What a Trump Presidency Means for the 2025 Tax Fight, Explained

The victory by Donald Trump in Tuesday’s US presidential election boosts the odds that Republicans will be able to push through a straight extension of their 2017 tax law.

A Trump win, alongside the GOP takeover of the Senate, would mean tax rates on the wealthiest and corporations won’t take a significant hit when Congress tackles how to handle expiration of much of the GOP’s signature tax law next year.

With the House undecided, it’s still unclear if Democrats will have any lever of power in Washington to counter Republicans.

Here’s how the 2025 tax fight might shape up given the election results so far:

1. What happens to expiring provisions in Trump’s 2017 tax law?

With GOP control, lawmakers will seek to preserve and extend as much of the 2017 law as possible, including tax cuts expiring next year that benefit the wealthy and businesses, such as the 199A deduction and the estate tax exemption.

GOP budget hawks would have to decide how many promises he made on the campaign trail will be turned into law. Trump handed out campaign vows like candy during the election, promising to exempt taxes on tips to restaurant workers and exempt car debt from tax to auto executives. He’s also suggested lowering the corporate rate even further to 15%. All of these promises would cost trillions of dollars, according to independent budget estimates.

One wild card is the cap on the deduction for state and local taxes. Republicans enacted the cap in their 2017 law, but it’s hit blue state Republicans. Trump recently switched positions and said he’d support removing the cap, though other Republicans say it subsidizes spending in Democratic-leaning states. And removing the cap would cost hundreds of billions of dollars.

2. How can Congress move to pass the tax legislation when it’s so divided?

Republicans have said they’d use the budget reconciliation procedure to push through a straight extension of the law—as they did when they passed the original law known as the Tax Cuts and Jobs Act—if they retook the White House and Congress.

Under reconciliation budget rules, lawmakers will be limited to provisions that fit within certain rules—meaning they must have a budget impact and some will likely be temporary to adhere to guardrails on spending outside the budgetary window. That could crowd out some priorities that can’t get enough Republican support.

Again, the role of the House determines whether Republicans can move ahead on this.

3. How will any extensions of the tax law be paid for?

Trump has called for tariffs of 60% on imports from China and up to 20% from elsewhere, and idea that most economists say would raise prices. Republicans in Congress are generally not keen on the idea. Green energy tax credits from the Democrats’ 2022 tax-and-climate law also could be targets for pay-fors to extend provisions, but that could be a tough sell among Republicans in whose districts those energy tax credits have spurred big projects.

If Democrats take control of the House, they’ll push for more of the bill to be offset. Some budget hawks on the GOP side also may back pay-fors, though many subscribe to the refuted notion that they will ‘pay for themselves’ with economic growth.

How the tax package comes together next year also will depend on the cost estimates and analyses coming out of Congress’s scorekeeper, the Joint Committee on Taxation.

JCT Chief of Staff Tom Barthold has said his staff has already been busy this year as lawmakers explore different options for what to do next year.

4. What would committee leadership look like and what does it mean for the tax talks?

The GOP Senate win hands the Senate Finance Committee gavel to Sen. Mike Crapo (R-Idaho), who most recently made headlines for blocking the $78 billion business-and-child tax break bill brokered by House Ways and Means Committee Chair Jason Smith (R-Mo.) and outgoing Senate Finance Chair Ron Wyden (D-Ore.)

That standoff stemmed from what Crapo called a too-generous child tax credit and what he said was exclusion from the drafting of the bill by Wyden and Smith.

Crapo has said renewal of the 2017 tax cuts don’t all need to be paid for, setting up a possible row with the JCT over scoring the cost of whatever tax bill emerges next year. Budget scorekeepers have estimated extending the law will cost $4.6 trillion over a decade.

Commenting before the election results, Crapo said one option is to use the “current law’ baseline, which cuts the price tag of the extension, but which some call an accounting trick.

With control of the House still undecided, leadership will likely go to either current Ways and Means Chair Smith or Rep. Richard Neal (D-Mass). Democrats will aim to block extension of the 2017 tax law that benefit the wealthy—specifically tax cuts for those making more than $400,000 a year.

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