Former President Donald Trump is still generating tax relief proposals on the campaign trail. Since we last checked in on his tax platform, Trump visited sites of hurricane relief efforts and announced a proposal to provide a tax deduction for the purchase of home generators. In Detroit, he proposed a deduction for interest on consumer car loans, and issued a statement to the Wall Street Journal – "I support ending the double taxation of overseas Americans" – suggesting that he may favor some form of territorial taxation for individuals.

Like many tax proposals from both candidates, the mechanics and cost are mostly afterthoughts. That's understandable, since they are crafted for and pitched to voters, not tax policy wonks. So, it was no surprise that Trump's campaign offered few details about how these proposals would work, and no revenue offsets were offered to cover the budget impact of the proposals. 

In a Truth Social post on electric generators, Trump explained that "retroactive to September 1st, 2024," such a purchase would "entitle you to fully deduct the TOTAL cost of said Generator for Income Tax Purposes." It isn't clear if the deduction would be claimable above-the-line like the expense deduction for teachers or apply simply as a new allowable itemized deduction. It reportedly would only be effective for taxpayers residing in areas affected by Hurricanes Helene and Milton. 

The former president's plan to allow consumers to deduct car loan interest would reportedly function as an itemized deduction for taxpayers, making it most impactful for the 10 percent of taxpayers who itemize. In 1986, Congress did away with the individual deduction for personal interest, which included auto loans. An initial estimate from the Tax Policy Center indicated Trump's proposal could reduce federal revenue by nearly $6 billion annually. 

Even less is known about Trump's plans to revise the taxation of the more than four million American citizens living abroad. The U.S. tax system is largely based on citizenship with U.S. citizens taxed on their worldwide income regardless of where they reside. The foreign earned income exclusion operates such that overseas citizens making up to the exemption amount do not pay U.S. tax on the income they earn abroad, but reporting and other compliance can be complicated regardless of the amount of tax owed. It remains to be seen how Congress might approach this issue.

Aside from these latest moves, the major planks in Trump's tax platform include extending the temporary individual, estate, and business tax relief provisions of the 2017 Tax Cuts and Jobs Act (TCJA), removing the cap on the deduction for state and local taxes (SALT), and eliminating federal taxes on tips, overtime pay, and Social Security benefits. Trump would also lower the tax rate for all corporations to 20 percent and lower it to 15 percent for domestic producers. To offset some of the forgone tax revenue, he would raise tariffs across the board with even higher import duties on Chinese products. Trump has also mused about imposing higher industry-specific tariffs to protect and encourage domestic production of automobiles and other products sold to American consumers. "The higher the tariff, the more likely it is that the company will come into the United States and build a factory," Trump said in an interview last week.

These latest tax proposals reflect an intensifying electoral strategy to capture every last vote in contested states. Trump lost three states that pushed President Biden over the top in 2020 — Georgia, Wisconsin, and Arizona — by less than 45,000 votes combined.

Polls show a close and tightening race focused on seven swing states: Arizona, Georgia, Michigan, Nevada, North Carolina, Pennsylvania, and Wisconsin. If tax policy can move the needle, we might just see more tax ideas tailored to appeal to voters in one or more of these seven states. #TaxTake

Upcoming Speaking Engagements and Events

Marc will speak at the 59th Annual Southern Federal Tax Institute today, October 21, and Loren will speak at the Tax Executives Institute's 79th Annual Conference on October 28.

In the News

Marc discussed the impending expiration of certain TCJA provisions at the end of 2025 in Roll Call, emphasizing that tax reform is just one of many pressing issues Congress will face in 2025.

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