2025 Post-Election Tax and Economic Outlook

After the recent election, any significant changes in tax and economic policy will affect companies, people, and the general economy for years to come. By the same token, inaction in 2025 could also have significant consequences for business owners and individuals. One of the most important debates on tax policy revolves around the continuation—or expiration—of important Tax Cuts and Jobs Act (TCJA) of 2017 clauses. Several broad changes resulting from this law include:

A permanent reduction in the corporate tax rate to 21%.
Temporary cuts to individual income tax brackets, which are set to expire at the end of 2025.
Temporarily doubled estate, gift and GST tax exemptions, set to expire at the end of 2025.

In this blog, we review the following trends:

Small Business Tax Planning
The Role of Tariffs
Inflation and the Debt Crisis
Retirement and Depreciation Opportunities
Corporate Tax Shifts and State-Level Reforms
Trade Policies and Global Economic Risks

If you’re looking for a deeper dive into the tax and economic shifts shaping 2025, Adapting to Economic Shifts: Four Essential Pricing Strategies for 2025 builds on our post-election outlook with expanded insights. We go beyond the headlines to examine the long-term impact of potential tax changes, trade policies, and economic trends—helping businesses and individuals plan with confidence. Stay informed and take action with expert perspectives from LBMC.

“Tax policy is never static, and political dynamics will play a major role in shaping the outcome of these proposals. For now, keeping an eye on developments and consulting with your tax advisor can help you stay ahead of potential changes.”
BEN CARVER, SHAREHOLDER AND HEALTHCARE INDUSTRY LEADER, TAX, LBMC, PC

2025 Business Outlook Report

The 106-page 2025 Business Outlook Report breaks down the biggest shifts happening right now.

2025 Business Outlook Report from LBMC

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1. Small Business Tax Planning: Key Actions to Take

Small business entrepreneurs have found the 20% deduction on qualified business income (QBI) to be revolutionary. But without congressional action, this benefit, along with the increased standard deductions and restrictions on state and local tax (SALT) deductions, may disappear.

Taxpayers in high-tax states like California and New York should consider the SALT cap’s possible long-term effects.
Reversing pre-2018 levels of estate and gift tax deductions motivates high-net-worth individuals to finish their estate plans before these changes take effect.

Staying ahead of these dates will help to maximize financial plans and reduce tax obligations.

“As this deadline approaches, small business owners should take proactive steps to understand how these changes may affect their tax obligations and financial planning in the near future. Consulting with a tax professional can help you navigate the complexities of the tax code and develop strategies to minimize your tax liability.”
LEIGH ANN VERNICH, SENIOR MANAGER, TAX, LBMC, PC

2. The Role of Tariffs: Balancing Costs and Opportunity

Tariffs are re-emerging as a pillar of U.S. trade policy under President Trump’s second term. On February 1, 2025, President Trump announced the imposition of new tariffs on key trading partners, including China. Proposed measures include a 10% tariff on China and other key trading partners to take effect on February 4, 2025. The objective? To encourage domestic production and reduce reliance on foreign goods.

These tariffs, nevertheless, could have a cost:

Higher consumer prices on imported goods.
Higher supply chain costs for companies depending on international manufacturing.

Over time, tariffs could encourage economic diversification, especially in light of programs like the CHIPS Act, which supports homegrown semiconductor manufacturing. Higher labor expenses in the United States, for example, could restrict the competitiveness of locally made items.

Actionable Advice:

Companies should review supply chains and think about localizing or diversifying activities.
Policymakers have to consider the possible increase in economic resilience against the short-term expenses of tariffs.

3. Inflation and the Debt Crisis: A Balancing Act

Following the highest rates of inflation in 40 years, the United States must simultaneously manage a mounting national debt and lower inflation.

