2024 Elections and Tax Policy: What You Need to Know
- Vi Nguyen, CPA, Supervisor
- Oct 22, 2024
- 2 min read
2024 Elections and Tax Policy: What You Need to Know
As we approach the 2024 election, the implications for federal tax policy are substantial. The upcoming Congress and president will play pivotal roles in shaping how the expiring provisions of the Tax Cuts and Jobs Act of 2017 (TCJA) are addressed, alongside responses to global tax developments and future IRS funding. Understanding these dynamics is crucial for preparing for potential tax changes ahead.
Background
The fate of the TCJA’s expiring provisions stands as the foremost tax policy issue influenced by the 2024 election outcome. While the TCJA introduced numerous temporary provisions that reduced taxes for individuals, it also implemented measures, such as the $10,000 cap on the deduction for state and local taxes, that increased tax burdens.
As we approach the expiration date of TCJA, lawmakers are already positioning themselves on which TCJA provisions should be extended or allowed to expire. Consensus will be challenging, even within political parties.
Key TCJA Expiring Provisions
The implications of allowing these provisions to expire are significant, leading to tax increases for individuals across the board. Here are some anticipated changes for individual taxpayers if these provisions are allowed to expire at the end of 2025:
Marginal Tax Rates: Reversion to higher pre-TCJA rates.
Standard Deduction: Reduction to lower pre-TCJA amounts (adjusted for inflation).
Personal Exemption: Reinstatement to pre-TCJA amounts (adjusted for inflation).
Child Tax Credit: Reversion to lower pre-TCJA levels, along with changes to eligibility thresholds.
Itemized Deductions: General return to pre-TCJA rules, including the elimination of the $10,000 cap on state and local tax deductions.
Estate and Gift Tax Exemption: Return to lower pre-TCJA amounts (adjusted for inflation).
Section 199A Pass-Through Deduction: Expiration of this deduction.
Conclusion
The outcome of the 2024 elections could significantly alter the landscape of U.S. tax policy. As the election approaches, staying informed about these developments will be essential for effective tax planning and strategy.
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