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The Tax Cuts and Jobs Act (TCJA)
The Tax Cuts and Jobs Act (TCJA), enacted in December 2017, was a major tax reform law in the first Trump Administration. It included provisions like corporate tax rate cuts, individual tax rate reductions, changes to itemized deductions, and more. The question of re-authorizing or extending parts of the TCJA is a top priority of the Republican Executive and Legislative branches of the government because many of its provisions are temporary and are set to expire after 2025.
Here are some key aspects currently on the table with regards to the re-authorization or extension of the TCJA:
Individual Tax Cuts:
The TCJA’s reductions in individual income tax rates are temporary and set to expire after 2025. There’s ongoing debate over whether to extend or make these cuts permanent. Some lawmakers argue for permanent tax cuts for individuals, while others believe such tax cuts primarily benefit the wealthy and contribute to income inequality.
State and Local Tax (SALT) Deduction Cap:
One of the most controversial aspects of the TCJA was the $10,000 cap on state and local tax deductions. This provision has been unpopular, particularly in high-tax states, and there are proposals to either repeal or increase the SALT cap in future legislation. This cap was critical to funding many of the other cuts, and is highly politically charged. Increases are likely, but no ceiling has been stated as yet.
Alternative Minimum Tax (AMT):
The AMT for individuals was modified under the TCJA. There are discussions about whether to permanently eliminate the AMT for individuals or adjust the exemption thresholds which with inflation are rapidly expanding the AMT impact.
Expiring Provisions:
Many provisions of the TCJA, such as the expansion of the standard deduction and the expedited & bonus depreciation, are scheduled to expire after 2025 or reducing at a rapid rate. There’s ongoing debate over which of these provisions should be extended or allowed to sunset. National REIA has extolled the value and impact of the depreciation in cost-effectively modernizing America’s aging housing infrastructure.
Tax Reform Proposals:
In the context of a re-authorization or extension of the TCJA, lawmakers have proposed various tax reform plans, including ideas to reduce the corporate tax rate further and renew the Opportunity Zones to incentivize re-investment, economic growth, and fiscal responsibility. The appointment of the former overseer of the OZs to the Secretary of HUD foreshadows the Trump administration’s intent to renew this key community revitalization tool.
In short, while the corporate tax cuts are likely to remain permanent, there’s a significant focus on the future of individual tax cuts, the SALT cap, and other temporary provisions. Considering the America First emphasis of Congress, Trump stands to renew and expand many parts of the TCJA in the coming year. Watch RealEstateInvestingToday.com for updates on this issue.
Corporate Transparency Act
While lawsuits have halted the requirement to comply with the registration of Beneficial Ownership Interests under the Corporate Transparency Act, individuals may still voluntarily sign up. If things change, there will likely be a short 10-14 day window for compliance, even as appeals will seek to re-instate the injunction on the registration mandate. If you haven’t registered, please be aware requirements could change rapidly. Watch RealEstateInvestingToday.com for updates on this issue.
National REIA
Since 1985 successful real estate investors have been part of a REIA. With over 120 Local Chapters and Local Associations and 40,000 members, we are the only non-profit serving independent investors and Investor Associations.
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