Latest news with #TCJA
Forbes
2 days ago
- Business
- Forbes
House Bill Targets SALT And PTET Deductions For Traders, Professionals
A Renewed Blow in the SALT Wars and a Wake-Up Call for High-Income Professionals. SALT Cap Workaround Congress is once again targeting high-income professionals in the name of tax reform. On May 22, 2025, the House of Representatives passed 'The One, Big, Beautiful Bill,' which proposes sweeping changes to the Tax Cuts and Jobs Act (TCJA). While the headlines focus on extensions of the TCJA's broad tax cuts, buried in the bill are provisions that quietly strike at key benefits for service professionals and investors. The legislation would eliminate the Pass-Through Entity Tax (PTET) deduction for professionals in fields like law, accounting, consulting, financial services, and trading. These are the same 'specified service trades or businesses' (SSTBs) that were already singled out in 2017's TCJA by limiting their qualified business income (QBI) deductions. The PTET workaround has been a crucial tool for many S-Corps and partnerships, allowing them to deduct state and local taxes (SALT) at the entity level and bypass the $10,000 SALT cap. Under the new bill, SSTBs would lose this option. At the same time, the House bill raises the SALT deduction cap to $40,000—but then phases it out for high earners. The phase-out begins at $250,000 of income for single filers and $500,000 for joint filers, and the deduction eventually drops back to $10,000 for the highest earners. The result: high-income professionals, especially in high-tax states, would see little or no SALT relief. Notably, the bill would also make permanent the TCJA's increased exemption amounts for the Alternative Minimum Tax (AMT), which originally aimed to prevent middle-income taxpayers from getting caught in the AMT net. That may soften the blow slightly, but it doesn't offset the broader loss of deductions. SALT will remain not deductible for AMT and increasing SALT caps might have limited effect if AMT is triggered. As of early 2025, 36 states and New York City have PTET regimes in place, designed specifically to counter the SALT cap. If this bill passes, the effectiveness of those state-level strategies could be gutted for service professionals. Traders, fund managers, and other investment professionals—especially those who qualify for trader tax status (TTS)—should prepare now. These changes could significantly alter 2025 tax planning. If the Senate passes a similar version of the bill, this would mark a major policy shift in how federal tax law treats pass-through income and professional service entities. Darren Neuschwander, CPA contributed to this blog post. See a longer version of this blog post on GreenTraderTax. Robert A. Green, CPA, is CEO of He specializes in tax strategies for traders and investment professionals.
Yahoo
2 days ago
- Business
- Yahoo
The 3 Main Proposals From Trump's New Tax Plan and What They Mean for You, According to Jaspreet Singh
Taxes: Everyone has to pay them, but nobody likes them. President Donald Trump understands that, and he campaigned on a promise to lower taxes for Americans. Learn More: Find Out: Since he took office, Trump has proposed the largest tax cut in American history. The 'One Big, Beautiful Bill' promises permanent tax cuts — those earning between $30,000 and $80,000 per year would pay around 15% less in taxes overall — no taxes on tips or overtime, and tax relief to Social Security recipients. However, there remains some level of opposition to this new tax bill within the GOP. The bill passed in the House of Representatives and will next be voted on by the Senate. As implied by the name, the bill is long and complex — many of its provisions might seem confusing and overwhelming. But, in a recent YouTube video, financial guru Jaspreet Singh summed up the three main tax proposals and what they could mean for your wallet. Here's what you need to know. 'Number one, it is to cut taxes — income taxes — across the board, because at the end of 2025, the Tax Cuts and Jobs Act is going to expire,' explained Singh. Signed into law during Trump's first term, the 2017 Tax Cuts and Jobs Act (TCJA) lowered tax rates overall. However, the current legislation is slated to expire at the end of 2025 if Congress doesn't act to extend the bill, which Trump, of course, wants to avoid. If Congress is unable to pass this new tax bill or extend the current provisions of the TCJA beyond Dec. 31, 2025, the White House Council of Economic Advisers indicated that these things will happen, among other tax changes: Tax bracket rates for individuals will go up. The standard deduction will decrease by close to 50%. The current child tax credit will also decrease by 50%, from $2,000 to $1,000. Be Aware: Singh explained that through this new tax proposal, Trump intends to maintain low corporate tax rates. The intention behind low corporate taxes is generally to encourage business growth and economic competitiveness — as highlighted by the Council of Economic Advisers, one of the most consequential provisions of the TCJA was that it effectively cut the corporate income tax rate from 35% to 21% to incentivize companies to continue doing business in the U.S. and to attract other companies to come to the U.S. If the current provisions of the TCJA do end up expiring later this year, expect corporate tax