With the election behind us, and Republican control in the White House, Senate, and House of Representatives ensured, the direction that anticipated 2025 tax reform will take is starting to take shape.
While the picture is still not clear, below outlines some initial thoughts.
The TCJA was passed during the Trump administration under a process known as reconciliation and, as a result, had many provisions that were “temporary” and scheduled to expire (sunset) after 2025. Some of the most notable provisions are as follows.
Early signs suggest that the Republican-controlled Congress will prioritize tax policy in 2025, focusing on both the sunsetting provisions of the TCJA and broader tax reforms. This approach may capitalize on Republican momentum from the election while avoiding complex bipartisan negotiations.
As a result, many of the tax policies outlined earlier are expected to be considered. Because these provisions were enacted during Trump’s first term, it’s likely that several will be extended, and some may even become permanent, depending on budget constraints. In addition to the above items from the TCJA, Republicans may pursue other campaign promises, such as exempting social security and overtime pay from taxes.
Revenue-raising measures may also be considered. Discussions may include reinstating tariffs, eliminating certain credits and incentives from the Inflation Reduction Act, reducing IRS funding, and addressing potential abuses of the Employee Retention Credit.
Early signs show that Republicans will attempt tax reform in 2025. Republican control should make the process easier, however, the specifics remain to be unseen. Redpath and Company will continue to monitor the situation and provide updates as things move forward.