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Other Tax Considerations
The following is not tax/legal advice, see the list below of 2024-2025 tax considerations that are still up in the air:
- Extension (or Expiration) of the 2017 Tax Cuts and Jobs Act (TCJA)
- What Might Change: Many of the individual-side provisions (such as lower income tax brackets, the higher standard deduction, and the 20% pass-through deduction) expire after 2025.
- Impact on Investors: If not extended, taxpayers could face higher marginal rates and lose popular deductions, resulting in higher overall tax bills—particularly for small-business owners, freelancers, and real estate investors.
- Possible Return of the Alternative Minimum Tax (AMT) for More Taxpayers
- What Might Change: Under TCJA, far fewer people are subject to AMT. Once those TCJA provisions expire, the old AMT thresholds could snap back into place.
- Impact on Investors: High-income earners, especially those in high-tax states who previously avoided AMT thanks to the TCJA’s higher exemptions, might be pulled back into it. AMT can reduce or eliminate deductions like state and local taxes (SALT).
- State and Local Tax (SALT) Deduction Cap Adjustments
- What Might Change: The current SALT deduction is capped at $10,000. Talks include raising that cap—possibly doubling it for married filers—or reverting to pre-2018 rules.
- Impact on Investors: Those who own property in high-tax states or who pay large amounts of state income tax could either see a bigger federal deduction (if the cap is raised) or no change (if the cap remains). But the politics are contentious and still very uncertain.
- Shifting Treatment of Tips
- What Might Change: Proposals exist to exempt tips from federal income tax (though likely still subject to payroll taxes). This would be a brand-new carve-out.
- Impact on Investors & Business Owners: Hospitality and service businesses could see changes in employee wage structures and labor costs. For individuals who earn tips—or have family members who do—this could yield tax savings. It may also influence hiring in tipped industries if labor becomes more affordable overall.
- Overtime and Social Security Tax Exemptions
- What Might Change: Some proposals would make overtime pay or Social Security benefits partially or fully exempt from federal income tax.
- Impact on Retirees & Employees: Retirees who rely on Social Security might keep more in their pocket if benefits are no longer taxed. Overtime-exempt pay could encourage more people to work extra hours if it’s taxed less. Both ideas are politically complex and still lack detail.
- Child Tax Credit (CTC) Changes
- What Might Change: The TCJA doubled the CTC from $1,000 to $2,000 and raised phaseout thresholds. The enhanced CTC expires after 2025. Lawmakers may debate making it permanent, adjusting the amount, or changing eligibility.
- Impact on Investors with Families: Families will want to watch closely. If the credit decreases or more children become ineligible, overall tax bills could climb—affecting disposable income, potential savings, and investment dollars.
- R&D Expensing and Bonus Depreciation
- What Might Change: Pre-2022 rules allowed for generous “bonus depreciation” and immediate expensing for R&D costs. Those have begun phasing down or reverting to slower write-offs.
Why Delaying Your Filing Might (or Might Not) Help
- If significant tax law changes happen late in 2025 and are applied retroactively, waiting to file (i.e., filing in October) might give you a clearer picture of which deductions, credits, or rates apply.
- On the other hand, filing early could still be beneficial if your situation is straightforward or if legislation remains stalled. Some changes might not become effective until after 2025 or might only pass at the very end of the year.
Consult your CPA or tax advisor before making big decisions—especially in a year when several moving parts could alter your tax picture overnight. By remaining aware of potential shifts, individual investors and entrepreneurs can make smarter calls about everything from retirement contributions to real estate investments, all while keeping a close eye on how final legislation will shape your 2025 tax bill.
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- Impact on Entrepreneurs & Real Estate Investors: If bonus depreciation (or full expensing of certain capital purchases) comes back, that can sharply reduce tax in the year of purchase. Real estate investors, tech start-ups, and manufacturing businesses would benefit from faster deductions, possibly increasing cash flow and reinvestment.
- Further Corporate Tax Rate Adjustments
- What Might Change: The 2017 reform brought the corporate rate down to 21%. Some lawmakers want it even lower for domestic manufacturing; others argue that 21% is “just right.”
- Impact on Investors: If you hold C-corp shares, a lower rate could improve after-tax earnings and possibly boost stock valuations in the long run. Pass-through business owners might see less of a direct benefit but should watch for any interplay (such as a smaller 20% pass-through deduction).
- Repeal or Reduction of Green Energy Credits from the Inflation Reduction Act
- What Might Change: Part of the “pay-for” discussion includes partially repealing or limiting recent green energy incentives to offset other tax cuts.
- Impact on Investors: If you’ve planned to invest in solar, EVs, or other clean-tech opportunities for tax credits, keep an eye on whether any of those credits get scaled back. It could alter ROI calculations for sustainable energy projects.
- Tariffs as a ‘Hidden’ Tax Offset
- What Might Change: Tariffs can raise significant revenue (up to $1–3 trillion over 10 years). The question is whether higher or broader tariffs might be used in lieu of or alongside tax hikes to pay for new cuts.
- Impact on Investors: Tariffs can drive up costs for imported goods and materials, potentially hitting profit margins for businesses dependent on foreign inputs. This can trickle down into consumer prices, affecting overall economic conditions and possibly investment returns.
- Short-Term vs. Permanent Extensions
- What Might Change: Congress often uses “temporary” extensions—like a 4- or 5-year renewal of provisions—to reduce headline costs. However, these can suddenly expire if not renewed.
- Impact on Investors: Planning gets trickier with short-term tax breaks. If key tax benefits (like bonus depreciation) are extended only a few years, you may want to time major purchases or real estate acquisitions to maximize short-lived benefits.
- Uncertain Timing of Legislation
- What Might Change: Lawmakers might tackle big, controversial issues (immigration, border funding, energy) before focusing on taxes. Or they could bundle everything into one large bill.
- Impact on Investors: Delays often push final tax deals to the last minute, leaving little time to react. Individuals filing early might not capture late-year changes; those waiting until October might pivot faster if big tax breaks (or hikes) get enacted retroactively to January 2025.
This content is provided for informational and educational purposes only and does not constitute an offer to sell or a solicitation to buy any security or investment product. All investors must review and sign the official offering documents, including the Private Placement Memorandum (PPM), which governs and supersedes any prior communication. Tax and legal outcomes vary by individual circumstance. We do not provide tax, legal, or accounting advice—investors should consult qualified professionals before making investment decisions. Click Here to see full disclaimer.