Tax season is almost upon us. But as we move into the new year and newly elected officials come to Washington, it's possible that the tax landscape may see some serious changes.
Although it is always difficult to predict the future, tax professionals have the best insight into what may happen to tax rules in the near future.
We've rounded up a few expert takes and predictions on possible changes to the tax code. You can use the information to prepare yourself financially for what may come.
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The TCJA will likely be extended
The Tax Cuts and Jobs Act of 2017 (TCJA) passed during the first administration of incoming President Donald Trump. Most of these tax cuts are set to expire at the end of 2025.
"If the TCJA expires, the tax laws revert back to the 2016 pre-TCJA laws and tax bracket levels," says Thomas J. Cryan, a tax expert and author of "Disrupting Taxes." "Specifically, the marginal tax rates will be increased if the law expires."
It is likely that Republicans will work with Trump to extend the cuts, but no one can say for sure how those efforts will turn out. "If the TJCA expires, all tax brackets will be raised," Cryan says.
Cryan does not expect that outcome, however.
"The best odds for how the tax laws might change in 2025 are on a straight bet that the old TCJA will be extended by the new Congress, say for another eight years," Cryan says.
The SALT cap will be raised
Even if the TCJA is extended, some experts expect there will be some changes to the details. One revision might involve the state and local tax — or SALT — deduction cap.
When the TCJA was passed, it placed a $10,000 cap on the amount of state and local taxes you are allowed to deduct on your federal return.
Spencer Carroll, a certified public accountant and account executive at Gelt, believes that rule will not stand if the TCJA is extended.
"If there's one provision predicted to change, it's the SALT cap," he says.
Carroll says the $10,000 cap caused a lot of "angst" among high earners in high-tax states and will likely be changed. During the presidential campaign, Trump indicated he would eliminate the cap altogether.
Straightforward filing is likely on the horizon
For many of us, filing taxes is a tedious process that is compounded by an inefficient tax-filing system. But with financial resources being poured into the IRS, it's possible a more straightforward process is coming soon.
These changes might not occur as soon as 2025, but they should be just over the horizon, says Armine Alajian, founder and certified public accountant at Alajian Group Inc.
"In 2026, we will likely see even more enhanced e-filing technology and new opportunities for taxpayers to reduce their liabilities through updated credits, deductions, and brackets," she says.
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The corporate tax rate will not change
Cryan notes that the TCJA's move to drop the corporate tax rate to 21% — down from 35% — was made permanent under that legislation. "So, the corporate tax rate will remain 21% into the future," he says.
However, it's worth noting that on the campaign trail, Trump said he would like to see the rate as low as 15%.
Tariffs are coming
On the campaign trail, Trump announced his intention to impose steep tariffs on some imported goods. Essentially, a tariff is a tax that the government charges on goods imported from another country.
Technically, tariffs should not impact your own taxes. However, they are likely to affect your bottom line.
Ben Johnston, chief operating officer of Kapitus — a financial company that offers business loans — says the higher cost of imported goods will likely be passed on to the consumer.
Although tariffs could spur increased investment in U.S. manufacturing, they also are likely to spur inflation and lower overall consumption, slowing the economy, Johnston says.
Overall, the impact of tariffs is difficult to predict, Johnston says. He notes that countries facing U.S. tariffs will likely respond with retaliatory tariffs of their own,"reducing demand for goods produced in the U.S. and sold abroad."
Bottom line
As with any other year, 2025 is likely to witness some modifications to the tax code. As these changes roll out, keep tabs on the new rules.
If possible, discuss your tax situation with a tax professional who can help you adjust to the changes so you avoid wasting money in the year to come.
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