1. Extension of the 2017 Tax Cuts and Jobs Act (TCJA)

What is it?

Keeping current tax cuts in place.

One of the central pillars of Trump’s tax plan is the permanent extension of the individual and estate tax provisions from the 2017 TCJA, which are set to expire at the end of 2025. This extension would maintain the current tax brackets and rates, as well as the increased standard deduction and child tax credit.

Key Points:

• Permanently extend individual and estate tax provisions
• Maintain current tax brackets, rates, deductions 

Potential Outcomes:

• Maintaining lower tax rates could provide continued tax relief for many Americans.
• The extension could contribute to increased consumer spending and economic growth.
• Could lead to a reduction in Federal revenue and an increase in budget deficit if not offset by growth.

The TCJA’s extension could provide stability in tax planning for individuals and businesses. However, the long-term fiscal implications of making these cuts permanent are a subject of debate among economists and policymakers.

2. Tax Exemptions for Specific Income Types

What is it?

 Making certain types of income tax-free 

Trump has proposed exempting overtime pay, tip income, and Social Security benefits from taxation .

Key Points:

• Exempt overtime pay, tip income, and Social Security benefits 

Potential Outcomes:

• These exemptions could provide tax relief for certain workers, particularly in the service industry and for retirees.
• These exemptions will reduce Federal revenue that may not be offset by growth and could potentially complicate the tax code.

These exemptions could provide targeted relief to specific groups of workers, in particular low wage earners, and retirees. However, they may also introduce new complexities into the tax system and reduce overall tax revenue.

3. Child Tax Credit Expansion

What is it?

 Bigger tax break for parents 

There are indications that Trump is considering expanding the child tax credit to $5,000 per child, a significant increase from the current $2,000.

Key Points:

• Increase to $5,000 per child from $2,000 

Potential Outcomes:

• This expansion could provide substantial financial relief for families with children.
• It might encourage long term population growth and support working parents.
• It would represent a significant cost to the federal budget.

This proposal could significantly benefit families with children, potentially reducing child poverty rates. However, the fiscal impact of such a large increase in the credit would be substantial.

4. Eliminate Overseas Income Taxation

What is it?

 No U.S. taxes for Americans living abroad.

Trump has stated that he would eliminate income taxes on Americans living abroad. During his 2024 presidential campaign, he pledged to end double taxation of overseas Americans . America is the only country that taxes foreign income made abroad.

Key Points:

• End income taxes on Americans living abroad 

Potential Outcomes:

• May encourage some migration, especially for U.S. retirees.
• Would eliminate additional sources of US Income.
• This proposal would align U.S. tax policy more closely with that of other countries, potentially making it more attractive for Americans to work or retire abroad.

5. Tax-Free Universal Savings Accounts (USAs)

What is it?

 New savings accounts with tax benefits. 

Trump proposes introducing new savings accounts aimed at increasing and simplify saving for individuals.

Key Points:

• Tax-Free Growth: Contributions would grow without being taxed.
• Flexible Withdrawals: Penalty-free withdrawals would be allowed at any time.
• Annual Contribution Limits: Proposed limits around $10,000 per year .
• Simplicity: Aimed at reducing complexity associated with savings accounts.
• Encouraging Savings: USAs aim to boost personal savings rates in America.

Potential Outcomes:

• Increased savings rates and wealth accumulation among Americans.
• Reduced dependence on government programs through enhanced financial security.

6. Lowering Capital Gains and Indexing for Inflation

What is it?

 Reduced taxes on investment profits.

Trump has proposed changes to capital gains taxes as part of his campaign.

Key Points:

• Lowering Top Rate: Reducing long-term capital gains from 20% to 15%.
• Indexing for Inflation: Adjusting purchase prices for inflation when calculating gains.

Possible Outcomes:

• More attractive investment environment
• Potential economic stimulation
• Reduced Federal revenue from capital gains
• Reduction in taxation on Wealthier segment of population

These changes aim to make investing more attractive while potentially stimulating economic activity by encouraging more investment. Many consider Capital Gains as a second taxation on money as the initial income to make the investment was already taxed. A reduction in Capital Gains is often seen as a gift to the wealthy as this tax is mostly on the higher end of the income tax bracket and is highly progressive.

7. Corporate Tax Rate Reduction

8. Repeal of Green Energy Tax Credits

9. E Commerce Sales Tax Standardization

10. Universal Import Tariffs

11. Enhanced Border Adjustment Tax (BAT)

What is it?

 Tax imports, not exports 

Essentially a value added tax (VAT) on imported goods requiring tax code changes, and border enforcement changes to account for the import of goods. Designed to protect domestic production of goods.

Key Points:

• Taxes imports while exempting exports.