rates to rise and companies to potentially look to do their business elsewhere. Singh also pointed out Trump's plan to fund these tax breaks with income from tariffs. Thomson Reuters reported that Treasury Secretary Scott Bessent 'expressed optimism' that the incoming tariff revenue will help offset the cost of the proposed extension of TCJA provisions. It's part of the Trump administration's plan to generate both long and short-term tariff revenue to lower taxes for Americans and bolster U.S. manufacturing while creating more jobs. Very surprisingly, Trump proposed raising taxes on the rich. At the time Singh posted his video, a tax rate increase to 39.6% — from 37% — for those earning at least $2.5 million per year was on the table, a change that, Singh said, 'may be necessary to continue funding essential programs like Medicaid and to pay for the tax cuts for middle and working-class Americans.' However, that proposal seems to have been removed from the bill, leaving the tax rate on the wealthiest Americans at the same level. Singh compared the U.S. to a business printing its own money, spending more than it earns — through taxes and tariffs — and getting deeper into debt to keep spending on things like paying contractors and funding programs. That means 'more and more tax dollars are now being used just to pay interest expenses [on the debt] … as opposed to actually providing value to society,' Singh said. As people expect government programs to continue, the government keeps taking on more debt, which leads to inflation — and inflation drives expenses up, meaning people need more help from the government, leading to a vicious cycle of spending and debt. Singh may or may not be correct — the ultimate effects of these proposed policies on Americans remain to be seen. The bill has to pass the Senate and be signed into law for any of them to be put into practice. Editor's note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on More From GOBankingRates 8 Common Mistakes Retirees Make With Their Social Security Checks Are You Rich or Middle Class? 8 Ways To Tell That Go Beyond Your Paycheck This article originally appeared on The 3 Main Proposals From Trump's New Tax Plan and What They Mean for You, According to Jaspreet Singh Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
3 days ago
- Business
- Yahoo
Trump's 2026 Budget Proposal: 7 Things Taxpayers Need To Know
President Trump's 2026 budget proposal, dubbed the 'One, Big, Beautiful Bill,' is a sweeping fiscal plan that aims to reshape federal spending and tax policy. The proposal, which has already passed the House, has stirred up plenty of debate on both sides of the aisle. 'At a high level, the proposal includes $163 billion in federal spending cuts, mostly hitting non-defense programs, and a fresh round of tax changes aimed at extending and expanding the 2017 Tax Cuts and Jobs Act,' Paul Miller, managing partner and CPA at Miller and Company LLP, wrote in an email. 'While the messaging frames it as pro-growth and middle-class friendly, there are winners and losers depending on where you sit financially.' Here are seven key takeaways taxpayers need to know. Find Out: Read Next: The 2017 Tax Cuts and Jobs Act (TCJA) was a major overhaul of the U.S. tax code that lowered most individual income tax rates, nearly doubled the standard deduction and expanded the child tax credit. Many of these provisions were set to expire at the end of 2025. 'By making the individual tax cuts from the TCJA permanent, tax rates would remain at their current lows and the expanded deductions/credits would continue. This keeps some taxpayers' bills lower in the near term, but also adds significantly to the long-term deficit in a major way,' explained Nik Agharkar, Esq., owner and managing member of Crowne Point Tax. The bill also includes a temporary boost in the standard deduction — $1,000 for individuals, bringing it to $16,000, and a $2,000 increase for joint filers, bringing it to $32,000. According to Agharkar, the middle class will avoid a sizable tax increase because key provisions like the 22% and 12% tax brackets — lowered from 25% and 15% pre-2017 — will remain in place. Other deductions, like for mortgage interest and state taxes, won't be subject to stricter limits. High-income earners stand to gain the most, Agharkar continued. The top rate would continue to be 37% instead of returning to 39.6% and the estate tax exemption would be permanently doubled. For businesses, the 20% pass-through business income deduction means owners of LLCs and S-Corps can write off a fifth of their income. Learn More: The proposal also mentions the elimination of taxes on tips, overtime pay and Social Security benefits. 'This proposal is aimed at boosting take-home pay for service and hourly workers, and would exempt all or a portion of these income types from federal taxation,' Laurie Smith, tax partner at Wiss & Company, wrote in an email. 'This proposal is temporary and includes income limitations.' But while these may appear beneficial, experts warn of potential challenges in the future. 