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Inside the Trump tax plan

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Donald Trump during a campaign event in Las Vegas

Ian Maule/Getty Images

Even before the 2024 election season concluded, President-elect Donald Trump had already unveiled a series of tax proposals aimed at reshaping the U.S. tax landscape. 

These proposals, collectively referred to as the “Trump tax plan,” encompass a range of changes that could significantly impact taxpayers, businesses, and the broader economy, and could have potential implications for your clients.

Extending the TCJA provisions

The Tax Cuts and Jobs Act of 2017 introduced substantial tax reductions for individuals and businesses. However, many of these provisions are set to expire after 2025. 

Trump’s tax proposals include making these cuts permanent, which would involve:

  • Individual tax rates and brackets: Maintaining the current tax rates and income brackets established by the TCJA.
  • Standard deduction: Preserving the increased standard deduction levels, which are $14,600 for single filers and $29,200 for married couples filing jointly in 2024. 
  • The Child Tax Credit: Continuing the enhanced Child Tax Credit, providing financial relief to families.
  • Estate tax: Keeping the elevated estate tax exemption thresholds, allowing individuals to transfer more wealth without incurring estate taxes.

Implications for taxpayers: Permanently extending these provisions would offer continued tax relief for individuals and families, potentially increasing disposable income and stimulating economic activity. However, it could also lead to a significant reduction in federal revenue, estimated at over $5 trillion over a decade. 

Enhancing business tax provisions

Trump’s tax proposals aim to bolster business investment and economic growth by:

  • 100% bonus depreciation: Extending the provision that allows businesses to immediately deduct the full cost of qualifying assets, encouraging capital investment.
  • R&D expensing: Continuing the immediate expensing of research & development costs, promoting innovation.
  • Section 199A deduction (QBI): Maintaining the 20% deduction for qualified business income from pass-through entities, benefiting small businesses and sole proprietors.

Implications for taxpayers: These measures are designed to incentivize business expansion and innovation, potentially leading to job creation and economic growth. However, they may also contribute to increased federal deficits if not offset by other revenue sources.

The SALT deduction cap

The TCJA imposed a $10,000 cap on the deduction for state and local taxes, which has been a point of contention, especially in high-tax states. Trump’s tax plan proposes eliminating this cap, allowing taxpayers to fully deduct their state and local taxes.

Implications for taxpayers: Removing the SALT cap would primarily benefit taxpayers in high-tax states, potentially reducing their federal tax liability. However, it could also disproportionately favor higher-income individuals and reduce federal revenue.

Exempting Social Security and overtime from taxes

Trump’s tax proposals include exempting certain income sources from taxation:

  • Social Security benefits: Eliminating federal income taxes on Social Security benefits, providing financial relief to retirees.
  • Overtime pay: Making overtime earnings tax-free, increasing take-home pay for workers.

Implications for taxpayers: These exemptions would increase disposable income for retirees and employees working overtime. However, they could also lead to substantial revenue losses for the federal government.

Auto loan interest deductibility

Another component of Trump’s tax plan is allowing taxpayers to deduct interest paid on auto loans.

Implications for taxpayers: This deduction would reduce the cost of financing vehicle purchases, potentially boosting the automotive industry. However, it may also complicate the tax code and reduce federal revenue.

A lower corporate tax rate for domestic production

Trump proposes reducing the corporate tax rate from 21% to 15% for companies that manufacture products domestically.

Implications for taxpayers: This reduction aims to incentivize domestic manufacturing, potentially leading to job creation and economic growth. However, it could also result in significant revenue losses, estimated at $595 billion over 10 years. 

Repealing green energy tax credits

The tax plan includes repealing tax credits for green energy initiatives, such as those for renewable energy production and energy-efficient home improvements.

Implications for taxpayers: Repealing these credits could discourage investment in renewable energy and energy efficiency, potentially impacting environmental goals. It may also increase tax liabilities for individuals and businesses that previously benefited from these credits.

Looking ahead: Navigating potential tax changes

As tax professionals, staying informed about potential tax law changes is crucial for providing clients with accurate advice and strategic planning. It has become clear that Trump’s tax proposals, if implemented, could bring significant changes to the tax landscape, as well as opportunities for tax professionals. 

Leveraging tools that can help navigate these changes effectively will become essential, particularly those that can enable you to offer high-value, scalable tax planning services, helping your clients maximize their tax savings.

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Accounting

IAASB tweaks standards on working with outside experts

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The International Auditing and Assurance Standards Board is proposing to tailor some of its standards to align with recent additions to the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants when it comes to using the work of an external expert.

The proposed narrow-scope amendments involve minor changes to several IAASB standards:

  • ISA 620, Using the Work of an Auditor’s Expert;
  • ISRE 2400 (Revised), Engagements to Review Historical Financial Statements;
  • ISAE 3000 (Revised), Assurance Engagements Other than Audits or Reviews of Historical Financial Information;
  • ISRS 4400 (Revised), Agreed-upon Procedures Engagements.

The IAASB is asking for comments via a digital response template that can be found on the IAASB website by July 24, 2025.

In December 2023, the IESBA approved an exposure draft for proposed revisions to the IESBA’s Code of Ethics related to using the work of an external expert. The proposals included three new sections to the Code of Ethics, including provisions for professional accountants in public practice; professional accountants in business and sustainability assurance practitioners. The IESBA approved the provisions on using the work of an external expert at its December 2024 meeting, establishing an ethical framework to guide accountants and sustainability assurance practitioners in evaluating whether an external expert has the necessary competence, capabilities and objectivity to use their work, as well as provisions on applying the Ethics Code’s conceptual framework when using the work of an outside expert.  

