Tax Issues

In 2025, several significant tax developments are influencing both individuals and businesses in the United States:

1. Expiration of 2017 Tax Cuts and Jobs Act (TCJA) Provisions: Several tax provisions from the TCJA are set to expire in 2025, potentially impacting tax rates and deductions. Discussions are ongoing regarding the extension of these tax cuts, with considerations about their effects on the federal deficit. citeturn0news27

2. Introduction of the Tax Relief for American Families and Workers Act of 2024: This Act, passed by the House in early 2024, aims to amend portions of the Internal Revenue Code. Key provisions include expanding the Child Tax Credit, restoring certain business tax breaks, and increasing funding for low-income housing development. The Act also seeks to strengthen economic ties between the U.S. and Taiwan by addressing double taxation issues. citeturn0search23

3. Implementation of the Global Minimum Corporate Tax Rate: As part of an OECD/G20 initiative, a global minimum corporate tax rate of 15% is being implemented to address tax base erosion and profit shifting by multinational corporations. While many countries have begun adopting this measure, the United States' position has shifted with the new administration, affecting the global rollout of this tax policy. citeturn0search26

4. Ongoing Effects of the Inflation Reduction Act (IRA): Enacted in 2022, the IRA continues to influence tax policies related to energy and climate change. In 2025, the Act's provisions are impacting sectors such as clean energy production, electric vehicle incentives, and sustainable aviation fuel, with ongoing adjustments to tax credits and incentives to promote environmental goals. citeturn0search25

5. Proposed Economic Reforms under Project 2025: Project 2025 outlines potential economic reforms, including significant changes to the Federal Reserve's role, a shift from income to consumption-based taxation, and adjustments to corporate tax rates. These proposals aim to simplify the tax system but have sparked debate regarding their impact on different income groups and economic stability. citeturn0search21

6. Foreign Earned Income Exclusion Adjustment: For U.S. citizens and residents working abroad, the Foreign Earned Income Exclusion has been adjusted to $130,000 for the 2025 tax year, allowing eligible taxpayers to exclude a portion of their foreign earnings from U.S. taxation. citeturn0search24

7. State-Level Tax Changes: Various states are implementing their own tax reforms in 2025. For instance, Scottish households are experiencing significant council tax increases, with all 32 local authorities raising rates by up to 15.6%, marking the steepest hikes in decades. citeturn0news17

These developments underscore the dynamic nature of tax policies in 2025, reflecting ongoing efforts to adapt to economic, environmental, and societal changes.