In this article, Katherine Lewis and Patrick Holten discuss the political landscape and upcoming tax-related legislative changes anticipated under the Trump administration in 2025. Following the 2024 elections, in which President Trump returned to office, Republicans control both the legislative and executive branches, with tax policy emerging as a key focus. The expiration of several provisions from the Tax Cuts and Jobs Act of 2017 (TCJA) at the end of 2025 is a major driver for legislative action, including potential tax cuts, the expiration of the Section 199A pass-through deduction, changes to individual income tax rates, and discussions surrounding the corporate tax rate.

With Republicans holding narrow majorities in both the House and Senate, internal party negotiations will be crucial in shaping tax policy. Proposals discussed during Trump's campaign include further tax cuts, repealing energy credits from the Inflation Reduction Act (IRA), and exempting tips, Social Security benefits, and overtime pay from taxation. Despite challenges such as balancing the federal budget and navigating the reconciliation process, a significant tax package is expected in 2025.

Lewis and Holten urge tax directors to prepare now by identifying their top priority tax issues and advocating for them early in the legislative process. Given the urgency of passing a tax bill this year, swift action from Congress is anticipated, particularly with a focus on addressing TCJA expirations and incorporating Trump's proposed tax changes.