The odds of Congress approving the federal budget in time for the new fiscal year that starts on October 1 are now miniscule. I guess one could say that Congress continues to meet expectations on this front as they have not accomplished this for decades. They apparently don’t believe in deadlines.
The 119th Congress which begins in January 2025 will have a major impact on tax policy. Portions of the Tax Cuts and Jobs Act tax legislation expire on December 31, 2025. Unless new provisions are signed into law, personal tax brackets, deductions, and exemptions will revert to previous law on January 1, 2026.
For most taxpayers, this would result in higher tax brackets, lower standard deductions, and increased exemptions. Overall, the net impact would be additional revenue for the federal government at the expense of taxpayers.
It is not like the government does not need your money. Over the last 12 months it has spent $1,598,360,000,000 more than it has received in revenue. The good news is that this is a smaller 12-month deficit than last July ($2,252,963,000,000). The bad news is that balancing the federal budget today would still require the government to terminate all Medicare benefits (but keep the taxes in place), eliminate the entire national defense budget, and stop all spending on federal transportation projects.
We will be closely monitoring the future of tax policy next year. In the meantime, you may wish to speak with your tax and estate planning professionals to discuss opportunities to maximize the benefits of current law to minimize your and your family’s future tax liabilities.
