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Understanding 2025 tax policy risks as election approaches

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2 years ago

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In less than 30 days, Americans will elect the politicians who will set policy for the next two years in Congress and four years at the White House. 

Between now and then, aside from campaign banter about eliminating taxes on tips or raising the corporate tax rate, tax policy likely won’t command much attention from the candidates. Nonetheless, it will be one of the single most important challenges facing those taking office in January. For American business leaders, the operative emotions around the coming tax policy debate might include the word fear.

In 2017, Congress passed the Tax Cuts and Jobs Act, a massive tax bill that broadened the tax base for both businesses and individuals, fundamentally changed how the U.S. taxes multinational companies, and lowered the corporate tax rate while temporarily providing a host of individual tax cuts, including doubling the Child Tax Credit, providing a larger standard deduction, lowering individual taxes and providing AMT relief.

Generally speaking, the TCJA’s international and corporate base broadening offset the cost of the international tax changes and a substantial reduction in the corporate tax rate, while the individual base broadening, plus some deficit financing, paid for lower individual taxes. And herein lies the problem for corporate America. 

While the tax changes affecting corporations were generally permanent to avoid distortions in business decision-making, the rules for individuals were made mostly temporary. 

They are set to expire next year. 

Those looking ahead have dubbed 2025 the year of “Tax Armageddon” for the sheer importance of how much is at stake. In fact, Deloitte recently released “Approaching the cliff: Tax policy and the 2024 elections,” a detailed look at the tax dilemma the new president will inherit and what will happen after 2025 if Congress doesn’t act. 

According to recent estimates from nonpartisan congressional scorekeepers, renewing the expiring provisions for individuals in a deficit-neutral manner would require Congress to find roughly over $4 trillion in spending cuts or tax increases over the next decade to offset the costs.

To be clear, it is not even remotely probable that Congress will identify more than $4 trillion in spending cuts to pay for extending tax relief. For a sense of scope, federal spending on discretionary programs, including defense, will total about $1.7 trillion in fiscal year 2024. There is simply no way Congress could find more than $4 trillion in spending cuts over a decade without changes to Social Security and Medicare, programs that are generally seen as off-limits by many members of Congress. 

Similarly, Congress is highly unlikely to scour the Tax Code and identify over $4 trillion in politically acceptable tax increases on families to offset the looming tax cliff they face. Increasing the deficit no longer goes without notice, and doing nothing is also not a viable option, as it would result in higher taxes for the vast majority of American families in 2026. 

The reality is that if Congress decides to pay for some or all of the TCJA extensions, which seems likely in almost any alignment of power next year, the fundamental architecture of the 2017 law is very much at risk. 

House Ways and Means Committee Chairman Jason Smith, R-Missouri, noted that some of his GOP colleagues think the corporate rate came down too much in 2017 and could be increased. The question that is going to be asked often next year may not be whether taxes on corporate America will increase, but whether Congress will raise the corporate rate or generate revenue by broadening the corporate tax base. 

And the answer very well could be: “Why not both?” 

Compounding this risk for businesses are two stark realities. 

First, there has been tremendous turnover in Congress generally and on the tax-writing panels in particular. Many lawmakers with institutional knowledge about the flaws in the pre-2017 Tax Code and the reasons for the changes made that year — especially the rationale for the international reforms and for the 21% corporate rate — have left Washington. 

Second, an increasing number of Republicans in the House and Senate, who once were reliable opponents of tax increases on businesses, now belong to what has become a far more populist political party and are more apt to listen to small-business owners than corporate CEOs. It is difficult, though not impossible, to envision a political alignment next year that would support fully deficit-financing extensions of the current law.

In 2017, business leaders played offense and defense. They pushed hard for a lower corporate tax rate and fought to minimize the impact of the base broadeners on their specific companies. However, 2025 promises to be a much more defensive exercise for corporate leaders. 

Accordingly, the time is now for business executives to identify the real-world impact of some of the options that may have surface political appeal. Similarly, finance function leaders would be well advised to make sure all internal stakeholders understand and educate themselves about the stakes in next year’s tax fight and the potential impact to the company’s bottom line.  

