New year – new tax laws? With a new Administration comes new proposals for tax law changes. Here are the ones we’re watching:
- With many provisions of the 2017 Tax Cuts and Jobs Act set to expire in 2025, many of those provisions may be extended.
- President Trump has proposed a cut on taxes on overtime pay and tips.
- The estate tax may be eliminated.
- One proposal is to allow for auto loan interest tax deductible.
- There has been a 10% import tariff proposed - a universal tax on US imports that would be taxed to the consumers.
- The SALT tax deduction may be restored. This tax deduction previously allowed all state and local taxes paid to be deducted from the Taxpayer’s IRS bill. In 2017, the deduction was capped at $10,000.
- Federal taxes on Social Security may be eliminated. Currently, Social Security is subject to federal income tax when there is “combined income” (1/2 of Social Security + other income) of more than $25,000 individual/$32,000 MFJ. The current proposal would eliminate taxes on Social Security entirely.
- One Representative has introduced a bill that would do away with the current tax code and be replaced with a national consumption tax – the Fair Tax.
- With these new tax plan proposals, some tax breaks may be taken away, such as the mortgage interest deduction, Head of Household filing status, the Child and Dependent Care Credit, American Opportunity Credit, student loan interest deduction, and Lifetime Learning Credit.