Trump Tax Plan 2025: Impact on Business

General overview of Trump’s 2025 Tax Plan

The newly signed tax “One Big Beautiful Bill" by President Donald Trump on July 4, 2025, has again put the U.S. fiscal policy in the spotlight. Trumps tax policy will influence individuals and companies in the years ahead. There are those updates that would be implemented immediately and others that would apply in 2025 which will influence returns that are to be filed in 2026.

Trump's tax cuts explained: the actual consequence of the reform will mostly be determined by the individual situation of the taxpayer. The measures are complicated, and not all the families or businesses are going to enjoy similar advantages. 

The extension of the TCJA, a landmark Trump reform, is central to the plan. While it reduced income taxes, its individual provisions expire in 2025, after which taxpayers face higher rates and fewer deductions without Congress. 

According to the Congressional Budget Office, extending TCJA would boost federal revenue but limit budget flexibility. The Trump income tax plan is presented as a stimulus for families and the economy, though critics warn of long-term costs. Republicans aim to highlight TCJA benefits and add campaign promises, shaping household tax bills and U.S. fiscal policy.

Taxpayers and businesses must track changes, asking the key question: how will Trump’s tax plan affect me?

What is Trump’s tax plan for individuals and businesses?

Trump’s tax plan for individuals is focused on tax relief for households and workers. His agenda is to do away with the federal estate tax which is currently imposed only on estates over $13.99 million. He has also promised to abolish or at least raise the current $10,000 cap on state and local tax deductions (SALT) cap which has been a point of controversy especially in the highly taxed states.

In addition to these, Trump has voiced his criticism of the current amount of funding of the IRS. He has proposed radical reductions in the budget of the agency, and this may lead to a decrease in government spending, but also constrains tax enforcement and collections. Researchers warn that these changes may have serious impacts of raising the federal deficit, unless they are combined with offsetting measures.

What changes are proposed for corporate taxes?

Trump tax reform presents a set of plans to change corporate and personal taxation. In the case of businesses, a major objective is to reduce the corporate tax rate, which is currently 21 percent to 20-percent or even 15 percent. It is expected that such action will boost economic activity and ensure that the U.S. companies are more competitive in the international arena (a 15 percent corporate tax rate would move the U.S. below the OECD average). The other important factor is that it has removed the 15 percent corporate minimum alternative tax that was brought in through the Inflation Reduction Act.

Key Changes for Businesses

The 2025 tax changes naturally raise a logical question for business owners: what does Trump want to do with taxes for businesses? 

Depreciation: The Act permanently allows full first-year depreciation for “qualified property” placed in service after January 19, 2025, removing the TCJA phaseout. Eligible assets include those with up to 20 years of useful life, some software, water facilities, and improvements to leased premises. Full expensing also applies to “production property” like manufacturing or refining assets, if construction starts between 2025 and 2029 and operations begin before 2031.

R&E Changes: From tax years after Dec. 31, 2024, firms may immediately deduct qualified domestic R&E expenses instead of capitalizing them, while foreign R&E remains amortized over 15 years. Software development performed domestically now qualifies as R&E, and small businesses under $31 million in receipts can retroactively apply the new rules to 2021 expenses, deducting balances fully in 2025 or over two years.

Business Interest Expense Deduction: TCJA limited interest deductions to 30% of adjusted taxable income (ATI), excluding business interest income and expense. The new Act permanently restores depreciation, amortization, and depletion to ATI, allowing larger deductions. This change is retroactive from the start of 2025.

Business losses: The Trump income tax plan restricts business losses for individuals and non-corporate taxpayers to $313,000 (single) or $626,000 (joint) in 2025. Losses above these caps cannot offset current income but may be carried forward, and the rule is now permanent.

How the Tax Plan Affects Corporate Taxes?

One of the main features of Trump’s 2025 tax plan is a change in the corporate income tax rate. The existing rate of 21 percent might be reduced to 20 percent or even 15 percent, a gesture that would stimulate economic growth, enhance investment and global competitiveness of businesses in the United States. This plan is consistent with the previous campaign pledges of Trump and the plans of the House Republicans which have been in the form of the Project 2025 plan.

The plan is also aimed at the 15 percent corporate alternative minimum tax (AMT) implemented as a part of the Inflation Reduction Act (IRA). Doing away with the AMT will ease the net taxation of the corporations and will enable them to invest more in expansion or capital projects or to settle debts. Similar to the rate cut, this alteration is an indication of objectives outlined in the Project 2025 framework.

Both of these are included in the further One Big Beautiful Bill Act (OBBBA). Altogether, these corporate tax measures are aimed at ensuring an immediate rescue of business and boosting its growth, redesigning the financial and investment environment of U.S. corporations in the years to come.

When did Trump’s tax plan go into effect? 

When would Trump's tax plan start? The most important aspects of the 2025 tax plan of President Trump will come into action in the year 2025. The corporate changes, such as possibly lowering the corporate tax rate and eliminating the 15 percent corporate alternative minimum tax (AMT) will be applicable to tax years beginning in 2025, and therefore, will be reflected in tax filings in 2026.

A key question many are asking is when does Trump’s tax plan end? While some provisions have historically been temporary under earlier legislation, many of the 2025 changes—including corporate rate reductions and AMT elimination – are designed to be permanent.

To conclude, given the retroactive nature of some of the provisions and the fact that most filings will not be affected at least not in the short-run, businesses have plenty of time to consider the new tax environment as it plans to grow and operate in the next few years.