Since American voters decided to send former President Donald Trump back to the White House, corporate executives have been working to clarify which tax scenarios they should plan for under his new administration.

According to tax experts from the Big Four firms Deloitte and Ernst & Young at separate press conferences held this week, as executives sort through the numerous tax reform proposals the president-elect floated during his campaign, as well as potential adjustments to existing tax laws, nearly all tax topics have raised widespread questions. Trump's proposals on individual income tax ran throughout his campaign, including proposals to exempt overtime pay, tip income, and Social Security benefits from taxes, and to create a tax credit for family caregivers.

In addition, Trump has also drawn close attention from the business community with proposals to impose a baseline tariff of 10% to 20% on all U.S. imports, a 60% tariff on Chinese goods, and the idea of cutting the corporate income tax rate from 21% to 20%, or to 15% for companies that produce goods on U.S. soil, according to data from the Tax Foundation. At the same time, businesses are weighing how and whether Trump will protect the trillions of dollars in tax cuts from his 2017 Tax Cuts and Jobs Act, which are set to expire at the end of 2025.

Potential fast track: 'You have to keep up with the pace'

Anna Taylor, deputy leader of Deloitte's tax policy group, said at the firm's briefing this week that all of this presents a "massive agenda" for lawmakers, as they must consider not only new tax cuts but also the projected $4.6 trillion cost of extending the tax cuts in Trump's Tax Cuts and Jobs Act. Businesses are also trying to gauge how quickly tax law changes might take effect.

Martin Fiore, vice chair of tax at Ernst & Young Americas, said his firm has been studying how to advise clients' finance teams to prepare for the extension of the Tax Cuts and Jobs Act and other evolving tax policy matters, noting that Trump's familiarity with and experience in legislation this time around could accelerate the process. To that end, he warned that organizations need to ensure they understand any proposed legislation, model the various potential impacts these changes could have on their own businesses, and then report to stakeholders.

"We think this is a very fast-moving process," Fiore said at a briefing earlier this week. "It's like telling a story; you have to keep up with its pace."

Early termination or modification of the Inflation Reduction Act?

Of course, it is still too early to determine exactly which tax policies the Trump administration will focus on. But some tax experts who spoke this week said they expect Trump and Republican lawmakers to at least use their newly won "trifecta" power to weaken parts of the 2022 Inflation Reduction Act, President Joe Biden's signature legislative achievement.

"Overall, legislation passed on a partisan basis will almost certainly be repealed to some extent," Aruna Kalyanam, global tax policy leader at Ernst & Young, said at the briefing, noting that surgical modifications are more likely than full repeal because many programs benefit Republican states and full repeal would disrupt energy markets. "Congress is generally unlikely to do retroactive repeal, because that really creates chaos in the market," Kalyanam said.

The massive Inflation Reduction Act poured billions of dollars into clean energy projects, such as a $200 million expansion for wind tower manufacturer CS Wind in Pueblo, Colorado, and electric vehicle tax credits aimed at combating climate change. The law also allocated $80 billion to strengthen IRS enforcement capabilities by 2032 and established a 15% corporate alternative minimum tax.

Kalyanam said that rather than a repeal that would bring a lot of "turmoil" to the energy industry, lawmakers might take what she called an "early termination" approach, cutting off the final years of tax credits and thereby generating significant revenue savings. At the same time, she noted that certain provisions in the Inflation Reduction Act enjoy broad support, such as those related to carbon capture and sequestration and clean hydrogen.

Optimism and caution on corporate income tax

In a speech in September at the Economic Club of New York, Trump promised to cut the corporate rate from 21% to 15% for companies that produce goods in the U.S., according to The Wall Street Journal, reviving the lower rate for domestic manufacturers that was eliminated by his Tax Cuts and Jobs Act.

The so-called "Made in America" 15% rate has drawn cautiously optimistic responses from businesses, but companies are eager for more details, Colleen O'Neill, leader of Ernst & Young's U.S. national tax department, said at the briefing. At the same time, it has raised a series of questions, such as what conditions would need to be met to qualify and whether it would be structured similarly to the Domestic Production Activities Deduction or Section 199 DPAD. "The statutory language already exists," O'Neill said. "When thinking about efficiency, leveraging existing statutory language is really helpful."

What businesses are more cautious about, she said, is the international side of corporate income tax. There are questions surrounding Republicans' views on taxation of international and offshore income. For example, O'Neill noted, it is unclear whether businesses will get a promised extension of the foreign income provisions in the Tax Cuts and Jobs Act or will see new forms of existing provisions, such as Subpart F of the Internal Revenue Code.

The proposed tariffs are also generating a lot of anxiety in the business community, she said. As with corporate income tax, businesses are thinking about what the structure of such tariffs would mean for them and whether they should consider relocating manufacturing sites if their supply chains are hit. Another concern is how quickly tariffs could be implemented.

"How quickly will we see these measures? Will tariffs be imposed on January 21 based on unilateral government action?" O'Neill said. "There are many questions about the potential impact of tariffs, and I can say there is also a lot of anxiety."

Timing and the 2025 'cliff' of the Tax Cuts and Jobs Act

If left unaddressed, the expiration of temporary tax cuts contained in the Tax Cuts and Jobs Act at the end of next year would mean more than $4 trillion in combined tax increases for businesses and individuals. Even before the presidential candidates became clear, a July report from KPMG, one of the Big Four consulting and accounting firms, asserted that the Tax Cuts and Jobs Act dilemma could make 2025 "the most significant tax legislative year since 2017," when Trump signed the landmark tax law.

Among the closely watched expiring corporate tax provisions is the deduction for Global Intangible Low-Taxed Income (GILTI), which, according to the KPMG report, currently has an effective rate of 10.5% for domestic companies and would rise to 12% by the end of next year if not extended. The Base Erosion and Anti-Abuse Tax (BEAT), designed to prevent domestic and foreign companies from shifting profits out of the U.S., would see its 10% minimum rate for certain taxpayers rise to 12.5% if not extended.

The fate of the Tax Cuts and Jobs Act extension is closely tied to budget and debt ceiling negotiations, said Jonathan Traub, leader of Deloitte's Washington national tax and tax policy group.

"You can't separate the discussion about the Tax Cuts and Jobs Act, because either you do nothing and cause a massive tax increase, or you don't fully offset it and cause deficits and debt to increase," Traub said. "So these two things are moving in parallel, prompting Republicans to try to kick off the reconciliation process early in the year right after the January 20 inauguration, or even pave the way for their plans before that."

Editor's note: This article has been updated to correct the name of an existing tax deduction whose language may be used for future tax changes.