From large corporate tax cuts to broad tariffs, Donald Trump’s tax policies have always been headline-worthy. As the newly re-elected President, Trump’s tax proposals will once again shape discussions as we head into 2025, a pivotal year with the scheduled expiration of many Tax Cuts and Jobs Act (TCJA) provisions. With the Republicans now controlling the House, Senate and presidency, significant new tax policies are likely to come to fruition. While Trump has not released a fully detailed tax plan, he has made several public comments about potential policies, giving taxpayers and businesses some insight into the road ahead. In this blog, we’ll break down key aspects of Trump’s tax agenda, examine how the TCJA continues to affect taxpayers and provide a detailed look at expected policy changes under his administration.
An Analysis of the 2017 Tax Cuts and Jobs Act (TCJA)
Major changes to the tax systems for companies and individuals in the United States (U.S.), brought about by the TCJA have expired or are set to expire. These expirations relate to (but are not limited to) the treatment of Section 174 costs, changes to the calculation of Section 163(j) interest limitation calculations and the gradual expiration of bonus depreciation and highest individual tax rate changes. Legislation was introduced in early 2024 to extend the treatment of some of these expiring TCJA provisions but was ultimately never included into law. There is thought that with a single-party control of Congress and the White House, that these expired and/or expiring items will be reinstated or extended.
Tax Proposals from Donald Trump
Declaring his great support for extending the TCJA, Donald Trump emphasizes the need to even further lower taxes for businesses and individuals. Trump has specifically mentioned a reduced business tax rate, hoping to further lower it from its already reduced 21% down to 15% for certain businesses. This would rank the U.S. among the most tax-competitive nations for businesses, potentially promoting more internal investment and job creation.
Furthermore, Trump wants to see the personal tax cuts—which are now scheduled to expire in 2026—become permanent. To promote economic development utilizing these cuts, he is committed to reducing the tax load for both companies and individuals alike.
Additionally, Trump has proposed some unconventional tax ideas, including the possibility of exempting tips and overtime compensation from income taxes. Hospitality workers are required to report their tips as taxable income and Trump’s plan seeks to free them of that responsibility. Exempting blue-collar workers from taxes on overtime may increase productivity from the nation’s manufacturing and industrial sectors. Trump also calls for removing the tax on Social Security income for retirees, therefore giving seniors even greater financial assistance.
Still, Trump has indicated his readiness to raise specific taxes, especially regarding tariffs. With an eye toward products imported from nations like China, he has proposed taxing imports of goods ranging in percentage terms from 10% to 25%. While these tariffs are frequently talked about in relation to trade policy, they essentially act as a tax on American consumers and have the potential to greatly affect federal revenue.
Donald Trump’s international tax proposals focus on extending key provisions of the TCJA to support U.S. businesses competing globally. He advocates keeping the Foreign-Derived Intangible Income (FDII) rate at 13.125% and the Global Intangible Low-Taxed Income (GILTI) rate at 10.5%, preventing their scheduled increases after 2025. Additionally, Trump supports maintaining the current 10% Base Erosion and Anti-Abuse Tax (BEAT) rate to discourage profit shifting by multinational corporations. These measures aim to sustain the TCJA’s momentum by fostering a competitive tax environment for U.S.-based companies, though their implementation will depend on congressional approval.
In an unconventional move, Trump has hinted at exploring the idea of replacing certain federal income taxes with tariffs on imported goods, particularly from countries like China. While this idea is still in the very early stages and hasn’t been defined, it would represent a massive shift in U.S. tax policy and could significantly affect consumer prices.
Key Tax Policies Under a Trump Administration
To help businesses and individuals quickly understand the potential changes, we’ve summarized key provisions in the tables below.
Business Tax Provisions
| Provision | Current Law | Trump’s Proposal |
| Corporate income tax rate | 21% (permanent) | Reduce to 15% for U.S. manufacturers |
| Bonus depreciation | Phased out after 2026 | Reinstate 100% bonus depreciation |
| Expensing
of Section 174 R&E costs |
Expired in 2022 and now required to capitalize and amortize over 5 years (15 years for non-US costs) | Reinstate
Immediate deductibility of R&E costs |
| Section 163(j) limitation calculation | Adjusted taxable income is calculated by taxable income excluding interest expense. | Allow depreciation and amortization to be added back to adjusted taxable income when measuring the business interest limitation. |
Individual Tax Provisions
| Provision | Current Law | Trump’s Proposal |
| Income tax rates | Top rate: 37% (expires after 2025) | Make TCJA rates permanent; explore replacing income tax with tariffs |
| Social Security benefits tax | Up to 85% taxable, depending on income | Eliminate tax on Social Security benefits |
| Child Tax Credit | $2,000 per child (2024) | Increase to $5,000 per child |
| SALT deduction cap | Limited to $10,000 | Eliminate State and Local Tax cap |
What to Watch for in the Road Ahead
With 2025 approaching, taxpayers and businesses alike should stay informed about how these proposed policies could affect their tax liabilities. Even if Trump’s proposals don’t pass in their entirety, the scheduled expiration of TCJA provisions means change is on the horizon.
Tax policy is never static, and political dynamics will play a major role in shaping the outcome of these proposals. For now, keeping an eye on developments and consulting with your tax advisor can help you stay ahead of potential changes.
Content provided by LBMC tax professional, Ben Carver.
LBMC tax tips are provided as an informational and educational service for clients and friends of the firm. The communication is high-level and should not be considered as legal or tax advice to take any specific action. Individuals should consult with their personal tax or legal advisors before making any tax or legal-related decisions. In addition, the information and data presented are based on sources believed to be reliable, but we do not guarantee their accuracy or completeness. The information is current as of the date indicated and is subject to change without notice.