As new tax bills are crafted and introduced, 2025 will be a time of heightened tax planning as taxpayers navigate these changes. to the AMT threshold and because the Pease limitation is currently set to be reinstated in 2026. The original passage of the TCJA included several revenue raisers that Congress has subsequently sought to modify. These proposals include a more favorable calculation to the Section 163(j) business interest expense limitation, allowing full expensing again of domestic §174 research and development and restoring 100% bonus depreciation. These changes were packaged into the 2024 Tax Relief for American Families and Workers Act, which passed in the House with bipartisan support but failed to advance in the Senate. Given the support many of these items garnered, they will likely be considered in future legislation. While much of the energy in Washington is expected to be directed at the expiring TCJA provisions, a variety of other proposals were made by President Trump during the campaign. For individuals, this includes the elimination of taxes on Social Security benefits, tip income and overtime wages, as well as a deduction for interest on car loans. Business tax proposals included a further reduction in the corporate tax rate to 15% for corporations with domestic production activities. A large part of the tax legislation is expected to be enacted using the budget reconciliation process. Under reconciliation, legislation can be passed with a simple majority in the Senate, but the process comes with restrictions. Deficit creation is allowed during the initial 10-year window but must be neutral afterward, which may reduce the ability to make some of the proposed legislation permanent without the inclusion of offsetting revenue-raising measures. The CBO estimates that extending the TCJA provisions alone will increase the federal deficit by $4.6 trillion over the next 10 years. With Republicans holding slim majorities in the House and Senate, there may be challenges in reaching a consensus among members on the extent to which the deficit should be increased. To lessen the deficit impact, Republicans have suggested increasing tariffs and rolling back Inflation Reduction Act (IRA) credits. These will likely face some resistance in Congress as many members will be unwilling to substantially increase tariffs and many of the projects supported by the IRA are located within Republican districts. This year is poised for significant tax legislation, with Republicans aiming to extend key TCJA provisions and introduce new tax cuts. The overall tax environment is expected to favor continued low taxes. As new tax bills are crafted and introduced, 2025 will be a time of heightened tax planning as taxpayers navigate these changes. Sam Brandt is tax senior manager with Forvis Mazars in Kansas City. 28
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