Expect Trump to Deliver Lower Taxes? An Expert Tells You How to Prepare Now | Global News Avenue

With Donald Trump about to take office, American taxpayers can expect lower tax rates in 2025. For those who do, tax experts say it’s possible you could benefit from filing your 2024 tax return.

They say deferring some income until next year or paying deductible expenses early can lower your bill in 2024, which may be beneficial if you predict you’ll pay less tax in 2025.

“We’re likely to see lower tax rates, so if you think tax rates are likely to be lower (in 2025), then of course you’ll want to defer income to next year when tax rates are likely to be lower,” said Green Growth Accountants tax director Susan McGuire said.

Trump discussed several tax proposals on the campaign trail. Here’s some background on the proposals, along with some strategies that may be helpful if you anticipate lower tax rates next year.

Americans eye Trump’s slew of tax proposals

Trump made a series of tax proposals during his campaign. He promised to make full use of Provisions of the Tax Cuts and Jobs Act of 2017 (TCJA) Eternal. This law almost standard deductionincreased child tax creditand proposed estate tax exemption.

He also proposed excluding Social Security payments from income taxes. For the 40% of beneficiaries who pay taxes on their benefits, The cuts will primarily help beneficiaries earning between $63,000 and $200,000, according to the Tax Policy Center. His campaign also proposed adding new tax credits for unpaid family caregivers and expanding the child tax credit from $2,000 to $5,000 per child.

The Republican platform says the new administration will eliminate tip and overtime taxes. The Congressional Research Service estimates that cutting the tip tax would save restaurant and hotel workers (3.3% of income tax filers) $730 to $2,170 in taxes.

If you think your taxes will be lower in 2025, you may need to defer some of your 2024 income

Deferring income means deferring some of your 2024 income to 2025 so that more of your money will be taxed at the lower rate you expected.

“You’re taking the payroll (tax) that you would normally have to pay, and then you’re deferring it to a future tax year,” McGuire said.

One way to do this is to maximize your contributions to traditional retirement accounts or health savings account. This will lower your adjusted gross income (general artificial intelligence) during the year, you will pay taxes on less of your income.

You can also defer income received throughout the year. For example, if you own a rental property, you can require your tenants to pay December’s rent in January. If you are not self-employed, you can ask your company to defer your bonus until next year. If you’re self-employed or freelance, you might consider deferring invoices until the end of the year, McGuire says.

You can also postpone your income tax and capital gains tax If you receive incentive stock Get options from your employer in 2024 and keep your options or stock until next year.

Accelerate deductions to lower 2024 tax bill

McGuire says if you have deductible expenses you expected to pay in 2025 but can incur before the end of the year, that could reduce your 2024 bill.

“(People) accelerate their deductions for the current year so they can use them,” McGuire said. “Same reasoning (like deferring your income). If you think the tax rate is higher now, then you want to deduct as much as possible.”

If you plan to donate to charity in 2025, you may want to do it before 2024 ends, rather than seeing Charitable Contribution Deduction on your 2024 bill. You can also prepay any expenses you expect to incur in 2025. For example, you could pay your January 2025 mortgage payment or property taxes this month.

Another strategy is to make anticipatory medical purchases before the end of the year if your 2024 medical expenses are close to reaching your 7.5%. adjusted gross income. If you plan to buy new glasses or get your teeth cleaned in 2025, doing so before the end of 2024 can help you maximize your medical deduction.