An increase in income tax rate means you'll pay a higher percentage of your income to the government. This directly reduces your disposable income, the money you have left after taxes for spending or saving. This can make it harder to afford basic necessities, save for retirement, or invest in your future.
Trump Wins the Presidency, Allowing Him to Bring Signature Tax Policy Proposals to the Table: On Nov. 6, 2024, Donald Trump was declared the winner of the 2024 presidential election, sweeping all seven battleground states (Arizona, Georgia, Michigan, Nevada, North Carolina, Pennsylvania, and Wisconsin) and earning 312 electoral votes. The president-elect is also projected to win the popular vote by a margin of between 1% and 2% once all votes are counted. With Republican majorities in both chambers of Congress as well, President-elect Trump is expected to pursue an aggressive economic and tax policy agenda.
Tax Cuts and Jobs Act (TCJA) Extensions. Trump’s top tax priority is cementing the legacy of his signature tax bill, the Tax Cuts and Jobs Act of 2017 (TCJA, Pub. L. 115-97), by extending or making permanent the tax-rate reductions in the bill, including the 20% pass-through business deduction and expanded estate-tax exclusion. However, he reversed course on one TCJA provision, the state and local tax (SALT) deduction limitation, now proposing to completely remove the deduction cap.
Corporate Taxes. Trump has proposed cutting the corporate tax rate from 21% to 20%, and later proposed lowering the corporate tax rate to 15% for companies that produce their products in the United States. Trump has not provided details on the domestic production requirements that would be required for companies to qualify for the lower rate.
Tariffs. Throughout his campaign, Donald Trump has proposed using tariffs as a means of funding some of his tax cut proposals or as an offset of extending TCJA provisions. In June, Trump also brought up the idea of replacing the federal income tax with an “all tariff policy.” This proposal signals that the president-elect is considering a trade agenda that is more protectionist than his first administration. Trump has specifically proposed a 10% to 20% universal baseline tariff on all U.S. imports, and further proposed a 60% tariff on all U.S. goods imported from China.
Republicans Retake Control of Senate: At the time of this writing, Republicans are expected to control the Senate next year with a 53 to 47 margin. This development brings Sen. Mike Crapo (R-ID) to the forefront, as he will lead the Senate Finance Committee in a year that will be heavily driven by negotiations over tax policy, in light of the expiration of several TCJA provisions.
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