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Accounting

Tariffs will hit low-income Americans harder than richest, report says

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President Donald Trump’s tariffs would effectively cause a tax increase for low-income families that is more than three times higher than what wealthier Americans would pay, according to an analysis from the Institute on Taxation and Economic Policy.

The report from the progressive think tank outlined the outcomes for Americans of all backgrounds if the tariffs currently in effect remain in place next year. Those making $28,600 or less would have to spend 6.2% more of their income due to higher prices, while the richest Americans with income of at least $914,900 are expected to spend 1.7% more. Middle-income families making between $55,100 and $94,100 would pay 5% more of their earnings. 

Trump has imposed the steepest U.S. duties in more than a century, including a 145% tariff on many products from China, a 25% rate on most imports from Canada and Mexico, duties on some sectors such as steel and aluminum and a baseline 10% tariff on the rest of the country’s trading partners. He suspended higher, customized tariffs on most countries for 90 days.

Economists have warned that costs from tariff increases would ultimately be passed on to U.S. consumers. And while prices will rise for everyone, lower-income families are expected to lose a larger portion of their budgets because they tend to spend more of their earnings on goods, including food and other necessities, compared to wealthier individuals.

Food prices could rise by 2.6% in the short run due to tariffs, according to an estimate from the Yale Budget Lab. Among all goods impacted, consumers are expected to face the steepest price hikes for clothing at 64%, the report showed. 

The Yale Budget Lab projected that the tariffs would result in a loss of $4,700 a year on average for American households.

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Accounting

At Schellman, AI reshapes a firm’s staffing needs

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Artificial intelligence is just getting started in the accounting world, but it is already helping firms like technology specialist Schellman do more things with fewer people, allowing the firm to scale back hiring and reduce headcount in certain areas through natural attrition. 

Schellman CEO Avani Desai said there have definitely been some shifts in headcount at the Top 100 Firm, though she stressed it was nothing dramatic, as it mostly reflects natural attrition combined with being more selective with hiring. She said the firm has already made an internal decision to not reduce headcount in force, as that just indicates they didn’t hire properly the first time. 

“It hasn’t been about reducing roles but evolving how we do work, so there wasn’t one specific date where we ‘started’ the reduction. It’s been more case by case. We’ve held back on refilling certain roles when we saw opportunities to streamline, especially with the use of new technologies like AI,” she said. 

One area where the firm has found such opportunities has been in the testing of certain cybersecurity controls, particularly within the SOC framework. The firm examined all the controls it tests on the service side and asked which ones require human judgment or deep expertise. The answer was a lot of them. But for the ones that don’t, AI algorithms have been able to significantly lighten the load. 

“[If] we don’t refill a role, it’s because the need actually has changed, or the process has improved so significantly [that] the workload is lighter or shared across the smarter system. So that’s what’s happening,” said Desai. 

Outside of client services like SOC control testing and reporting, the firm has found efficiencies in administrative functions as well as certain internal operational processes. On the latter point, Desai noted that Schellman’s engineers, including the chief information officer, have been using AI to help develop code, which means they’re not relying as much on outside expertise on the internal service delivery side of things. There are still people in the development process, but their roles are changing: They’re writing less code, and doing more reviewing of code before it gets pushed into production, saving time and creating efficiencies. 

“The best way for me to say this is, to us, this has been intentional. We paused hiring in a few areas where we saw overlaps, where technology was really working,” said Desai.

However, even in an age awash with AI, Schellman acknowledges there are certain jobs that need a human, at least for now. For example, the firm does assessments for the FedRAMP program, which is needed for cloud service providers to contract with certain government agencies. These assessments, even in the most stable of times, can be long and complex engagements, to say nothing of the less predictable nature of the current government. As such, it does not make as much sense to reduce human staff in this area. 

“The way it is right now for us to do FedRAMP engagements, it’s a very manual process. There’s a lot of back and forth between us and a third party, the government, and we don’t see a lot of overall application or technology help… We’re in the federal space and you can imagine, [with] what’s going on right now, there’s a big changing market condition for clients and their pricing pressure,” said Desai. 

As Schellman reduces staff levels in some places, it is increasing them in others. Desai said the firm is actively hiring in certain areas. In particular, it’s adding staff in technical cybersecurity (e.g., penetration testers), the aforementioned FedRAMP engagements, AI assessment (in line with recently becoming an ISO 42001 certification body) and in some client-facing roles like marketing and sales. 

“So, to me, this isn’t about doing more with less … It’s about doing more of the right things with the right people,” said Desai. 

While these moves have resulted in savings, she said that was never really the point, so whatever the firm has saved from staffing efficiencies it has reinvested in its tech stack to build its service line further. When asked for an example, she said the firm would like to focus more on penetration testing by building a SaaS tool for it. While Schellman has a proof of concept developed, she noted it would take a lot of money and time to deploy a full solution — both of which the firm now has more of because of its efficiency moves. 

“What is the ‘why’ behind these decisions? The ‘why’ for us isn’t what I think you traditionally see, which is ‘We need to get profitability high. We need to have less people do more things.’ That’s not what it is like,” said Desai. “I want to be able to focus on quality. And the only way I think I can focus on quality is if my people are not focusing on things that don’t matter … I feel like I’m in a much better place because the smart people that I’ve hired are working on the riskiest and most complicated things.”

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