Assuming there is a grid lock in the new Congress next year (House controlled by Democrats and Senate controlled by Republicans), from what I understand the subject tax rates should remain unchanged in 2025 as well. Is my understanding correct?
On the off chance, Democrats continue to hold the Senate majority (assume razor thin majority) (and assume Democrats return to controlling the House), how do you anticipate the subject tax rates to change?
Edit: Added "LT" in the title to eliminate needless discussion about LT vs ST
Thanks
Comments
"2017 TCJA is good until 12/31/25. That means that not much will change for individual or corporate tax rates for the tax filing years 2025 and 2026. But things would change after 2 tax filing years."
Congress can change existing laws, notwithstanding the effective date of the those laws.
Below are some answers from Claude -
"The Tax Cuts and Jobs Act (TCJA) of 2017 did not significantly change the individual long-term capital gains tax rates. Here's an overview of what remained the same and what minor adjustments were made:
Basic rate structure:
The TCJA maintained the same three-tier rate structure for long-term capital gains that existed before the law:
0%
15%
20%
Income thresholds:
The income thresholds at which these rates apply were kept, but they are now indexed to inflation using a different measure (chained CPI) which generally results in slower increases over time.
Additional Net Investment Income Tax:
The TCJA did not change the additional 3.8% Net Investment Income Tax that applies to individuals with income above certain thresholds.
Collectibles and certain small business stock:
The 28% maximum rate on long-term capital gains from collectibles and certain small business stock was maintained.
Unrecaptured Section 1250 gain:
The 25% maximum rate on unrecaptured Section 1250 gain (related to depreciation on real estate) was also kept in place.
Holding period:
The one-year holding period to qualify for long-term capital gains treatment remained unchanged.
While the TCJA made significant changes to many areas of the tax code, the treatment of individual long-term capital gains remained largely the same. The most notable impact on capital gains taxation was indirect, through changes to ordinary income tax rates and brackets, which can affect the overall tax situation of investors."
Main corporate tax rate:
The TCJA lowered the main corporate tax rate from 35% to 21%. This change is permanent and does not have a set expiration date. It will remain in effect unless new legislation is passed to change it.
Full expensing of capital investments:
The TCJA allowed for 100% bonus depreciation (full and immediate expensing) of certain capital investments. This provision began phasing out in 2023 and is set to fully expire after 2026, unless extended by new legislation.
Interest expense limitations:
The TCJA introduced new limitations on the deductibility of business interest expenses. These rules are permanent, but some specific provisions have different phase-in periods.
International tax provisions:
Many of the international tax provisions introduced by the TCJA, such as the Global Intangible Low-Taxed Income (GILTI) rules, are permanent.
It's important to note that while the main corporate tax rate change is permanent, many other business-related provisions of the TCJA are set to expire or change after 2025.
As always with tax law, there's the possibility of new legislation being introduced that could alter these expiration dates or make other changes to the corporate tax structure."
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The above commentary is from Claude and is consistent with my recollection of the current tax laws and as such at this time I am good with my first question.