Navigating the new tax landscape: How Trump’s return impacts accountants

Now that President Trump is back in office, the US tax system is braced for vast changes. As major provisions of the 2017 Tax Cuts and Jobs Act (TCJA) approach their expiration dates, the Trump administration and Congress are weighing up not just which policies to extend, but also dozens of new proposals. Combined with new tariffs and potential modifications to international tax rules, accountants must stay informed about these changes to effectively advise clients.

Reduction in Corporate tax: 

Under the new administration, Trump has suggested dropping the current 21% corporate income tax rate – as established by the 2017 TCJA – to 20%. Trump has also voiced support for the rate to drop as low as 15% for corporations that manufacture in the US to incentivise domestic production and potentially bring manufacturing jobs back to the US.  

If corporate tax rates decrease this low, accountants must help clients adjust strategies to optimise savings. In these changing rate environments, timing differences, such as accelerated deductions or deferred income recognition, can create permanent tax savings. 

Accountants must also carefully evaluate how these changes could impact current pass-through entity (PTE) structures, especially considering varying state tax regimes. Lower corporate federal rates could offset some of the complexities associated with pass-through structures, such as state-level PTE taxes.  

Individual tax rates: 

Trump also intends to extend the TCJA provisions for taxation of individuals, which would entail keeping the top individual income tax rate at 37% along with extending the 20% qualified business income deduction available to pass-through businesses. 

The implications of these tax rate changes extend to the Section 199A deduction, which offers a 20% deduction for qualified business income. Personal tax rate adjustments under Trump’s administration could influence the overall value of the deduction. High-income clients engaged in specified service trade or business (SSTB) activities will likely remain excluded above certain income thresholds. Non-SSTB businesses must continue to meet W-2 wage and property basis requirements to qualify for the deduction.  

The latter are the cases that tend to make headlines. The news last year that a Hong Kong finance worker was tricked into sending $25m to fraudsters by a deepfake video call, broke the topic out of its niche and into the mainstream. The trouble is, most fraud is much less flashy. Retail Banker International reported in March that ID fraud may account for half of all bank-related fraud by 2025.  

Explaining why this is an issue, Rehaks said, “There are a couple of high-profile cases where someone steals $25m, and that’s nice, but typical cases that we hear about every day range from $5,000 to $50,000. If you lose that much money, it doesn’t make the news, but the real news is how normal this crime is. If you look at the rates where these crimes are investigated and they apprehend the perpetrators, they are essentially zero.

“Typically, this means someone walking away with the money, and not much money left for the victim. There are some exceptional cases where the gangs get prosecuted, but most of the crime is targeting different countries for political reasons, and convincing police to investigate a case that spans multiple countries and makes them do 60 different paperwork requests in five different languages is very hard. They are trying to combat the crimes of the 21st century using the means of the 19th.

Another area Trump has signalled support for is repealing the $10,000 cap on state and local tax (SALT) deductions. Restoring full SALT deductibility would likely benefit taxpayers in high-tax states such as New York, New Jersey, and California. However, the potential impact on federal revenue and budget deficits remains a concern.  

Accountants must prepare to adjust tax planning strategies for clients who would be affected by this change, particularly those in high-tax states. 

Negotiations and Reconciliation Rules: 

Negotiations around the SALT deduction highlight broader policy debates that could shape the final form of tax reform legislation. The reconciliation process—used to pass budget-related provisions with a simple majority in the Senate—restricts tax legislation to items that directly impact the federal budget. This procedural limitation could force compromises on key elements of Trump’s tax agenda. 

A return of 100% accelerated bonus depreciation for qualified assets is likely to return under Trump's administration. The phasedown of bonus depreciation, set to eliminate full deductions for most properties by 2027, may be reversed. Trump and congressional Republicans support restoring 100% bonus depreciation recovery for capital expenditures that drive infrastructure and business growth.  

Construction project timing 

Adjustments to the bonus depreciation rates could provide further incentives to change the timing of construction projects, allowing taxpayers to take advantage of expanded accelerated depreciation for such projects in the future. If your client is considering purchasing and placing equipment in service by the end of this year, analyse how a change in bonus depreciation may impact them and whether it may be worthwhile to adjust the timing of the capital investment.  

Accountants must review planned capital expenditure budgets and determine which projects have the most flexibility for acceleration, deferral or continuing the current course. Quickly identifying such projects and associated placed-in-service considerations will likely strengthen tax results in any legislative scenario. When analysing the effect of any proposed bonus depreciation changes, take care to model the broad impact of the reduction in taxable income. 

Trump has proposed raising revenue through increases in tariffs, which could have significant implications for US importers and the economy in general. At the end of 2025, several US international tax regimes are scheduled to change as required by the TCJA, including the regimes for Global intangible low-taxed income (GILTI) and foreign-derived intangible income (FDII), and the base erosion and anti-abuse tax (BEAT). 

For accountants, it will be important to closely monitor proposed policy changes and advise clients on tax planning strategies both domestically and globally. Additionally, businesses may face complexities in compliance and reporting as potential policy changes evolve, making proactive financial analysis and strategic planning essential.