2024 Election results and the impact on high net-worth individuals

In brief

What happened?

Based on the November 5 election results, former President Donald J. Trump has been elected to serve as the 47^th President of the United States and Republicans are also set to gain control of the US Senate and retain a slim majority in the US House.

Why is it relevant? 

Control of the White House and Congress will provide President-elect Trump and Congressional Republicans the opportunity to set the direction of US tax policy and potentially enact the tax and trade policies that President-elect Trump proposed during his campaign.

That said, several key individual provisions enacted as part of the 2017 Tax Cuts and Jobs Act (TCJA) are set to expire at the end of 2025, including those that affect income, gift, and estate taxes. Failure to pass any new tax legislation or extend the current individual tax provisions of the TCJA before the law sunsets would result in across-the-board tax increases on virtually every individual taxpayer. Republicans will need to work together to address the expiring TCJA provisions prior to December 31, 2025.

Observation: Republican control of the White House and Congress will allow for the use of “budget reconciliation” procedures to enact any new tax legislation in 2025 with only Republican votes, as was the case in 2017 when the TCJA was enacted. However, the narrow Republican majorities in both the House and the Senate could make it challenging for Republicans in Congress to enact all of President-elect Trump’s campaign proposals. For this reason, negotiations on how to address the expiring TCJA tax provisions and other tax and trade proposals could delay action on a reconciliation tax bill until late 2025.

Action to consider 

Individuals will need to assess the impact of President-elect Trump’s tax policy proposals and monitor the possible expiration of the TCJA tax provisions on their personal tax situation. Examining the impact of allowing the provisions to sunset on estate and wealth planning may allow individuals to be well positioned at the end of 2025 to make adjustments as needed before 2026 begins.