Donald Trump’s 2024 Presidential Victory: Proposed Tax Policies Overview

As Donald Trump returns to the presidency, his tax proposals outlined from the campaign trail have come into focus. These policy proposals offer a mix of tax cuts, credits, and tariff-based revenue strategies designed to reduce burdens for businesses, workers, and retirees while reshaping trade policies. However, it is important to note that any tax policy changes will require Congressional approval. Below is an overview of his key tax proposals and their implications.

Revisiting the 2017 Tax Cuts and Jobs Act (TCJA)

A major focus of Trump’s tax policy is the expiring provisions of the 2017 Tax Cuts and Jobs Act, which was a centerpiece of his first term. The TCJA introduced several tax cuts for individuals and businesses, which are set to expire in 2025. Trump’s administration aims to extend the TCJA to provide lower tax rates for high-income earners and corporations.

Trump has also shown openness to revisiting the $10,000 cap on state and local tax (SALT) deductions, a measure that has faced criticism, particularly from lawmakers representing taxpayers in states with high local tax rates.

Additional Tax Proposals

Trump’s broader tax plan targets various groups, including businesses, workers, retirees, and caregivers. The proposals include:

• Lowering Corporate Taxes: Reducing the corporate tax rate from 21% to 20%, with a further reduction to 15% for companies manufacturing in the U.S., incentivizing domestic production.
• Exempting Tips and Overtime Pay from Taxes: This tax policy aims to provide financial relief to hospitality and service industry workers by removing federal income taxes on tips and overtime earnings.
• Eliminating Taxes on Social Security Benefits: Currently, taxpayers whose income is over a certain threshold, are taxed up to a maximum of 85% on their Social Security income. This proposal will provide some financial relief by completely eliminating federal taxes on Social Security income.
• Tax Relief for Certain Essential Workers: Removing federal income taxes for firefighters, police officers, and members of the military.
• Caregiver Tax Credits: Providing tax credits to family caregivers supporting parents or loved ones.
• Deductions for U.S.-Made Vehicle Loans: Allowing individuals who purchase U.S.-manufactured cars to deduct interest on car loans from their federal taxes.

Tariffs on Imported Goods

A significant part of Trump’s tax policy is the use of tariffs on imported goods to not only generate revenue for tax cuts and credits, but to also encourage the purchase of domestically produced goods and support American manufacturing. His proposals include:

• Raising General Import Tariffs: Increasing tariffs to 10%-20% on most imports to make foreign goods less competitive.
• Targeted Tariffs on Chinese Imports: Rates as high as 60% for goods imported from China.

Implications for Businesses and Individuals

While these proposals aim to promote domestic growth, they come with potential considerations.

• Impact on Businesses: Higher tariffs could benefit domestic manufacturers by creating a more even playing field with foreign competition. However, companies reliant on international supply chains, especially from China, will face increased costs for imported merchandise, potentially impacting profitability.
• Consumer Costs: Tariffs may lead to higher prices for goods that are imported or rely on imported components, affecting consumers, and causing higher inflation.
• Uncertainty in Implementation: The need for Congressional approval and potential trade tensions add complexity to the execution of these proposals.

Navigating Tax Changes

As tax policies evolve, businesses and individuals should be cognizant of these potential changes. At LMC, we specialize in helping clients navigate these complexities. Whether you are a business evaluating the implications of tariffs or an individual planning for the anticipated new tax policies, our experienced professionals are available to provide advice and support. Contact your LMC advisor today to learn more.