Trump’s Tax Plan 2025: A Deep Dive into the New ‘Build Back Better’ Proposals

The 2025 tax landscape is shaping up to be a topic of intense discussion, and a significant new set of proposals under the ‘Build Back Better’ banner, associated with Donald Trump’s platform, is drawing considerable attention. These proposals suggest some of the most substantial tax code changes in years, potentially affecting everyone from service industry workers to small business owners and retirees.

As your dedicated financial partner, SW ACCOUNTING & CONSULTING CORP believes in proactive planning. Understanding these potential shifts is the first step toward securing your financial future. This article provides a detailed breakdown of these new tax proposals and what they could mean for you and your business if they were to be enacted.

Disclaimer: The following information is based on publicly discussed tax proposals and is not current law. Tax policies are subject to significant change during the legislative process. For personalized advice based on current regulations, contact our expert team.

Key Tax Proposals for Individuals

The proposed plan includes several groundbreaking changes aimed at providing tax relief to individual American taxpayers. Let’s explore the specifics.

1. Tax-Free Income for Tipped Workers

Perhaps the most talked-about proposal is the plan to make all tip income entirely exempt from federal income tax. This would be a monumental change for millions of workers in the hospitality and service industries.

• Proposed Benefit: If enacted, income earned through tips would not be taxed.
• Potential Impact: This could significantly boost the take-home pay for waiters, bartenders, delivery drivers, and other service professionals who rely on gratuities.

2. Increased State and Local Tax (SALT) Deduction Cap

A major point of contention from the 2017 Tax Cuts and Jobs Act (TCJA) was the $10,000 cap on the SALT deduction. The new proposal suggests a dramatic increase.

• Proposed Change: Raise the SALT deduction cap from $10,000 to $40,000 for individuals.
• Potential Impact: This would provide substantial relief to residents of high-tax states like California, New York, and New Jersey, allowing them to deduct a much larger portion of their state and local property and income taxes.

3. Other Proposed Individual Deductions and Credits

The plan also introduces several other targeted relief measures:

• Overtime Pay Exemption: A proposal to make overtime pay tax-exempt up to certain limits could provide relief for hourly workers.
• Car Loan Interest Deduction: A new deduction for interest paid on car loans for U.S.-assembled vehicles is on the table, aimed at incentivizing domestic manufacturing.
• Additional Senior Deduction: Individuals aged 65 and older could see an additional income deduction, providing more financial breathing room in retirement.
• Child Tax Credit Increase: The proposal also includes a modest increase to the Child Tax Credit, from $2,000 to $2,200 per child, to provide further support for families.

Major Proposed Changes for Businesses

Business owners, particularly those operating as pass-through entities, should pay close attention to the proposed changes designed to stimulate investment and growth.

1. Making the Qualified Business Income (QBI) Deduction Permanent

The 20% QBI deduction (Section 199A) is one of the most valuable provisions for pass-through businesses (S-corps, partnerships, sole proprietorships) from the TCJA, but it is set to expire after 2025. This new plan proposes to make it a permanent fixture of the tax code.

• Proposed Change: Make the Section 199A QBI deduction permanent.
• Potential Impact: This would provide long-term certainty and significant tax savings for millions of small and medium-sized businesses, encouraging entrepreneurship and reinvestment. For more on the current QBI rules, you can reference resources from the Tax Policy Center.

2. Restoring 100% Bonus Depreciation

Bonus depreciation, which allows businesses to immediately deduct the full cost of eligible assets, has been phasing down since 2023. The new proposal would bring it back to its full 100% power.

• Proposed Change: Reinstate 100% bonus depreciation for qualified assets.
• Potential Impact: This is a powerful incentive for businesses to invest in new equipment, machinery, and technology. It improves cash flow by allowing for a massive upfront tax deduction, accelerating the return on capital investments.

3. Doubling the Section 179 Deduction

Section 179 expensing is another critical tool for small businesses. The proposal suggests a significant increase to the deduction limit.

• Proposed Change: Double the Section 179 deduction limit from approximately $1.25 million to $2.5 million.
• Potential Impact: This would allow small and medium-sized businesses to immediately expense even larger asset purchases, further encouraging investment and simplifying depreciation schedules.

What Could This Mean for Your Financial Strategy?

If these proposals become law, they would represent a seismic shift in tax strategy for both individuals and businesses. The emphasis on tax-free income streams, larger deductions, and permanent business incentives would require a complete re-evaluation of financial planning.

For individuals, the focus might shift to maximizing newly non-taxable income and taking advantage of expanded deductions like SALT. For businesses, the permanence of the QBI deduction and the restoration of 100% bonus depreciation would create powerful, long-term incentives for capital investment and growth.

The key takeaway is the importance of staying informed and agile. Tax laws can and do change, and being prepared is your best defense.

Conclusion: Prepare for Tomorrow’s Tax Code Today

While the ‘Build Back Better’ tax proposals from the Trump platform are still in the discussion phase, they offer a clear glimpse into a potential future for the U.S. tax code. From tax-free tips to permanent business deductions, the changes could be transformative.

Navigating this potential new landscape requires foresight and expert guidance. The team at SW ACCOUNTING & CONSULTING CORP is constantly monitoring these developments to provide you with the most current and strategic advice. Contact us today to ensure your financial plan is ready for whatever comes next.