Trump’s Tax Cuts

With a new administration comes a new perspective on taxes. It’s hard to say what will be enacted as that will be subject to debate and dialogue. Still, I’m very confident there will be significant changes that we need to be aware of moving into 2025.

As Robert Kiyosaki, author of "Rich Dad, Poor Dad," once said, "It's not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for." That will continue to be the case as new tax legislation is proposed and passed into law.

A recent article highlighted some of the changes that may occur. Please understand these are changes that might happen and are not necessarily certain. What this list does highlight is how one needs to be dynamic in their perspective about how they handle taxation.

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"Tax breaks that could disappear

Some long-standing tax breaks could face elimination, according to the document:

• Mortgage interest deduction: This could either be cut entirely or lowered to a $500,000 cap, with the former idea saving $1 trillion over a decade and the latter $50 billion over the same period.
• "Head of household" tax filing status: This filing status provides a larger standard deduction for unmarried adults with children. Eliminating it could save $192 billion over 10 years. 
• American Opportunity Credit: This $2,500 tax credit is given for educational expenses amassed over the first four years of a person's higher education. Revoking it would save $59 billion over a decade. 
• Child and Dependent Care tax credit: This credit helps families with young children pay for up to $2,100 in annual child care expenses. Waiving it would save $55 billion over a decade.
• Student loan interest deduction: Scrapping this deduction, used by people with student loan debt, could save $50 billion over 10 years. 
• Lifetime Learning Credit: This nonrefundable tax credit is equal to 20% of qualified tuition and related expenses under $10,000. Repealing it would save $26 billion over 10 years.

New tax breaks under consideration

The document also outlines several ideas for lowering taxes, in addition to eliminating taxes on overtime and tips. They include:

• Eliminating the estate tax: This proposal would most benefit ultra-rich families given that the estate tax hits people with assets of nearly $14 million. Removing this tax would cost the U.S. $370 billion over 10 years. 
• Raising or eliminating the SALT deduction cap: Mr. Trump's TCJA introduced a controversial $10,000 cap on deducting state and local taxes, or SALT. Under the latest Republican proposals, the cap could be eliminated or raised to higher thresholds, such as $20,000 for married couples. The cost could range from $100 billion to up to $1 trillion, depending on the size of the change. 
• Making auto loan interest tax deductible: This idea, which was floated by Mr. Trump during the 2024 presidential campaign, could cost $61 billion over a decade.”

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Source: 
https://www.cbsnews.com/news/trump-tax-cuts-extension-republican-salt-deduction-student-loans/

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