AS DONALD TRUMP PREPARES FOR A SECOND TERM IN THE White House, tax policy is again set to be a significant focus of his administration. While a formal, comprehensive tax plan was not released during the 2024 campaign, Trump did outline several key tax policy proposals during the campaign. These tax proposals were largely geared toward stimulating economic growth, encouraging domestic production, and providing tax relief to U.S. individuals and businesses. The major components of his tax agenda included: CORPORATE TAX RATE REDUCTIONS AND TARIFFS Lowering the Corporate Tax Rate: Trump has proposed reducing the corporate federal income tax rate from the current 21% to 20% for all corporations, and further reducing the effective corporate tax rate to 15% for companies that manufacture products within the U.S. The reduction in rates aims to encourage domestic production and increase the competitiveness of U.S. companies in the global markets. Reinstating the Domestic Production Activities Deduction (DPAD): By reinstating the DPAD to 28.5%, Trump would further reduce the effective tax rates for U.S.-based manufacturers, providing an incentive for investment in domestic facilities and job creation. Tariff Proposals: Trump also proposed to aggressively increase tariffs on all U.S. imports. The proposal would have widespread effects by imposing a universal tariff on all U.S. imports to 20% and an increase on current tariffs on China to 60%. Trump also proposed a foreign retaliation of 10% on all U.S. exports plus additional in-kind tariffs on U.S. exports to China. INDIVIDUAL INCOME TAX CHANGES Individual Tax Rates: Another key proposal is to make permanent several individual tax cuts established under the TCJA, including maintaining the top marginal tax rate of 37%, which is scheduled to increase to 39.6% in 2026. Child Tax Credit Expansion: The former president has also proposed extending the child tax credit of $2,000 per child or potentially increasing the credit to $5,000. State and Local Tax Deduction (SALT): Trump has proposed eliminating the $10,000 SALT deduction cap. If Trump’s POTENTIAL TAX CHANGES UNDER THE TRUMP ADMINISTRATION BY HANNAH FISCHER FREY & STEVE J. KOO, BAIRD HOLM LAW FIRM 10 Nebraska CPA
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