Election results and expiring provisions – Tax considerations for Asset Management in 2025

In brief

What happened?

Updated results from the November 5 elections confirm that Republicans will retain control of the House and will hold a Senate majority. 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 act on the tax and trade policies that President-elect Trump proposed during his campaign.

Why is it relevant?

With key 2017 Tax Cuts and Jobs Act (TCJA) individual provisions set to expire at the end of 2025 and several business tax provisions set to change, 2025 will be a significant year for tax legislation. With Republican control of Congress, reconciliation procedures will likely be used to address expiring TCJA provisions. Senate reconciliation rules would not allow for permanent extension of TCJA individual provisions, and a new sunset date could again potentially be set earlier in an initial 10-year budget period, as was done in 2017 when the TCJA was enacted under reconciliation procedures.

In addition to extending TCJA provisions, Congress could consider President-elect Trump's campaign proposals, which included taxing large university endowments, a new 15% corporate tax rate solely for companies that made products in the US, as well as several proposals affecting individuals.

During the campaign, President-elect Trump signaled potential across-the-board tariffs of 10 to 20% on imports from all countries, with additional tariffs targeting specific countries. In a series of social media posts in late November, Trump said he would impose tariffs of 25% on imports of all goods from Mexico and Canada and add an additional 10% tariff on all Chinese goods – on his first day in office. Tariffs could be part of the 2025 tax debate and will have a significant impact on companies, especially in industries that rely on imports or on China for key supplies. 

President-elect Trump’s nominations for leadership roles across various agencies may have a significant impact on the asset management (AM) industry. For example, in addition to his recent nomination of Scott Bessent to serve as Treasury Secretary, President-elect Trump will likely announce nominees for leaders of the Securities and Exchange Commission, Commodity Futures Trading Commission, Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency and the Federal Housing Finance Agency over the course of the transition.

Given the diverse group of investor types, asset classes, domestic and foreign investments and flow-through and corporate entities throughout organization structures, the impact of either the expiring TCJA provisions or President-elect Trump’s proposals on the AM industry may be broad.

Actions to consider

Investors and fund managers alike must understand the impact of expiring 2017 TCJA provisions that are set to expire in 2025. Tracking the various proposals put forth by President-elect Trump and Congressional Republicans relating to these tax provisions and other policies will be key in navigating the possible impact of changes.