With the second inauguration of President Donald Trump, now is an opportune time to evaluate how potential changes to tax policy could affect your financial strategy. Building on the framework of the Tax Cuts and Jobs Act (TCJA), Trump has signaled intentions to expand key provisions that may present opportunities for both individuals and businesses. By planning ahead, you can position yourself to take advantage of potential tax benefits while safeguarding against uncertainty.
Potential Effects on Individual Taxes
Tax relief across all levels of income has been a common priority in Trump’s proposals. Once inaugurated, we could see an extension of the reduced tax brackets established under the TCJA, helping many Americans retain more of their earnings. Specifically, Trump has floated the possibility of increasing the standard deduction, which would allow taxpayers to reduce taxable income without itemizing.
For families, both Trump and VP JD Vance have taken strong stances on an increase to the Child Tax Credit or similar deductions, easing financial pressures on new and growing families. These changes could help the average American household build savings and retirement assets.
Estate and Capital Gains Tax Planning
Estate planning is a critical area where proposed changes could have a significant impact. Trump has previously advocated for reducing or eliminating estate and capital gains taxes, which could create substantial opportunities for transferring wealth efficiently.
Currently, the estate tax exemption stands at $13.99 million per individual in 2025, but is set to drop to approximately $7 million in 2026 unless further legislative action is taken. For families whose estates are near or above this threshold, leveraging gifting or trust strategies now could help maximize the current higher exemption.
Balancing estate planning with other tax considerations—such as income and property taxes—requires careful coordination. Working closely with your attorney, financial advisor, and CPA ensures a tailored approach that reflects your family’s unique situation, while planning for the potential tax changes.
Retirement Planning Under Low Tax Rates
Today’s historically low tax rates offer an excellent opportunity to revisit your retirement strategy. Consider the following options:
• Roth IRA Contributions and Conversions: Converting funds from a traditional IRA to a Roth IRA allows you to pay taxes now and enjoy tax-free withdrawals in retirement. This can be especially beneficial if you anticipate higher tax rates in the future. However, it’s essential to plan carefully to avoid moving into a higher tax bracket during the conversion process.
• Maximizing Contributions: Fully funding your 401(k), IRA, and Health Savings Account (HSA) provides valuable tax benefits while bolstering your retirement savings. Contributions to traditional accounts reduce your current taxable income, while Roth contributions offer future tax-free growth. If tax cuts are enacted under Trump, as a result, the extra household take-home-pay is a great opportunity to increase contributions to retirement advantaged accounts.
• Portfolio Rebalancing: Favorable capital gains tax rates provide an opportunity to rebalance your investment portfolio. Selling appreciated assets now could help optimize your investment strategy while minimizing tax liabilities.
Collaborate with your financial advisor to explore options that align with your retirement goals and take full advantage of today’s tax environment.
Positioning Yourself for Future Success
As we anticipate possible tax changes under a second Trump administration, now is the time to revisit your financial strategies. Whether it’s optimizing your tax plan, updating estate arrangements, or exploring retirement strategies, working with a trusted CPA or financial advisor can help you navigate these potential shifts and position yourself for future success.