Amid the many pressing issues as we head into the final stretch of this campaign season, tax policy may not be top of mind, but it should be. The stakes for the 2025 tax debate are high and the impacts will be far-reaching.

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Accounting

SEC’s Semiannual Reporting Proposal Faces Investor Pushback: What CFOs Need to Know

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18 hours ago

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August 25, 2026

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U.S. Securities and Exchange Commission (SEC)

A proposal from the U.S. Securities and Exchange Commission to potentially shift some public companies away from quarterly financial reporting toward a semiannual model is drawing significant pushback from investors, even as it continues moving through the regulatory process. The debate has direct implications for corporate finance teams, auditors, and the broader transparency of U.S. capital markets.

What the SEC Proposed

According to a summary published by accounting advisory firm Cohen & Co., the SEC issued a proposed rule on May 19, 2026, aimed at simplifying financial reporting requirements for many U.S. public companies. The proposal would potentially reduce the frequency of certain mandatory disclosures from quarterly to semiannual, a structural change that has not been made to core U.S. reporting requirements in decades.

The proposal follows an extended debate within U.S. policy circles, with proponents arguing that reduced reporting frequency could lower compliance costs and free up management time for longer-term strategic planning rather than quarter-to-quarter results management.

Why Investors Are Pushing Back

Comment letters submitted in response to the proposal have been extensive, and according to Cohen & Co.’s review of the public record, investors “appear to be largely opposed” to the shift, viewing frequent interim reporting as a core benefit of U.S. capital markets relative to other jurisdictions.

Accounting and law firms have taken a more measured position, generally urging any changes to remain aligned with the Financial Accounting Standards Board (FASB), whose existing disclosure requirements and guidance are built around a quarterly reporting cadence. A shift to semiannual reporting without corresponding changes to FASB guidance could create friction between SEC filing requirements and GAAP-based disclosure expectations.

Lessons From the U.K. Experience

The debate is not without precedent. The United Kingdom moved away from mandatory quarterly reporting for listed companies in 2014, returning to a semiannual disclosure requirement. According to Cohen & Co.’s analysis, that experience offers a cautionary data point: there was no measurable increase in capital expenditure or R&D investment following the change, while analyst coverage of affected companies declined as reliable interim information became less available — a particular risk for smaller and newly public companies that rely on analyst coverage to maintain investor visibility.

Practical Implications for Finance Teams

Beyond the debate over disclosure philosophy, the proposal carries practical complications. Many companies have debt covenants and credit agreements structured around quarterly financial delivery; a shift to semiannual reporting could require renegotiating those terms. Reduced reporting frequency would also extend the “window of market silence” between disclosures, a factor that governance and investor-relations teams would need to manage carefully to avoid information asymmetry.

Separately, and unrelated to the reporting-frequency debate, the SEC and FASB have continued finalizing more routine updates this year. New Accounting Standards Updates are taking effect for December 31, 2026, fiscal year-ends covering income tax disclosures, credit loss measurement, induced debt conversions, and stock compensation, according to Eide Bailly’s review of 2026 ASU activity. Additional guidance on paid-in-kind dividends and environmental credits is also on the near-term horizon.

What to Watch Next

The semiannual reporting proposal remains in the comment and review phase, and no final rule has been adopted as of this writing. Finance leaders should monitor the SEC’s regulatory agenda for further movement, while treating the current quarterly reporting requirement as the operative standard until any final rule is issued and an effective date is set.

Given the extent of investor opposition documented in the comment file, a full shift to mandatory semiannual reporting appears more likely to result in either a scaled-back compromise or continued study rather than swift adoption — though the SEC’s ultimate direction remains uncertain.

 

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Accounting

AI-Driven Automation and Continuous Accounting Frameworks

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2 weeks ago

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August 15, 2026

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The accounting profession is undergoing a fundamental structural transition as enterprise finance departments shift from periodic month-end closes toward automated continuous accounting models. By integrating specialized machine learning algorithms directly into enterprise resource planning (ERP) platforms, chief accounting officers are transforming financial reporting from a retrospective exercise into a real-time operational asset.

The Shift from Periodic Close to Continuous Financial Reporting
Traditional accounting workflows heavily relied on manual data reconciliation, spreadsheet calculations, and multi-week closing cycles at the end of each fiscal period. In contrast, continuous accounting frameworks utilize automated software agents to process, validate, and post transactional data in real time as business activities occur.