Inflation Outlook: By committing to quantitative tightening by lowering its balance sheet and avoiding Treasury market intervention, the Federal Reserve seeks to lower inflationary pressures.
Debt Concerns: The growing national debt raises questions over possible volatility in the value of the dollar as the world’s reserve currency and increases the likelihood of higher interest rates.

Although inflation seems to be slowing down, unbridled borrowing might have long-term effects on government expenditure, interest rates, and economic growth.

Actionable Advice: Given rising interest rates, both companies and individuals should concentrate on protecting liquidity and investigating debt management techniques.

4. Retirement and Depreciation Opportunities

Changing tax policies offer opportunities to maximize financial returns by means of proactive retirement contribution and depreciation deduction planning.

Retirement Contributions: Through periodic changes to 401(k) and other retirement plan restrictions, employers and employees can maximize tax-advantaged contributions.
Depreciation Deductions: One of TCJA’s benefits is bonus depreciation rates. From 80% in 2023 to 60% in 2024, bonus depreciation will continue to decline. Still, Section 179 discounts are an advantageous approach to cover large expenses.

Actionable Advice:

Examining their fixed asset schedules will help businesses maximize gains.
Higher contribution levels should be fully used by workers to build retirement savings.

5. Corporate Tax Shifts and State-Level Reforms

Corporate tax policies also receive extra attention in the context of the post-election environment:

Federal Proposals: Further cuts to the corporate tax rate, potentially to 20%, and incentives for U.S.-made goods complement programs aimed at strengthening the domestic sector.
State Reforms: Like those in Kentucky, new pass-through entity tax rules might provide businesses with tools to offset SALT deduction limitations and pave the way for other states to follow.

Actionable Advice:

Look at how possible reduced federal rates would influence financial forecasts.
Monitor state-level changes that could enhance tax planning flexibility.

6. Trade Policies and Global Economic Risks

Although the U.S. dollar is currently the main reserve currency utilized globally, new systems like blockchain-based reserves are creating challenges for it. Protectionist policies also contradict American natural competitive advantages in sectors like research and development (R&D). Aerospace is one of them.

Actionable Advice:

Companies with overseas exposure should evaluate how likely changes in trade policies and world currency domination could affect operations.

“Resilient businesses must be able to navigate the constantly changing tax environment. LBMC offers comprehensive tax planning and advisory services, ensuring our clients are well prepared to respond to legislative changes and take advantage of available benefits.”
BEN CARVER, SHAREHOLDER AND HEALTHCARE INDUSTRY LEADER, TAX, LBMC, PC

Outlook - Planning for an Uncertain Future

The post-election budgetary and economic scene offers both possibilities and challenges.

Stay Informed: Observe regular updates on fiscal policy, tariff rules, and expiring tax laws.
Consult Experts: Work with tax experts to create plans for your situation.
Act Early: Early action can help to reduce risks whether using expiring benefits, adjusting for tariff-based cost hikes, or modifying for possible debt consequences.

Although navigating post-election tax and economic terrain can feel daunting, you are not alone. LBMC assists companies and individuals in staying ahead of tax changes, streamlining financial plans, and preparing for the future.

Get personalized guidance to plan for expiring tax provisions, maximize retirement contributions, or evaluate the effects of trade policies.

LBMC tax tips are provided as an informational and educational service for clients and friends of the firm. The communication is high-level and should not be considered as legal or tax advice to take any specific action. Individuals should consult with their personal tax or legal advisors before making any tax or legal-related decisions. In addition, the information and data presented are based on sources believed to be reliable, but we do not guarantee their accuracy or completeness. The information is current as of the date indicated and is subject to change without notice.

2025 Business Outlook Report

1. Small Business Tax Planning: Key Actions to Take

2. The Role of Tariffs: Balancing Costs and Opportunity

3. Inflation and the Debt Crisis: A Balancing Act

4. Retirement and Depreciation Opportunities

5. Corporate Tax Shifts and State-Level Reforms

6. Trade Policies and Global Economic Risks

Outlook - Planning for an Uncertain Future

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