What Trump's Victory Could Mean For The 2017 Tax Cuts

The 2024 election victory of former President Donald Trump, coupled with Republicans retaking the Senate and possibly retaining the House of Representatives, has put the spotlight on what this means for tax policy.

Tax experts agree a likely result is the extension of key components of the 2017 Tax Cuts and Jobs Act (TCJA).

Ben Henry-Moreland, a senior financial planning expert at Kitces.com, told Think Advisor that he anticipates a “Republican trifecta” in Washington, making the extension of the TCJA provisions highly probable. This includes the historically high estate tax exemption, higher standard deduction, lower income tax brackets, and the restructured alternative minimum tax (AMT) framework.

While there is a possibility that Republicans could seek to repeal the estate tax entirely, Henry-Moreland notes that the current high exemption levels mean the tax only applies to the wealthiest Americans, making it a lower priority compared to other policy changes.

Also Read: Powell Brushes Off Trump’s Removal Threat: Economists Say 2026 Could Be His Last Stand

One caveat is that state-level estate and inheritance taxes will still need to be considered, as many states maintain lower exemptions than the federal government. Trust planning to move assets out of estates and avoid state-level taxes is likely to continue, according to Think Advisor.

The current AMT framework, which has significantly reduced the number of households subject to the tax, is also expected to be extended, preventing a return to the pre-2018 rules that would have affected more taxpayers.

Similarly, the higher standard deduction and limitations on state and local tax (SALT) deductions are likely to remain in place, despite Trump’s comments to the contrary during his campaign. While the SALT cap has been criticized, it has not had as severe an impact as anticipated, as many high-income taxpayers were already subject to the AMT before the TCJA changes.

Leslie Gillin Bohner, chief fiduciary officer at Fiduciary Trust International, echoes the view that most TCJA provisions will likely be extended, advising clients to adopt a “wait-and-see approach” and plan on their timeline to utilize remaining exemption amounts, Think Advisor reports.

Read Next:

• US Consumer Sentiment Rises More Than Predicted To 6-Month Highs, Inflation Expectations Hit 4-Year Low

Image via Pexels