Automated bank reconciliation tools cross-reference incoming bank feeds, invoice records, and purchase orders automatically. By resolving transactional variances instantly throughout the month, corporate accounting teams eliminate the traditional workload spikes associated with quarterly and annual closes.

Machine Learning in Audit Trails and Anomaly Detection
Advanced natural language processing (NLP) and machine learning tools are redefining internal audit and financial control environments. Automated systems analyze 100% of general ledger entries, identifying anomalous transactions, duplicate payments, and unauthorized journal entries in real time.

Rather than relying on random statistical sampling, corporate internal auditors can focus their attention on high-risk flags automatically surfaced by algorithmic monitoring platforms. This continuous risk assessment strengthens internal controls over financial reporting (ICFR) and significantly reduces fraud risk.

Evolving Roles for Accounting Professionals
As routine data entry and manual reconciliation tasks become fully automated, the skill set required for accounting professionals is shifting toward data analysis, system design, and strategic business advisory.
– Systems Governance: Accountants are increasingly responsible for monitoring algorithmic accuracy and managing data integration pipelines.
– Business Partnership: Finance professionals leverage real-time financial dashboards to advise operational leaders on margin management and working capital allocation.
– Regulatory Compliance Management: Accounting teams utilize automated platforms to ensure compliance with dynamic tax codes and international accounting standards.

Core Implementation Recommendations
1. Deploy Automated Reconciliation Tools: Integrate continuous transaction processing modules into existing enterprise ERP architectures.
2. Establish Algorithmic Governance Controls: Implement strict internal testing protocols to ensure automated accounting rules comply with GAAP/IFRS standards.
3. Reskill Accounting Teams: Invest in training finance staff on data analytics, workflow automation, and predictive financial modeling.

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Accounting

Global ESG Reporting Standards and Double Materiality Compliance

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2 weeks ago

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August 9, 2026

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Corporate accounting departments face expanding reporting expectations as international sustainability disclosure standards achieve regulatory enforcement across major global jurisdictions. Chief Accounting Officers (CAOs) and corporate controllers are establishing rigorous internal accounting controls to treat Environmental, Social, and Governance (ESG) metrics with the same data precision, auditability, and governance as traditional financial statements.

Regulatory Harmonization Under Global Sustainability Frameworks
The implementation of standardized sustainability reporting frameworks—notably rules established by international sustainability accounting boards—has created unified expectations for public and large private enterprises. Corporations must report standardized metrics covering greenhouse gas emissions (Scope 1, 2, and material Scope 3), energy utilization, workforce demographics, and supply chain governance.

In Europe and other participating international jurisdictions, double materiality principles are mandatory. Under double materiality, organizations must report both how external sustainability risks impact corporate financial performance, and how internal corporate operations affect surrounding environmental and social structures.

Integrating Sustainability Metrics into Core ERP Systems
To provide auditable non-financial data, enterprise organizations are integrating specialized carbon accounting and ESG management platforms directly into core ERP systems. Automated data collectors capture energy utility invoices, logistics fuel consumption metrics, and vendor compliance records in real time.

Establishing automated, traceable data pipelines ensures that non-financial reporting is supported by clear audit trails. This structured approach allows external financial auditors to provide reasonable assurance on sustainability disclosures during annual corporate reporting cycles.

Financial Impacts and Capital Market Disclosure
Accurate ESG reporting directly influences corporate cost of capital and institutional credit ratings. Commercial lenders and institutional asset managers systematically incorporate sustainability metrics into risk pricing models. Companies that demonstrate transparent, verifiable progress in operational energy efficiency and climate risk mitigation benefit from expanded access to green bond markets and lower debt pricing.

Action Steps for Accounting Leadership
1. Implement Double Materiality Frameworks: Conduct comprehensive assessments to identify material financial and operational sustainability metrics.
2. Build Auditable Non-Financial Data Pipelines: Automate ESG data collection within core accounting software to ensure data integrity.
3. Align Sustainability with Annual Financial Filings: Prepare non-financial disclosures concurrently with financial statements to satisfy regulatory audit expectations.

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