'While these measures appear beneficial on the surface, they are projected to contribute between $5 and $11 trillion to the national debt over the next decade,' George Carrillo, CEO of the Hispanic Construction Council (HCC), former director of social determinants of health for the state of Oregon and former Democratic candidate for Governor of Oregon, pointed out. Seniors 65 and over with limited income will see a new temporary $4,000 deduction, called a 'bonus' in the legislation, CNBC reported. This is available whether they take the standard deduction of itemize their returns. The provision would apply to tax years 2025 through 2026 and would phase out for single filers with more than $75,000 in modified adjusted gross income or $150,000 for joint filers. This would help lower-income seniors, but Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center, explained to CNBC that it's not a life-changing amount. A senior who brings in roughly $50,000 per year would see their taxes reduced by a little under $500 per year. One of the most closely watched components of the proposal is how the administration will address potential changes to the state and local tax (SALT) deduction cap. As it stands today, the proposal would raise the $10,000 cap to $30,000 for joint filers with modified adjusted gross income under $400,000. Once it exceeds that amount, the cap would be reduced but not below $10,000. This would be a significant benefit to taxpayers living in high-tax states like New York or California. 'This has been a point of contention for lawmakers from high-tax states — they want to see a full repeal of the cap,' Smith explained. 'Efforts to raise or repeal the SALT deduction cap aim to provide meaningful tax relief to residents in high-tax states, but they must be carefully weighed against the potential to significantly increase the federal deficit.' The child tax credit (CTC) in the 2017 TCJA temporarily doubled from $1,00 to $2,000, but the proposal would make this permanent and expand it further, increasing it from $2,000 to $2,500 per child until reverting back to $2,000 after 2028 and adjusting for inflation. There will also be stricter identification requirements to claim the credit, according to Smith. Another family focused proposal is the creation of MAGA savings accounts, short for Money Account for Growth and Advancement. 'These accounts would offer tax-advantaged savings options for middle-income families, similar to Roth IRAs or HSAs, but with broader usage flexibility,' Smith noted. Funds could be used toward education, similar to a 529 plan, but could also be used for starting a business or buying a home in the future. However, it would not benefit from tax-free withdrawals like the 529 plan. 'The budget proposes large cuts to Medicaid, food assistance and education, with work requirements attached to some benefits,' Miller wrote. 'The IRS would also see a significant budget cut, which might sound good at first blush but could slow down processing and enforcement.' The cuts would primarily affect low-income households. 'Housing Choice Vouchers, public housing funds, HOME grants and heating assistance (LIHEAP) are all on the chopping block. For a low-income renter, the new two-year cap on rental assistance could be life-changing,' Agharkar warned. This would impact middle-class Americans more indirectly. 'If federal support for affordable housing and infrastructure is withdrawn, state and local governments may raise taxes or fees to try to fill the gap,' Agharkar noted. 'Property taxes, sales taxes or local levies could increase so that cities can fund housing initiatives or community development projects that used to be federally financed.' Wealthy individuals don't rely on these programs, but Agharkar pointed out that they're still stakeholders in communities and the economy. An overlooked impact is the real estate market and employers. 'Cuts to rental assistance and home-building grants could lead to higher rents and housing shortages at the lower end of the market,' he added. 'In turn, this can spur housing instability that creeps up the income spectrum.' More From GOBankingRates How Far $750K Plus Social Security Goes in Retirement in Every US Region 9 Downsizing Tips for the Middle Class To Save on Monthly Expenses This article originally appeared on Trump's 2026 Budget Proposal: 7 Things Taxpayers Need To Know Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
4 days ago
- Business
- Yahoo
Sen. Cornyn visits Waco to discuss future of Trump tax cuts with small business owners
WACO, Texas (FOX 44) — U.S. Sen. John Cornyn made a stop in Waco on Tuesday to meet with small business owners and discuss the future of the 2017 Tax Cuts and Jobs Act (TCJA), a signature piece of legislation passed during President Donald Trump's first administration that is set to expire at the end of 2025. Cornyn, a Texas Republican and member of the Senate Finance Committee, is traveling across the state to hear directly from entrepreneurs about how the tax cuts have affected their operations — and how extending them might help sustain growth. The meeting was held at Sticker Universe. The senator met with John Peel of Sticker Universe, Trey Lipsitz of M, Lipsitz & Co., Kirk Zander of United Truck Equipment Company & United Truck Equipment Manufacturing, and Kyle Citrano of George`s Restaurant. 'This is important to economic growth, not only here in Waco and McLennan County, but across Texas and across the nation,' Cornyn said. 