As Democrats rally this week around Vice President Kamala Harris at their convention in Chicago, a major tax deadline is looming at the end of next year.
With financial advisors and tax professionals paying close attention to the sunset date on of Dec. 31, 2025, for many parts of the 2017 Tax Cuts and Jobs Act, the presidential election between Harris and Republican former President Donald Trump and down-ballot races for Congress will decide whether either party gets a mandate to reshape the law to their liking.
Shifts in the income tax brackets stand out as the “absolute No. 1 point, and as soon as you tell people their wallet will feel it, they will start paying attention to it,” he said in an interview. Business owners and other taxpayers should meet with their advisors or tax professionals to figure out their plans with an eye toward the ramifications to their rates and strategies under a Harris or Trump administration with divided power or one-party control in Congress.
“They will be even emotionally less stressed and financially less stressed because they planned and they’re aware of what’s happening,” Ringbauer said about clients who get ready in advance. “There is nobody who is not going to be impacted by these changes.”
The tax policy proposals from the Trump and Harris campaigns and the Biden administration show major differences when it comes to the sunsetting statutes, according to a tracker maintained by the nonprofit, nonpartisan Tax Foundation. Neither campaign responded to a request from Financial Planning for their official position on the Tax Cuts and Jobs Act.
During her presidential campaign in the 2020 cycle, Harris called for tossing out the entire law, except for the parts benefitting taxpayers who earn less than $100,000 per year, and President Joe Biden has argued for extending the provisions applying to households under $400,000. However, the Tax Foundation listed Harris’ position as “to be determined,” based on the fact that she might “continue the same policies put forth in the FY 2025 budget of the Biden-Harris administration or may propose additional tax policy changes.”
Last week, Harris unveiled an economic plan with breaks and subsidies that the Committee for a Responsible Federal Budget found would boost the deficit by $1.7 trillion over a decade without accompanying taxes or another source of revenue.
“The steps announced today will cut taxes for the middle class, reduce grocery costs, take on price gouging, lower the costs of owning and renting a home, continue to bring down the costs of prescription drugs, and relieve medical debt for millions of Americans,” the Harris campaign said in a statement. “These bold actions will address some of the sharpest pain points American families are confronting and bolster their financial security.”
In contrast, Trump is pushing to make all provisions affecting individual income and estate taxes permanent, while considering replacing some personal duties with increased tariffs, the Tax Foundation noted. In recent weeks, he also said he would end any taxes on Social Security benefits — which the Committee for a Responsible Federal Budget said would hike the federal deficit by $1.6 to $1.8 trillion. Its estimate of the cost of extending “large parts” of the Tax Cuts and Jobs Act has reached $4 trillion.
“Republicans will make permanent the provisions of the Trump Tax Cuts and Jobs Act that doubled the standard deduction, expanded the child tax credit and spurred economic growth for all Americans,” the official 2024 GOP platform said. “We will eliminate taxes on tips for millions of restaurant and hospitality workers, and pursue additional tax cuts.”
Attendees browsed merchandise being sold at McCormick Place during the 2024 Democratic National Convention in Chicago.
Tobias Salinger
Outside Chicago’s McCormick Place conference hall, where the Democrats are hosting caucus meetings and the other daytime events during the convention, retired cardiovascular invasive specialist Maureen Rzasa said a cutoff of $400,000 per year seemed “very high.”
Most people would “be pretty happy with it” if the next administration and Congress raise rates on “the higher end income-level people,” she said. Still, she supports tax breaks for seniors who are often helping their extended families financially.
“For tax cuts, I think it’s really important for senior citizens,” said Rzasa, 73. “I’m a senior now, so those are concerns. Making sure that the seniors maybe get a little break on the taxes, maybe under a certain income, no tax at all. That would be really great.”
The sheer size of the law, not to mention the impossibility of knowing the makeup of the next Congress and presidential administration, leaves advisors, tax professionals and their clients in a degree of limbo. Campaign promises and soundbites about changes to laws usually lack detail and require the always-complicated passage of a bill through Congress.
Harris and Trump are “trying to target and suggest items that will drive additional voting blocs” to their side, and it’s certainly “valuable to understand what a candidate stands for,” Ringbauer said. Rather than trying to predict the future, though, advisors and their clients can lay out several different scenarios for possible shifts in policy based on the results, he said.
“Non-action is not an option,” Ringbauer said. “Not planning is not an option. It is really that simple this time around, because everyone will be impacted one or another. It’s better to be prepared than be surprised, and you may not be able to make changes as a result. ‘Plan, plan, plan’ are the magic words right now.”
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 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.
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.
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.”