Kelly Bullis
Now that President Trump is back, he made a lot of promises about tax law that he is expected to move forward in Congress.
First is to make permanent his original tax law started back in 2017. Without that move, many popular provisions will automatically go away at the end of 2025.
Individual tax bracket rates will all go up 2-5% (you will pay more in taxes). The Standard deduction would be cut by more than 50% (you would need to start itemizing your deductions again, making tax preparation more difficult). The child tax credit would be cut in half and the credit of $500 for children over 17 years old would go away. Qualified Business Income Deduction of 20% of pass-through business income would go away, subjecting small businesses to higher personal tax rates instead of trying to level the playing field to match lower corporate tax rates. The Estate and Gift tax exemption would drop from current $13.99 million to $7 million, essentially destroying the ability of many small businesses being handed to a next generation of owners as well as subjecting a lot of families to the dreaded 45% estate tax.
There are some unpopular provisions of the 2017 tax law that would go away as well. Currently, there are no miscellaneous itemized deductions. Unless the tax law is amended, in 2026, that will be back. Personal exemptions would be back, making up a little for the loss in the standard deduction. Casualty and Theft losses would be easier to deduct again. The limit on state and local tax (called SALT) would go away. (Taxpayers in states with large income and property taxes, like California, would be able to deduct all they paid, instead of being limited to a maximum of $10,000.) The deduction for job-related moving expenses would be reinstated.
Trump promised to make Social Security benefits and tip income non-taxable. As obviously popular that this move would be, expect Congress to make the actual change difficult. Congress is badly addicted to current tax revenue, making these two items non-taxable would reduce taxable income available to give away to special interests. Hopefully, Elon Musk’s DOGE will eliminate most if not all of those special interest black holes, making it easier to pass a bill that would make Social Security and tip income non-taxable.
My prediction. I believe Trump will offer to drop the SALT in exchange for votes from Democrats in such states as New York, New Jersey, Connecticut, Massachusetts, Pennsylvania, Illinois, and California. The real battle to pass this will be in the Senate. Hopefully, dropping the SALT will also swing some Democrat senators to vote for the tax changes as well.
I don’t expect to see any voting on this until the fall. Congress will wrangle, wiggle and prognosticate on the pros and cons of making the tax law changes, waiting to get a feeling from their constituents on where to cast their votes. The longer Congress waits before passing will decide if it will be an easy tax filing season in 2026 or not. (There must be time for the IRS and tax software companies to be able to write the software to incorporate tax law changes.)
Have you heard? Ecclesiastes 8:1 says, “Who is like the wise? And who knows the interpretation of a thing? A man’s wisdom makes his face to shine, and the hardness of his face is changed.”
Kelly Bullis is a Certified Public Accountant in Carson City. Contact him at 775-882-4459. On the web at BullisAndCo.com. Also on Facebook.