In Summary
With the 2024 general election results finalized, Republicans will have full control of Washington in 2025 and 2026. President-elect Donald Trump will serve his second term, and Republicans will maintain a slim majority in the House and gain control of the Senate. This unified control opens up the possibility of significant changes to tax policy, especially with the impending sunset of many provisions of the Tax Cuts and Jobs Act (TCJA) of 2017 at the end of 2025. While extending many of these provisions is likely to be a priority for Republicans, the specifics of new tax legislation remain uncertain, influenced by campaign promises, fiscal constraints, and procedural rules.
Key Takeaways
- Republicans will control the White House, House of Representatives, and Senate, setting the stage for potentially significant legislative action. Tax policy is expected to be a primary focus, with the TCJA provisions set to expire at the end of 2025.
- There are several potential extensions and changes that may be enacted, including an extension of many expiring TCJA provisions, potentially allowing the $10,000 cap on the State and Local Tax (SALT) deduction to expire, further reduction of the corporate tax rate from 21% to 15%, and new individual income tax proposals, such as making interest on loans for domestically produced automobiles tax-deductible.
- Navigating fiscal impacts, the Byrd Rule, and slim majorities in Congress will be crucial in shaping the final tax legislation. Despite unified control, passing all proposed tax changes is not guaranteed, and the tax policy landscape in 2025 remains uncertain.
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