Tax policy and the 2024 election
Tax policy can have significant economic implications and is often a key driver of decision-making for business and individual taxpayers alike. An understanding of tax policy is critical to navigating uncertainty and planning for changes in the tax landscape. With that in mind, Baker Tilly is pleased to provide details and insights on tax policy and the 2024 election.
Tax policy and the 2024 election
Overview
Election outcomes impact future tax policy decisions and, in 2024, the stakes are exceptionally high.
The United States is facing a pivotal fiscal cliff next year, as numerous Tax Cuts and Jobs Act (TCJA) of 2017 provisions are scheduled to expire. Absent Congressional action, most TCJA provisions affecting individuals, estates and pass-through entities will sunset at the end of 2025, resulting in increased tax burdens for the majority of taxpayers. Additionally, businesses have been grappling with a trio of provisions that have already changed (unfavorably for taxpayers) as scheduled under the TCJA. The recent failure of a bipartisan bill that would have provided relief from those changes only adds pressure to enact comprehensive tax reform before the end of next year.
How the expired and expiring provisions are ultimately addressed will have pervasive and significant impacts on both individual and business taxpayers. The shape and contents of any potential tax reform is dependent upon the outcome of the upcoming elections and the balance of power heading into the 119th Congress. The range of possible solutions also varies widely, with sharp contrasts in general Republican and Democratic approaches, as well as variances in priorities and principles within parties. Adding to the complexity is the exorbitant price tag associated with a blanket extension. Because of the cost, solutions are not limited to the expiring provisions; everything, including permanent tax provisions, will be on the table during negotiations.
The impending TCJA expirations are creating instability in the tax policy landscape and hindering taxpayers' ability to make informed long-term decisions. Understanding the factors affecting decision-makers and tracking developments can help taxpayers overcome some of the uncertainty by assessing and planning for potential tax policy outcomes.
Our pages linked below dive further into the importance of the Tax Cuts and Jobs Act on today’s tax policy debate, discuss the 2024 elections and the implications of possible election outcomes, provide details on the tax policy platforms of both major parties and suggest a few steps taxpayers can take today.
2024 election insights
Toggle between our three insight pages for a deeper analysis provided into the 2024 election and its impact on tax policy.
Tax Cuts and Jobs Act and its impact
When the TCJA was signed into law, it was the most sweeping tax legislation in three decades. Because of the process Congress used to pass the bill, not all TCJA provisions were made permanent; some were only enacted temporarily. How the TCJA’s impending expirations are handled is likely to have ramifications for almost every taxpayer in the United States.
Visit our Tax Cuts and Jobs Act and its impact page to learn more about the TCJA, details about its expiring provisions and the cost of extension.
Election details and possible outcomes
With the White House and both chambers of Congress up for grabs in 2024, there is a wide range of potential election outcomes, the results of which will determine the future of tax policy. Policymakers in the 119th Congress will face difficult negotiations within their own parties and, if the election results in a divided government, between parties.
Visit our election details and possible outcomes page to learn more about the upcoming elections and the ramifications.
Tax policy platforms
Understanding each party’s tax priorities can help taxpayers anticipate the range of possible post-election outcomes. Generally, Republicans and Democrats approaches to tax reform vary widely; however, there are a few areas that garner bipartisan support.
Visit our tax policy platforms page to learn more about Republican and Democrat tax policy priorities.
Looking to 2025
The new Congress will inherit an unstable tax policy landscape and a limited timeframe to address it. While the TCJA’s expiring provisions are driving the immediate need for tax reform, it’s important to understand the prohibitive cost of extension means everything will be on the table during negotiations, including the corporate tax rate.
The timing of any potential reform will depend on whether the election results in a unified or divided government. Republicans have stated, if they were to sweep, they hope to pass a tax bill within the first 100 days of the new administration. This timeline may be aspirational for either party in a unified government, as an approaching deadline is often a key motivator to finding compromise. Should the election result in a divided government, it’s likely we won’t see a tax bill come together until the second half of 2025.
While the magnitude of the approaching fiscal cliff and ramifications of a TCJA expiration should force legislative action, even “must pass” bills can get stuck in Congressional gridlock. Taxpayers should prepare for the possibility that Congress will not be able to come to a resolution before the expirations take effect.
Baker Tilly’s tax policy specialists will continue to bring you updates and analysis throughout the election and TCJA negotiations so you can assess and plan for potential tax reform.
Steps taxpayers can take
Despite the current uncertainty surrounding tax policy, there are steps taxpayers can take to ensure they are in the best position possible to adapt to future changes:
Engage policymakers
Engagement with policymakers is critical to ensuring they are well-informed going into the 2025 tax policy debate. It also provides taxpayers with the opportunity to build support for favorable tax policies. The Ways and Means committee is currently seeking information on the impact of the TCJA expirations; at a minimum, we encourage you to submit your comments. Learn more on our tax policy platforms page.
Take advantage of TCJA expiring provisions
Taxpayers should consider taking advantage of the TCJA’s expiring provisions while they remain in place - with only months before the United States reaches a tax policy crossroad. Contact your Baker Tilly tax advisor to discuss opportunities.
Stay informed
An understanding of the factors affecting tax policy will allow taxpayers to navigate the current uncertainty and anticipate potential changes. If you haven’t already, you can subscribe to our mailing list to receive tax insights and the latest developments.
Model the consequences
Given the range of potential election outcomes and the large variances in party platforms, taxpayers should model the consequences of various scenarios. Understanding the impacts each will have on your tax liability can help you make decisions in an uncertain tax policy landscape.
Please reach out to your Baker Tilly advisor to discuss the impact of the information and analysis provided in our tax policy and the 2024 election insights.
Last updated Oct. 4, 2024
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.