Possible Outcomes:

• Protects domestic production.
• Risk of consumer price increases and trade retaliation.
• Higher compliance costs for businesses

12. Revocation of Global Tax Agreements

What is it?

Leaving international tax deals 

In his first stint as President, Trump has show that he is willing to rock the apple cart and toss out new deals. Whether this is saber rattling to leverage new deals, or there is significant changes to existing trade deals is yet to be seen.

Key Points:

• Exit or renegotiate OECD tax frameworks.
• Exit or renegotiate individual or existing international trade agreements with various nations.
• Shifts from Bi Lateral International tax focus to Sovereign tax focus.

Possible Outcomes:

• Greater U.S. control of tax policy.
• Potentially more favorable terms for US firms, and trade
• Retaliation risk from international partners.
• Potentially protectionist policies helping domestic industries
• Potentially inflationary if retaliatory policies put in place by foreign partners

A common theme under Trump’s proposal is the potential to protect domestic markets and products, and move to more Sovereign trade and tax policies. The net effect is yet to be determined, but is likely to have some inflationary effect, while simultaneously potentially improving existing deals.

13. Simplified Tax Filing

14. Abolishing the IRS for a National Sales Tax

What is it?

Replace income tax with sales tax 

This would eliminate the IRS as an organization, and the need to collect income taxes altogether. It would be replaced by a Federal Sales Tax. Some will argue that sales taxes are regressive, so replacing the income tax with a sales tax will be more regressive for those in the lower income bracket. The counter is that the income tax system is already highly progressive and it is likely that higher income segments will continue to consume more and therefore pay higher taxes. This has yet to be determined the net effect of such a proposal.

Key Points:

• Replace income tax with a flat-rate sales tax
• Simplifies tax system.
• Eliminates filing income taxes, and specific deductions

Possible Outcomes:

• Potentially regressive impact on low-income households.
• Eliminates the zero income tax filers that have offset all their income tax liabilities with write offs
• Productivity boosts eliminating income tax filing
• Possible implementation challenges.

While a Flat Tax, or “Fair Tax” has been discussed as a simplified income tax proposal for years, this would completely replace the byzantine set of tax code, deductions, and loopholes with a consumption based flat sales tax. It would shift the focus from income to consumption.

15. Revisiting SALT Deduction Limits

What is it?

 Changing state and local tax deductions

In his first term this was considered either one of the most brilliant or evil political tax policies of his administration. In effect, wealthy states with high property prices were capped on mortgage deductions for high real estate areas. This in essence became a major change in wealthy coastal cities, and in essence a major tax increase for democratic “blue” states. This would potentially be a reversion to the pre Tax Cut and Jobs Act norm, or something closer.

Key Points:

• Adjust or remove $10,000 cap on state and local tax (SALT) deductions.
• Eliminate or reduce the focus on high-tax states

Possible Outcomes:

• Relief for taxpayers in high-tax states.
• Benefits wealthier households disproportionately.
• Potential Federal revenue loss, but relief on State and Local Budgets constraint to raise taxes

Critics have pointed out that this tax targeted the wealthy, and blue states, and was in essence a double taxation since many states and local municipalities already have, substantial in some cases, property taxes. Some have pointed to this as supporting the migration from high tax (“Blue”) states to lower tax (“Red”) states. This would move to return closer to pre TCJA tax policies.

16. Revisiting Carried Interest Loophole

What is it?

Changing tax rules for fund managers 

Most people will never deal with this, but Hedge Fund and other Investment Managers have “Carried Interest”, meaning they take a percentage of any market gains in the portfolio of investments they manage for customers. While this is part of their “pay, currently it is treated as an investment gain which is taxed as a Capital Gain. This means that they can pay a Capital Gains tax rate of say 20% versus what someone in that tax bracket might pay if it was taxed as ordinary income at say 37%.

Key Points:

• Modify or maintain tax treatment of carried interest.
• Controversial among policymakers. Technical, it is a capital gain on an investment, but it is also a form of pay/income to the fund managers.

Possible Outcomes:

• Potential for small Federal tax gains
• Potential benefits for higher tax rates on private equity and hedge fund managers.

This loophole has been criticized for benefiting wealthy investors, escaping their fair share of taxes on an income stream that most tax payers have no access to, and tends to hit the very top end of individual wealth.

17. “Made in America” Tax Credit

What is it?

Tax breaks for U.S. manufacturing 

This would incentivize industry to build and source from the United States, potentially producing jobs and higher economic output, and protecting American industries. It could potentially also be inflationary if insourcing costs minus tax credits exceed the cost basis of global competitors.

Key Points:

• Tax credits for goods entirely manufactured in the U.S.
• Aligns with “America First” agenda to produce more goods and services in America

Possible Outcomes:

• Encourages domestic manufacturing.
• Risk of global trade conflicts.
• Potentially inflationary costs

Another America first proposal that can have both positive domestic production, jobs, and output, as well as negative trade and inflationary outcomes.

