Here we go again. For the second time in American history, a president has been elected to a second non-consecutive term in office.
During his first term, President Donald J. Trump focused heavily on taxes. Will this be true for the second term?
On the other hand, Trump's second presidency is likely to look a lot like his first.
This is mainly due to future sunsets of the many aspects of one of the cornerstones of Trump's first term, the Tax Cuts and Jobs Act. With Republicans regaining power in the executive branch and the Senate, it's a safe bet that these provisions will be expanded. These laws, which primarily but not exclusively benefit high net worth taxpayers, include:
Income tax rates. Income tax brackets are set to return to pre-TCJA levels, meaning many taxpayers will see their tax rate rise. For example, the top bracket of income tax for individuals, estates and trusts would revert to 39.6% from the current rate of 37%.
Standard deduction. The TCJA repealed the personal exemptions but increased the standard deduction, which is currently $29,200 for couples filing jointly and $14,600 for individuals.
Child tax credit. For families with dependents, the TCJA replaced the dependent exemptions with an increase in the child tax credit. Although Vice President-elect JD Vance discussed a $5,000 child tax credit on the campaign trail, no official plan for that number has been produced, so it will likely remain at its current value of $2,000.
Exemption from estate and gift tax. The TCJA doubled the 2011 estate and gift tax exemption of $5 million. Adjusted for inflation, the exemption currently stands at $13.61 million for individuals and $27.22 million for couples. In 2026, the exemption is scheduled to return to pre-TCJA levels of approximately $6.8 million for an individual and approximately $14 million for a married couple.
SALT. At one time, filers were able to claim deductions for all state and local property taxes and most income or sales taxes (subject to different limits). The TCJA limited the itemized deduction for total state and local taxes to $10,000 per year for both single and joint filers.
Mortgage interest rate. Before the TCJA, taxpayers could deduct interest on mortgage payments related to the first $1 million incurred to purchase (or substantially renovate) a primary and secondary residence plus the first $100,000 in home equity debt. The TCJA capped these figures at $750,000 of home mortgage debt and suspended the deduction on home equity loans unless they are used to purchase, build, or substantially improve the taxpayer's home.
Outside of the TCJA, Trump has also outlined a controversial plan to cut taxes and tariffs. Under this plan, the corporate tax rate would be cut from 21% to 16% and income taxes would be cut for everyone (although the highest earners would get the biggest benefit).
However, these cuts would require congressional approval, so if Democrats somehow retake the US House of Representatives, then that would represent a potential hurdle.
That said, his projected fees do not require such approval.
According to Tax FoundationTrump's proposed tariffs would actually be the seventh largest tax increase since 1940, with the typical household paying about $1,700 more each year in additional costs for goods.
Finally, Trump has floated the elimination of federal income taxes on pension payments. That reduction would mostly benefit middle- and upper-income retirees who earn enough to pay federal income taxes on their benefits, with the biggest increase likely going to those earning between 63,000 and $200,000, according to estimates by the Tax Policy Center.
In turn, this cut is also likely to hasten the inevitable bankruptcy of the Social Security Trust Fund. When the fund is depleted, retirees would see their benefits cut by 23% to 33%.