'There's a lot of challenging economic signals being sent with some of the tariff negotiations and the like, which make this even more important. We need to maintain the growth of our economy here locally, in our state, and in our nation.' Local business owners say the tax law helped them hire more workers and reinvest in their companies. Kyle Citrano, owner of George's Restaurant, said the TCJA gave him the confidence to expand. 'I would love to grow more. I love to try and do new things. I'd love to do other kinds of things here in Waco, but I don't know if that's a possibility without those aspects,' Citrano said. Kirk Zander, president and owner of UTEC & UTEM, warned that allowing the tax cuts to expire could have ripple effects across the workforce. 'I think businesses would just invest less, and it would just slow the whole environment of the economy,' Zander said. 'Certainly, employees would suffer —We'd probably have to lay some people off.' According to Cornyn, letting the tax cuts expire would result in tax increases for about 60 percent of American families in 2026, and the average family of four making $75,000 a year would face a $1,500 tax increase next year. Working families would see the child tax credit cut in half, and Texans would see their taxes increase an average of $3,000. While some Americans have expressed concern about the long-term fiscal impact of the TCJA, Cornyn said there are ways to balance the budget without targeting vulnerable populations. 'In order to begin to be fiscally responsible, we're going to have to do some hard things,' he said. 'But we are determined to do it, number one, without affecting Social Security. And number two, without affecting benefits for Medicaid recipients.' Cornyn acknowledged that he does not expect significant support from his Democratic colleagues in extending the law. 'Many of my Democratic colleagues don't like tax cuts. They believe they are the party of government and they want to grow the government, which means more revenue, which means higher taxes,' he said. As the 2025 expiration date approaches, the debate in Washington is heating up — and business owners in Texas are watching closely to see what Congress decides. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
New York Post
4 days ago
- Business
- New York Post
House Republicans banking on ‘big beautiful bill' to boost midterm chances, stop Dem plans for third Trump impeachment
WASHINGTON — House Republicans are urging their Senate colleagues to swiftly pass President Trump's 'big beautiful bill' — which recent polling suggests is popular in key congressional districts — to avoid losing the chamber to Democrats who could use a new majority to start impeachment probes. Speaker Mike Johnson (R-La.) told The Post in a phone interview Friday that Republicans got 'caught flat-footed' when the Tax Cuts and Jobs Act (TCJA) passed in December 2017 and the GOP took a drubbing in the midterms the following year, handing Democrats a 41-seat House advantage. 'We want to ensure that people can feel the effects of it well in advance of the midterm elections,' Johnson said. Advertisement 'That's one of our great regrets about the TCJA is we waited too long. We believe this bill is going to provide real relief for real Americans everywhere — and the sooner we do it, the better.' Historical headwinds are strongly against House Republicans heading into next year. In nearly every midterm election since 1938, the party in power has lost seats — with two exceptions: 1998 and 2002. 6 The One Big Beautiful Bill Act is intended to be the president's signature legislative achievement of his second term. Getty Images Advertisement 6 Republicans wanted to get President Trump's marquee legislative agenda through early to give voters time to experience it. Nathan Posner/Shutterstock But Johnson and other GOP leaders have been trying to stay optimistic about the GOP's odds of defying history. High stakes The stakes are high for Republicans, especially Trump, even as some GOP senators have doubted the bill has enough votes to pass the upper chamber in its current form. A National Republican campaign operative focused on the 2026 elections warned Tuesday Democrats are 'going to do everything in their power to impeach President Trump' if they win back even partial control of Congress. Advertisement Even Dems in toss-up races, like Georgia Sen. Jon Ossoff, have signaled openness to impeachment based on Trump 'selling access' to people purchasing his name-branded cryptocurrency. Johnson already stared down an impeachment threat this Congress after Rep. Shri Thanedar (D-Mich.) tried to force a vote this month on articles alleging abuse of trade powers, bribery and corruption, obstruction of justice and tyranny. 'While Democrats are throwing fits, impeding law enforcement, playing political games, and demonstrating how far out of touch they are — Republicans are working to deliver lower taxes for families, restore American energy dominance, strengthen border security, restore peace through strength, and make government work more efficiently and effectively,' the speaker said in a statement at the time. 'The contrast has never been more clear.' 6 The Senate GOP is generally thought to be in a fairly safe position heading into 2026, unlike House Republicans. REUTERS Advertisement Thanedar backed down at the last minute following objections from some members of his own party — but other Democrats like Rep. Al Green (R-Texas) have hinted at following through in the future, accusing Trump of being 'an authoritarian president.' 