As we enter 2025, tax policy remains at the forefront of business leaders’ minds, particularly with the recent expiration of key provisions from the 2017 Tax Cuts and Jobs Act (TCJA). The outcome of the 2024 elections and ongoing policy debates will shape the tax landscape for years to come. As companies adjust to a post-TCJA world, it’s essential to track the evolving tax issues that could have a significant impact on business operations, profits, and future planning.
1. Corporate Income Tax Rate
One of the most prominent tax issues in 2025 is the corporate tax rate. While the TCJA set the corporate tax rate at 21%, debates about whether to increase or decrease this rate continue to divide policymakers.
Where they diverge:
Former President Donald Trump remains a proponent of reducing the corporate tax rate to 15%, specifically for businesses that manufacture their products domestically. On the other hand, Vice President Kamala Harris, continuing the Biden administration’s stance, advocates for a 28% corporate tax rate, a proposal that aims to raise substantial revenue to fund social programs and infrastructure.
Where they converge:
Some Republicans, recognizing the fiscal pressures of rising deficits, have expressed support for a modest increase in the corporate tax rate—somewhere between 21% and 28%. This compromise could help balance the need for tax revenue while maintaining economic competitiveness.
2. Sources of Revenue
The broader debate on how to fund tax cuts remains unresolved. While tax cuts have been a central policy tool, there is growing concern about their long-term impact on the federal deficit and overall economic stability.
Where they diverge:
Trump and many conservative lawmakers argue that tax cuts should not be offset by new taxes, citing the potential for economic growth to cover the cost of tax reductions. They believe that reducing taxes spurs investment, job creation, and innovation.
Harris, however, supports using tax increases to fund some of these cuts. Key proposals include:
- Raising the corporate alternative minimum tax (CAMT) from 15% to 21%
- Reinstating the top marginal tax rate of 39.6% for high-income earners
- Introducing a 25% wealth tax on billionaires, targeting unrealized capital gains
- Imposing higher taxes on long-term capital gains for individuals with taxable income above $1 million
Where they converge:
Some Republicans have acknowledged the need for fiscal responsibility and have suggested that tax cuts may need to be offset by new revenue sources. This has created a space for bipartisan discussions, where finding a balance between tax reductions and deficit reduction could lead to compromises.
3. Expiring TCJA Provisions
With the expiration of key TCJA provisions, including the $10,000 cap on state and local tax (SALT) deductions, the debate over who should benefit from these changes has intensified.
Where they diverge:
Harris has framed her approach as part of a broader “opportunity economy” aimed at helping the middle and lower classes. She has emphasized her commitment not to raise taxes on those making less than $400,000 annually, while also advocating for expanded tax credits for families and small businesses. Harris’s plan would allow the estate tax exemption to revert to its pre-TCJA levels.
Trump has continued his focus on economic growth, emphasizing that extending the TCJA provisions for all income groups will provide a much-needed boost to the economy. He has also expressed interest in implementing a new middle-class tax cut, potentially through a payroll tax reduction or an increased standard deduction.
Where they converge:
Both candidates support expanding the child tax credit and providing tax relief for tip income. They also agree on reinstating the SALT deduction, which has been a contentious issue for taxpayers in high-tax states.
4. Tariffs
Tariffs continue to play a pivotal role in U.S. trade policy, with significant implications for business operations, particularly those with international supply chains.
Where they diverge:
Trump remains a staunch advocate for tariffs, using them as a central tool of his “America First” trade policy. He has called for across-the-board tariffs ranging from 10% to 20% on all U.S. imports and has threatened steep tariffs on goods from specific foreign adversaries.
Where they converge:
Both Trump and Harris agree on the need to address unfair trade practices, though their approaches differ. Harris has criticized Trump’s tariff policies, labeling them as a “Trump sales tax,” but has maintained some of the existing tariffs introduced by the previous administration.
5. International Tax
The international tax landscape continues to evolve, with key TCJA provisions impacting U.S. businesses that operate globally. The question of how to align U.S. tax policy with global agreements, such as the OECD’s global minimum tax, remains unresolved.
Where they diverge:
Trump supports maintaining the international tax provisions of the TCJA, including the global intangible low-taxed income (GILTI) regime. He has also expressed opposition to U.S. participation in the global minimum tax agreement and has been critical of international tax coordination.
Harris, on the other hand, is open to reforming the international tax system to curb the practice of profit shifting and offshore tax avoidance. She supports aligning U.S. tax rules with the global minimum tax, using the additional revenue to fund domestic initiatives such as the “America Forward” tax credit.
Where they converge:
No significant points of agreement have yet emerged on this issue, though both candidates agree on the need to prevent U.S. corporations from shifting profits and jobs overseas.
Conclusion
As we move into 2025, the debate surrounding tax policy remains highly fluid. The expiration of TCJA provisions, along with shifting political dynamics, sets the stage for significant tax reforms. Businesses must stay engaged in the process, preparing for potential changes in corporate tax rates, international tax policies, and other critical areas.
While the outcome of the 2024 elections will shape the trajectory of U.S. tax policy, there is widespread acknowledgment that tax reforms will be necessary to address both economic growth and fiscal sustainability. Regardless of the election outcome, businesses should continue to assess their tax strategies, prepare for potential changes, and remain adaptable in the face of evolving tax policy debates.
