Here we go again. For only the second time in American history, a president has been elected to a second non-consecutive term in office.
During his first term, President Donald J. Trump focused heavily on taxes. Will that hold true for term two?
Taxwise, Trump’s second presidency will likely look much like his first.
This is largely due to the upcoming sunsets of numerous aspects of one of the keystones of Trump’s first term, The Tax Cuts and Jobs Act. With Republicans regaining power in the executive branch and Senate, it is a safe bet that these provisions will be extended. These laws, which largely but not exclusively benefit high-net-worth taxpayers, include:
Income Tax Rates. Income tax brackets are currently set to return to pre-TCJA levels, which means many taxpayers will see their tax rate increase. For example, the top individual, estate and trust income tax bracket would go back up to 39.6% from the current rate of 37%.
Standard Deduction. The TCJA repealed personal exemptions but increased the standard deduction, which currently sits at $29,200 for couples filing jointly and $14,600 for individuals.
Child Tax Credit. For families with dependents, the TCJA replaced the dependent exemptions with an increased child tax credit. Though Vice President-elect J.D. Vance discussed a $5,000 child tax credit on the campaign trail, no official plan for that number has been produced, so it would likely remain at its current $2,000 value.
Estate and Gift Tax Exemption. The TCJA doubled the 2011 estate and gift tax exemption of $5 million. Adjusted for inflation, the exemption currently stands at $13.61 million for individuals and $27.22 million for couples. In 2026, the exemption is scheduled to revert to pre-TCJA levels, roughly $6.8 million per individual and close to $14 million for a married couple.
SALT. Itemizers used to be able to claim deductions for all state and local property taxes and the greater of income or sales taxes (subject to various limits). The TCJA limited the itemized deduction for total state and local taxes to $10,000 annually for both single and joint filers.
Mortgage Interest Rate. Prior to the TCJA, taxpayers could deduct interest on mortgage payments associated with the first $1 million incurred to purchase (or substantially renovate) a primary and secondary residence plus the first $100,000 in home equity debt. The TCJA limited these numbers to $750,000 of home mortgage debt and suspended the deductibility on home equity loans unless they are used to buy, build or substantially improve the taxpayer’s home.
Outside of the TCJA, Trump has also outlined a controversial plan of tax cuts and tariffs. Under this plan, the corporate tax rate would be slashed from the current 21% to 16%, and income taxes would decrease for everyone (although high-earners will see the biggest benefit).
These cuts, however, would require congressional approval, so if the Democrats somehow recapture the U.S. House of Representatives, then that would represent a potential roadblock.
That said, his projected tariffs require no such approval.
According to the Tax Foundation, Trump’s proposed tariffs would effectively be the seventh-biggest tax increase since 1940, with the typical household paying an estimated $1,700 more each year in additional costs for goods.
Finally, Trump has floated eliminating federal income taxes on retirement payments. This reduction would largely benefit middle—and high-income retirees who earn enough to pay federal income taxes on their benefits, with the biggest boost likely going to those who earn between $63,000 and $200,000, according to Tax Policy Center estimates.
On the flip side, this cut would also likely quicken the inevitable insolvency of the Social Security Trust fund. When the fund is exhausted, retirees would see their benefits cut by 23% to 33%.