'House Democrats have already provided just a small preview of what a Democratic majority would bring: distractions, division, and nonstop Trump Derangement Syndrome,' said National Republican Congressional Committee spokesman Mike Marinella. Trump was impeached and acquitted twice during his first term and has been keen on avoiding a repeat of that fate. Beyond the specter of impeachment, House Democrats would take over powerful committees with subpoena powers and other investigative tools and launch a blitz of inquiries into Trump and his allies. Topics could range from Trump's crackdown on law firms and universities, to his meme-coin venture and the 'flying palace' super jet worth an estimated $400 million his administration recently received from Qatar. 6 Qatar's gift of a luxury jumbo jet sparked bipartisan criticism of President Trump. YouTube/Spotti Flight Legislative success The House passed the One Big Beautiful Bill Act, 215-214, early Thursday to make Trump's 2017 tax cuts permanent; end taxes on qualified tips, overtime pay and car loan interest payments as well as boost border and defense spending; enact Medicaid reforms; and claw back money from unused green-energy tax credits. Its passage had been in doubt up until hours before the vote due to last-minute objections from conservatives in the House Freedom Caucus, who wanted work requirements for Medicaid imposed sooner than 2029. They successfully got the timeline bumped up to the end of 2026. Advertisement Fiscal hawks also wanted hundreds of billions of dollars in solar, wind and other renewable energy tax incentives from President Joe Biden's Inflation Reduction Act to be stripped if not implemented by the end of 2028 — or if it has not produced at least a 5% return on investment within 60 days of the bill's enactment. Blue-state Republicans further touted a $40,000 state and local tax (SALT) deduction cap for individuals filing with the IRS. 'The ultimate package is one that really does appeal to hardworking Americans because it addresses their needs, it addresses real tax benefits and tax savings, the cuts that will help everybody,' Johnson said. 'The challenge is the process of building that consensus step by step is very time consuming — and very laborious.' 'It's another reason why we had to start this a year in advance,' he added, noting that getting it to Trump's desk by July 4 would 'be great for the party, but bigger than that, great for the country, and it will also avoid these calamities that would follow us if we don't get this job done.' Advertisement 6 President Trump is eager to avoid a midterm defeat, which would make his final years in office more challenging. JIM LO SCALZO/EPA-EFE/Shutterstock The GOP-aligned polling firm Fabrizio Lee issued an internal memo Saturday showing up to 72% of registered voters in key congressional districts supported 'requiring able-bodied, working-age adults who receive Medicaid to at least look for work or participate in community service part-time.' Another 63% also preferred 'ending the federal income tax on tips,' 61% liked extending the 2017 tax cuts for individuals and 59% favored 'ending federal income tax on overtime pay,' the poll found. House Minority Leader Hakeem Jeffries (D-NY) and others have ripped the tax bill as a 'scam' that would disproportionately benefit the ultra-wealthy, but GOP campaign staff believe the early polling is a good sign for their party in the midterms. Advertisement 'The polls are clear that voters overwhelmingly support the Republican agenda, and that's exactly why Democrats will be rejected again in 2026,' Marinella said. Game plan for victory In tandem with the efforts to achieve legislative and policy successes, Trump and his allies are hoping smart politics can prevent a midterm loss. That means emphasizing quality candidates, avoiding messy primaries and fundraising aggressively. 6 The president has lashed out at Rep. Mike Lawler, but generally backed Republicans at risk of messy primaries. Seth Harrison/The Journal News / USA TODAY NETWORK via Imagn Images Advertisement Candidate quality had been widely seen by GOP brass as one of the biggest reasons for the party's disappointing 2022 midterm performance. Republicans took steps to rectify that issue in 2024 and are hoping to repeat that by discouraging retirements and recruiting more viable candidates. Additionally, Trump has begun endorsing Republicans months in advance of potential primaries in order to avoid messy infighting. The president came out early in support of New York Rep. Mike Lawler's re-election bid, potentially clearing the field for Rep. Elise Stefanik (R-NY) to make a run for governor. Lawler has also teased a possible run. Lastly, Trump, his allies and Republicans have been working to boost their war chest to help fortify embattled candidates with ample cash, with super PACs such as MAGA Inc. and Securing American Greatness expected to play a big role in the midterm skirmish. National Republican Congressional Committee Chairman Richard Hudson (R-NC) has signaled his intention of going on offense, with more than two dozen seats on the official House GOP campaign arm's target list. There are 13 House Democrats running in districts that Trump won, but only three Republicans in districts that former Vice President Kamala Harris won in the 2024 cycle.
