often says he wants to make permanent the tax cuts in the 2017 law, we believe that promise would also include the higher lifetime estate and gift tax exemption. Whether Trump wants additional easings remains to be seen.
On business taxes, Trump supports dropping the current 21% corporate income tax rate to 20%. He also said he would drop it further to 15%, but only for corporations that make their products in the U.S. Trump hasn’t provided details on how this would work.
Trump has said he needs general 10% (or 20%) price lists for imported goods and 60% price lists for goods imported from China. Although price lists would increase revenue for the US government, they would also lead to higher costs of goods for consumers.
Trump needs to take full advantage of the blank energy tax credits for businesses and individuals, which were passed under the Inflation Reduction Act of 2022.
He would bring back 100% first-year bonus depreciation and allow more expensing. And he would allow businesses to claim research and development tax deductions in the year the expenses are incurred, rather than requiring firms to amortize the costs over 5 years (or 15 years).
When Trump was president, he promised to end the “Johnson Finish. “And he reiterated that desire for the electoral crusade in the face of the 2024 elections.
This federal tax law, in effect for 70 years, prohibits churches, charities, and other exempt 501(c)(3) organizations from engaging in political campaigns, either for or against a candidate running for office. Republican lawmakers have tried for years to get rid of the statue, but without success.
We can’t talk about Trump’s tax proposals without also mentioning Project 2025. This policy plan, designed for the next Republican administration, was promoted through the Heritage Foundation and includes a list of proposals desired by conservative-leaning think tanks .
There is a lot about taxes, the following proposed changes:
This was first seen in Kiplinger’s tax letter. It helps you navigate the complex world of taxation by keeping you up-to-date with new and ongoing adjustments to tax laws, offering tips for reducing your business and individual taxes, and predicting what the White House and Congress might do with taxes. Get a free part of The Kiplinger Tax Letter or sign up.
Joy is a tax attorney and CPA with experience with an L. L. M. in Taxation from New York University School of Law. After many years working for giant law and accounting firms, Joy saw the light and now puts her education, legal experience, and extensive knowledge of federal tax law into working writing for Kiplinger. He writes and edits The Kiplinger Tax Letter and contributes articles on federal taxes and retirement to kiplinger. com and Kiplinger’s Retirement Report. His articles have been picked up through the Washington Post and other media outlets. Joy has also appeared as a tax expert on newspapers, television, and radio to talk about federal tax advances.