18. Full Expensing for Business Investments

What is it?

Immediate tax write-offs for business purchases

Businesses can already write of many business expenses, but this would accelerate the write off. Details are sparse, but this may allow businesses to expand, purchase capital equipment quicker by realizing the economic benefits up front versus say spread over many years.

Key Points:

• Permanent or expanded full deduction for capital expenditures.
• Part of pro-business policies.

Possible Outcomes:

• Increased business investments.
• Potential acceleration of capital projects, and equipment and associated economic growth.
• Reduction in Federal revenue in the short term, but evens out of the term of investment.

This is a very pro business stance that could spur significant growth and acceleration of capital investments. There would likely be short term Federal revenue fall due to proposals, but those are just typically brought forward on write offs business likely would have received over lifetime of capital expense so it just brings those forward.

19. Broadening Opportunity Zones

What is it?

 Expanding tax breaks for investing in poor areas

The government for years has attempted to create “Opportunity zones” where additional tax incentives are available to spur additional investment into typically poor and under invested areas. Trump’s proposals in this area maybe an expansion of such programs.

Key Points:

• Expand areas eligible for Opportunity Zone tax incentives.
• Attracts investment in underserved areas.

Possible Outcomes:

• Increased development in targeted regions.
• Risk of gentrification and displacement.

As with all investments, they may improve the areas of investment, but not always of the lives of the people in those areas. In some cases, gentrification or urban renewal can be thought of as helpful, but in some cases it displaces the most needy making it harder or impossible for them to continue to support themselves in the improved areas. However, in general urban renewal is thought of positively, but to critics it has negative effects that disproportionately impact the poor.

20. Tax Incentives for Cryptocurrency Investments

What is it?

Tax breaks for digital currency investments 

The details are light but it is clear that the income administration support Crypto currency, believe that it should be well defined and have a lower regulatory touch, and they would like the innovation and assets in the Crypto currency space to occur in the US.

Key Points:

• Favorable tax treatment for digital assets/crypto.
• Encourage innovation in blockchain technologies.
• Regulatory support for digital assets.

Possible Outcomes:

• Boost to the digital economy.
• Support innovation and transition from Traditional Financial firms (TradFi) to Decentralized Finance (DeFi).
• Tax evasion and regulatory concerns.

There is a lot wrapped up into crypto currencies, including the development of a US Central Bank Digital Currency (CBDC), the transition to more modern banking and financial mechanisms, as well as the impact on how the US regulates, manages, monitors, and asserts control over currency and capital including the US long term position as the Worlds Reserve Currency. We don’t know much, but that this administration seems willing to put their toes into the deep end of the pool, whether they jump in or not is to be seen.

21. Retirement Tax Reforms

What is it?

Changes to retirement account rules 

These are generally seen as positive helping individuals save more, and potentially earlier. There is likely to be some impact on Federal Revenues, but this is generally seen to help individuals save more of the money they earned to grow and develop over their working careers.

Key Points:

• Higher contribution limits for retirement accounts.
• Adjust Required Minimum Distribution (RMD) rules for retirees.

Possible Outcomes:

• Increased retirement savings.
• Longer term stability with more individuals reaching financial freedom and retirement stability.
• Some reduction in federal tax revenue.

22. Enhanced Tax-Free Savings Accounts (USAs)

What is it?

New flexible savings accounts 

This proposal could enhance savings, and allow folks to develop savings quicker, and minimize the effects of unplanned expenses for the most economically challenged. While critics will say this will disproportionately help wealthier individuals as they have the most money and hence would accrue therefore most of the benefits, this could greatly impact the savings and flexibility of those who are most in danger of severe financial consequences.

Key Points:

• Tax Free growth on savings contributions
• Flexibility for withdrawals, could be taken penalty free at anytime
• Simplified contribution rules, up to $10,000 a year.

Possible Outcomes:

• Encourages and promotes savings.
• Reduced dependency on government aid.
• Potential Federal Revenue impact and trade-offs.

23. Social Security Payroll Tax Deferrals or Cuts

What is it?

Temporary reduction in Social Security taxes 

Details are light, but Trump implemented executive orders to defer some Payroll taxes during the COVID pandemic in 2020. He has discussed and may implement some form of Social Security payroll adjustment in the new administration.

Key Points:

• Extend payroll tax holidays.
• Reduce or eliminate payroll taxes temporarily.

Possible Outcomes:

• Short-term relief for workers.
• Concerns about Social Security fund sustainability.

Will this be a short term gimmick that will hurt in the long term, or will there be material changes that benefit the worker financially, too early to tell.