The 2024 elections have driven intense conversation on a number of issues. Among them are taxes, as both political parties have good reason to pass a new set of tax laws in the near future. Enacted in 2017, many current tax provisions are set to expire a little more than 12 months from now, so the next administration will have to make tax law a focus soon after they settle into the Oval Office.

Let’s review how the 2024 elections may affect taxes, depending on who is in control of the legislative and executive branches.


What Happens if There is No New Tax Bill?
The last major tax bill was passed in 2017, known as the Tax Cuts and Jobs Act. In most instances, it is still the primary tax document governing individual and business tax provisions. And many - but not all - of those provisions are scheduled to sunset at the end of 2025.

That means, theoretically, if no new tax bill is passed by the legislature and signed into law by the President, any provisions that are scheduled to sunset would revert back to what was on the books before the TCJA - effectively back to 2016-era tax provisions.

Thankfully that won’t affect some of the most impactful provisions - corporate tax rates will remain at a flat 21 percent even if the act expires. There are, however, numerous important provisions that would be affected by a pre-2017 rollback, including the child tax credit, the standard deduction, and state and local tax (SALT) deductions.

As both political parties have their own tax agendas to pursue (and constituents to please), it’s highly likely that a new tax bill will be passed before the TCJA expires. As for what a new set of tax laws would include, that would depend on which party has greater control over the legislative process.
What May Happen if the Republicans Largely Influence the Legislative Process During a Tax Bill?
There is a chance that the Republicans will control both the House and Senate following the 2024 elections, which would give them serious negotiation power should a new tax bill come to the floor.

In this theoretical outcome, it’s likely that most of the TCJA provisions set to expire would be extended. That would be the starting point, at least, but it’s likely that certain things like the amount of the standard deduction would be recalibrated to match today’s economic realities. Further, both parties have indicated a willingness to raise the child tax credit in a new tax bill beyond what the TCJA provides for 2025 ($1,700 refundable portion).

In a Republican-majority scenario, the following provisions would probably be preserved along with the tax concepts underpinning the TCJA:

* A larger standard deduction and no personal exemptions
* Lower marginal income tax rates at most income levels
* A larger child tax credit and refundable portion
* A larger estate tax exemption (the TCJA doubled the pre-2017 exemption)
* Additional deductions for small businesses (the TCJA allowed sole proprietorships, partnerships and certain corporations to deduct up to 20 percent of pass-through income)

In addition to the above tax-related provisions, there are many questions surrounding tariffs under a potential Trump administration. Putting aside the economic impacts of tariffs, as there are many and they are difficult for any one person to explain, much of the discussion related to tariffs is centered around whether they can be used to fund government programs - perhaps as a way to offset the cost of continuing tax cuts.
What May Happen if the Democrats Largely Influence the Legislative Process During a Tax Bill?
The Democrats may also have the upper hand in tax law negotiations, depending on how the presidential and Senate/House election...