Making sense of the evolving tax policy landscape can feel like embarking on an uncharted trail. With President Donald Trump back in office, several proposed changes may significantly impact both individual taxpayers and small business owners. Let’s explore these developments and what they could mean for you.
Proposed Tax Cuts
The latest tax proposals are supposed to reduce the burden for working Americans:
- Eliminating taxes on tips and take-home pay for workers in industries where tips and overtime constitute a substantial portion of the income
- Removing federal income taxes on Social Security Benefits
- Increasing the child tax credit to $5,000 per child with no income limits
These tax cuts are designed to provide relief to families and individuals, but there could be complications. For example, retirees could retain more of their benefits now, but cuts like what President Trump are proposing could reduce overall available benefits by 2031.
Impact on Small Businesses
There are also proposed tax changes for small business owners, such as:
- Reduction in Corporate Tax Rate: A proposed decrease in the corporate tax rate from 21% to 15% for companies that produce in the United States. It’s supposed to boost profitability for small businesses that produce domestically.
- Universal Baseline Tariff on Imports: A new 10–20% baseline tariff on all imports aims to protect domestic industries. However, small businesses relying on imported goods may face increased costs, potentially leading to higher consumer prices.
Looking Ahead
As these proposals go through the legislative process, staying informed and proactive is crucial. The law that goes into effect may not resemble the original proposal—not to mention the long-term impacts are hard to gauge right now.
If you are facing tax debt and are unsure what these changes could mean for you, contact Highland Tax Group today to speak with one of our tax professionals.