With the return of President Trump and a Republican majority in Congress, significant changes to tax policies are anticipated heading into 2025. Many provisions from Trump's Tax Cuts and Jobs Act (TCJA), which originally restructured the tax system in 2017 primarily benefiting high-income earners and corporations, are on the verge of expiration, creating a potential financial impact for millions of Americans.

As highlighted in a recent Business Insider article, the fate of the TCJA is uncertain, with Trump advocating for not only the extension of existing provisions but also for new tax cuts. According to Trump spokesperson Karoline Leavitt, "President Trump is committed to lowering the tax burden on the American people... while growing the strongest and most resilient economy the world has ever seen."

This financial strategy comes amidst pressing concerns about the national debt, which has now reached approximately $36 trillion. Experts like Edwin G. Oswald, a former legal advisor to the U.S. Treasury, warn that the increasing national debt may complicate ambitious tax cut plans, stating that "there's going to be just more fiscal pressure, I think, now than eight years ago in terms of how rich this tax bill can be."

Among the potential changes, the child tax credit, which was doubled under the TCJA, could be a focal point. Although current provisions allow for a $2,000 tax break per child, some lawmakers are pushing to increase this amount to as much as $5,000. As Senator Josh Hawley of Missouri noted, increasing the child tax credit "would be very helpful" for many families.

Furthermore, tax credits related to electric vehicles and several other Biden-era policies might be at risk. Financial experts suggest that individuals considering the purchase of electric vehicles should act soon, as the current tax credit could disappear after 2025. In this regard, financial advisor Kat Grier emphasizes that "now may be the time to purchase [an EV] as opposed to running into perhaps some jeopardy or uncertainty as we move into 2025" while prospective changes are deliberated.

One key area where Trump’s previous tax cuts faced scrutiny was the State and Local Tax (SALT) deduction. Originally unlimited, Trump capped this deduction at $10,000 in 2017, which has affected high-income earners, especially in states with elevated local taxes. There is discussion among Republicans to potentially raise this cap, providing somewhat of a reprieve for taxpayers in specific states, although no consensus has been achieved on how to proceed.

As the 2025 deadline approaches, tax experts advise taxpayers to stay informed yet remain cautious. Salon outlines that while new legislation may be on the horizon, any changes in tax law generally won't take effect until 2026. Therefore, immediate tax planning may not be as urgent, giving taxpayers more time to strategize their financial moves.

It's essential to remain proactive during this period, with planning steps such as tax-loss harvesting and strategic income deferrals potentially beneficial should tax rates change. In conclusion, with significant tax policy changes looming on the horizon, utilizing a tax professional could help navigate the complexities of forthcoming legislation and maximize possible benefits.