In the Black: April 2024

The sunsetting of TCJA in 2025

You may know by now that I'm a political junkie, and I especially follow news of tax policy. My friends and family have high hopes that one day I may read less white papers and Senate economic reports - but until then here's a breakdown of some of the ways the next presidential election may impact your taxes.

The first thing to start with is the Trump tax bill of 2017, the Tax Cut and Jobs Act. This is set to expire at the end of the next presidential term (2025). Changes you may have noticed in your taxes:

State, Property and Local (SALT) tax deductions were capped at 10k, if you live in CA, NY or NJ - this meant your tax bill likely went up (coincidence it affected predominantly blue states? I'll leave you to judge).

QBI deduction I'll be real, this one was a boon to small businesses (sole props , partnerships and scorps), giving them an additional 20% deduction based on net business income (income limits applying). Here's hoping that Congress can extend this and the Biden child tax credit with the bill that’s on their desks now.

This is the one you likely didn't notice and it's WREAKING HAVOC on the federal government's budget (have you noticed budgets issues in the news all the time?). Trump cut the tax rate on corporations (C corps) from 35% to 21%. So the biggest US companies saw a massive lowering of their tax bill. With a lot less income to fund the government, what's Trump's plan to make up the difference? Look to Social Security - he proposed it in every budget he put forward while president
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Biden’s Proposed Budget: Tax Policy

Some highlights:

  • Add a $10k tax credit for first-time homebuyers and a one-time $10k credit for sellers of "starter homes" to increase market inventory.

  • Expand Child tax credits

  • Raise the corporate tax rate to 28% (helpful for that budget shortfall)

  • End Fossil Fuel tax breaks (again will help the budget)

  • Add a 25% billionaire tax, as well as limit loopholes for the wealthy on estate transfers (you guessed it, budget friendly)

  • Disallow companies to expense compensation over 1 million for executives

  • More funding for the IRS for audits of large businesses and wealthy individuals

It’s unlikely that all of these proposals will pass both houses of Congress, but it’s a good measure to see how each candidate thinks about tax policy.

All this leave you feeling dizzy? Check out the nonpartisan Tax Foundation tracker here:

​https://taxfoundation.org/research/federal-tax/2024-tax-plans/​

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The end is nigh!

For tax season that is. The tax team including myself will be clocking out after the tax deadline on April 15th until May for a well needed break. We’ll be responding to urgent items, but we appreciate your understanding as we catch up on sleep and re-introduce ourselves to our families!

Berit Bailey