Trump’s 2025 Tax Plans: Experts Weigh in on What Could Happen

Among the many changes President Donald Trump proposed during his second presidential campaign was modifying the way individuals and corporations are taxed. In his first term in office, Trump enacted sweeping tax changes with the Tax Cuts and Jobs Act (TCJA) of 2017.

Now the Trump administration has the opportunity to continue making adjustments to the tax code. Many of the TCJA tax provisions are set to expire at the end of 2025, opening the door to more extensive changes.

There are a number of elements to Trump’s tax plan that, if enacted, would radically alter the system of taxation. Here are five things some of the country’s top tax professionals and economists say may happen next.

1. Extending the Tax Cuts and Jobs Act

Among the TCJA’s many overhauls, it created a single flat corporate tax rate of 21%, raised the standard deduction for individuals and couples, increased the child tax credit and capped the deduction for state and local taxes at $10,000 (known as the SALT cap).

[READ: State and Local Taxes: What Is the SALT Deduction?]

“If Congress doesn’t pass new legislation, tax rates will increase and the standard deduction will decrease,” says Spencer Carroll, a certified public accountant and account executive at Gelt Financial, headquartered in Miami. “With Trump now in office, we predict a lot of the provisions in the TCJA will be extended.”

There was no SALT cap before the TCJA, but now Trump backs its repeal. The limitation has been especially problematic for high earners in high-tax states, Carroll says, since it made it harder for people to itemize their deductions.

According to Richard McWhorter, certified financial planner and managing partner with SRM Private Wealth in Beverly Hills, California, extending the tax cuts may have negative consequences, such as continued inflation

“The hope is as we cut taxes it will spur growth and everyone will be happier,” McWhorter says.

“But there could be a heightened amount of national debt. The more debt we take on, the more buyers we need. That’s an issue. Interest compounds, so that expense gets bigger and bigger, resulting in higher inflation. Unless wages keep up, people can buy less product,” he adds.

2. Exempting Certain Types of Income From Taxation

If you’re an hourly employee or depend on gratuity to meet your expenses, Trump’s plan to exempt overtime pay and tips from taxation may sound appealing to you

“I can understand wanting to help lower income people,” Romeo Razi, CPA and founder of TaxedRight in Las Vegas, says. “People who receive tips and overtime wages are usually nonsalaried individuals, and they don’t make much money as it currently stands.”

All Social Security benefits, too, would be free from income taxes under Trump’s proposal

“For Social Security, if it’s the only income you receive there is already no tax,” Razi says. However, the Social Security Administration reports that about 40% of people do pay federal income taxes on their benefits because they have other substantial income.

In Trump’s plan, income earners would also gain the tax-free benefit, a change that could destabilize the Social Security trust funds that pay out the benefits. Therefore, Razi believes a more prudent approach would be to impose a means test to qualify for the Social Security tax exemption instead of eliminating it entirely.

[Read: How Much Could Trump’s Social Security Pick Impact Your Benefits? What to Expect in 2025]

3. Reducing Corporate Taxes

Should businesses enjoy a steeper tax break? Trump says yes, and so does Mark Pingle, professor of economics at the University of Nevada.

“This is a very good idea,” Pingle says. “A tax to any business is a cost that the business must cover by either charging a higher product price, by paying labor less or by paying less for some other productive input.”

Pingle acknowledges that taxing businesses at a higher rate is politically popular, so this part of the plan may be rejected.

“It preys upon economic ignorance,” he says. “Politicians can pretend they’re not taxing their voters by taxing business, but business taxation is taxing voters.”

Because the downstream effect of a high corporate tax tends to lead to more expensive products and a higher cost of living, Pingle says it disproportionately impacts the poorest people. Therefore, in the long run, reducing business taxes can make it easier for low-income people to make ends meet.

“We should entirely eliminate corporate taxation and all direct taxes on business because there are better ways to collect tax dollars,” says Pringle, who believes in taxing consumption rather than work or business.

4. Eliminating Federal Income Tax in Favor of Tariffs

Trump has suggested ending the federal income tax. The impact of replacing that income tax with higher tariffs on imported goods would be enormous and may not even be feasible.

“Tariffs on countries and products should be viewed strategically, not so much as a revenue source,” Pingle says, explaining that it can be wise when the U.S. wants certain products to be produced domestically, or to avoid enriching countries viewed as adversaries.

[Trump Has Promised to Lower Taxes: Will It Actually Make You More Money?]

5. Potentially Less Aggressive Auditing and Enforcement

If filing your taxes frays your nerves because you’re worried about an audit, Noah Rosenfarb, CPA and founder of Wealthrive, a tax strategy firm in Parkland, Florida, says Trump’s proposed tax changes can offer relief.

“I expect audit rates and enforcement actions to decline under the Trump administration,” Rosenfarb says. “His return to office order for federal employees may result in people quitting their jobs, too, which includes IRS employees. So, maybe the IRS won’t come knocking.”

That doesn’t mean taxpayers should take advantage of the potentially less aggressive auditing process, Rosenfarb says. Just reevaluate the strategies you’re willing to implement to reduce or eliminate tax.

5. Simplifying the Tax Code

Christina Taylor, vice president of tax development for April, a New York-based tax software platform, would like to see Trump’s promise to simplify the tax code come to fruition.

“It would be immensely helpful for taxpayers and even tax professionals who attempt to be good stewards by complying with IRS guidelines and instructions but may not be in full compliance due to the complicated way much of the tax code is written,” Taylor says.

During his first term as president, Trump attempted to simplify taxes by making Form 1040 a single page.

“That just resulted in three new schedules being added to account for the one- page 1040,” Taylor says. “It didn’t simplify the code, it just shifted lines from one form to three new ones, which have since grown larger and more complex.”

Actual simplification of the code would be ideal. “Taxpayers are inherently nervous, it would help them understand and be more confident about filing,” Taylor says. “I’m not confident it’s coming but I am hopeful.”

How Likely Is It Trump’s Complete Tax Plan Will Be Enacted?

“With a thin majority in Congress, I think Trump will have a tough time preserving all of his 2017 Tax Cuts and Jobs Act, which sunset this year,” says Lou Barberini, a San Francisco-based CPA and journalist with an MBA in taxation.

Barberini points out the increasing national debt, which is now at $36 trillion and counting, as an argument for Trump hitting significant roadblocks in his quest to greatly lower taxes.

“Our borrowers are going to want higher interest income to compensate for our status as a highly leveraged debtor,” Barberini says. “All we need is one bad Treasury auction.”

Although the odds of Trump’s entire tax plan being enacted are slim, at least some significant changes are most likely on the horizon.

“I’m skeptically optimistic that the policies will work,” McWhorter says. “I believe we all are hopeful that whatever policies are implemented will better our country. We all benefit if it does.”

More from U.S. News

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Trump’s 2025 Tax Plans: Experts Weigh in on What Could Happen originally appeared on usnews.com

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