Major Tax Policy Changes in the US and Their Impact on Businesses and Individuals

PHOTO BY LEELOO THE FIRST ON PEXELS

Tax policy changes in the US significantly impact both businesses and individuals. These alterations can affect tax rates, deductions, and credits, shaping financial decisions for many.

Observing how recent updates influence economic behavior helps in understanding the broader implications for society. This post will explore the key changes and their effects on various sectors.

Extension and Modification of the Tax Cuts and Jobs Act (TCJA)

The TCJA introduced major tax changes, many set to expire soon. Discussions now focus on extending key provisions like the 21% corporate tax rate and individual tax cuts through 2025.

The tweet below highlights proposed changes, including renewing Trump-era tax cuts, eliminating taxes on overtime pay and tips, and offering tax breaks for “Made in America” projects:

MAJOR U.S TAX RELIEF COMING:

•No tax on tips
•No tax on Social Security for seniors
•No tax on overtime pay
•Renewing Trump tax cuts
•Adjusting the SALT cap
•Ending tax breaks for billionaire sports team owners
•Closing the carried interest loophole
•Tax cuts for ‘Made… pic.twitter.com/pHPT2UBf1c
— Open Source Intel (@Osint613) February 6, 2025

Adjustments to the 20% pass-through deduction and the SALT cap could also reshape business strategies and middle-class tax relief.

Repeal of the State and Local Tax (SALT) Deduction Cap

The SALT deduction cap, set at $10,000 in 2017, has significantly impacted taxpayers in high-tax states.

Efforts to repeal or adjust the cap aim to reduce tax burdens, potentially increasing refunds and lowering tax bills.

The tweet below highlights another key tax relief measure—an increase in the Earned Income Tax Credit (EITC) to $8,046 for 2025, up from $7,830 in 2024:

6- Earned Income Tax Credit

For taxpayers who have three or more qualifying children, the maximum Earned Income Tax Credit amount is $8,046 for tax year 2025.

This is up from $7,830 for tax year 2024.
— Cam Marzi (@Invested_In_You) January 7, 2025

These changes could provide financial relief and boost spending power for many taxpayers.

Implementation of New Tariffs and Trade Policies

New tariffs continue to shape U.S. trade policy, impacting industries and consumers alike.

The video below indicates that a 25% tariff on imports from Canada and Mexico and a 10% tariff on Chinese goods were introduced on February 1, 2025:

These tariffs, linked to immigration policies, may raise prices on essentials like avocados and electronics. Canada has announced retaliation, and financial markets are reacting with uncertainty. Businesses may shift supply chains to adapt, affecting both local and global economies.