#USTaxExemptionPlan

Recent developments in U.S. tax policy have introduced proposals that could significantly impact tax exemptions and deductions for individuals and businesses. Key initiatives include:

1. Extension of Expiring Tax Cuts

House Republicans are crafting comprehensive tax-and-spending legislation inspired by former President Trump. The plan aims to extend expiring tax cuts, fund border enforcement, and reduce safety-net programs like Medicaid. Individual lawmakers are advocating for specific tax breaks, including provisions for emergency power generators, racehorse depreciation, timber loss write-offs, and tax-exempt bonds for spaceports. Balancing these diverse demands with budget goals and deficit reduction remains a challenge.

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

Moderate Republicans are optimistic about President Trump's support for raising the cap on state and local tax (SALT) deductions. This adjustment is particularly significant for GOP lawmakers from high-tax states like New York, New Jersey, and California. They emphasize that addressing the SALT cap is crucial for maintaining control of Congress and providing relief to constituents in these states.

3. Residence-Based Taxation for Americans Abroad

A proposed bill, the "Residence-Based Taxation of Americans Abroad Act," seeks to exempt U.S. citizens residing long-term outside the United States from taxation and reporting requirements on income and assets earned or held abroad. If enacted, this legislation would allow U.S. citizens living abroad to report and pay tax only on U.S.-sourced income, potentially alleviating the burden of double taxation.

4. Estate Tax Exemption Considerations

The current gift and estate tax exemption is $13.61 million for a single person in 2024. Without congressional action, this exemption is set to revert to 2017 levels, approximately $7 million. This potential change could significantly impact estate planning, especially for successful business owners whose estates may exceed the lower threshold.