Business actions to consider
- Engage with regulators about potential guidance to reexamine – either for repeal or for preservation – emphasizing areas in which your industry or sector can provide insights and highlight potentially overlooked details.
- Anticipate longer timeframes to resolve IRS disputes and appeals.
- Plan for a more uncertain compliance and audit environment until the IRS workforce situation stabilizes.
Tax policy – extending Tax Cuts and Jobs Act (TCJA) individual and business tax provisions
Developments
The Trump administration’s top tax policy priority this year is enactment of a signature tax bill that could substantially affect US businesses. Key provisions of the legislation include:
- Permanently extending TCJA individual tax rates and incentives
- Extending and in some cases expanding business-favorable TCJA provisions, such as expensing for domestic R&D and immediate expensing of the costs of constructing new US factories
- Maintaining and providing stability for the current US international tax regime
- Repealing clean energy initiatives enacted under the previous administration
- Making permanent and increasing the Section 199A “pass-through deduction”
- Addressing President Trump’s campaign proposals on tips and overtime
Proposed legislative changes include mainly favorable provisions, but the effects may vary by industry, sector and circumstances, so companies should pay close attention to the details and remain engaged throughout the legislative process.
Short- and long-term business planning should take into consideration timing, as some of the tax provisions are temporary, others phase out and some take effect in the future. For those in the clean energy space, for example, there will be a significant change in policy direction, and the timing of investment decisions could affect the cost of planned projects due to the elimination or phaseouts of incentives in the coming years.
For US multinational companies, the tax legislation likely means continuity and greater certainty about the future direction of US international tax policies. Permanent extension of the current tax rates on global intangible low-taxed income (GILTI), the deduction for foreign-derived intangible income (FDII) and the rates for the base erosion and anti-abuse tax (BEAT) are included in the legislation, lessening the possibility of less favorable rates that were otherwise scheduled to take effect in 2026. The legislation also includes tax increases aimed at eliminating or at least neutralizing “unfair foreign taxes.”
Business actions to consider
- Engage in modeling to determine the potential effects of different tax provisions on your company.
- For companies with significant cross-border activities, including foreign-headquartered companies, examine the new provisions that might impact decision-making in these operations.
- Determine whether and how any new or enhanced domestic business tax incentives might apply to your specific circumstances.
- Work across the organization to bring tax considerations into broader business planning discussions.
Trade policy – stepping away from multilateralism
Developments
Trade has been a prominent policy focus area for President Trump, with a shift away from multilateralism and the use of tariffs as a negotiating tool with individual countries. Administration announcements of tariff increases and retrenchments have led to swings in the stock market and uncertainty about the short- and longer-term economic impact.
Amid the ongoing tariff negotiations between the US and different countries, US markets may experience continued volatility. The unpredictable trade landscape could affect the costs of businesses with a presence in affected markets, and companies have been finding it challenging to predict future trade actions and countermeasures.
Business actions to consider
- Develop detailed models to map trade flows and costs to assess potential direct and indirect impacts on supply chains, transactions and investments.
- Assess and consider customs management alternatives.
- Any analysis here should also consider the tax impacts of changes under these models.
- Stay informed and monitor developments, as this is an area that can change quickly.
Immigration policy
Developments
Border security has been a cornerstone policy of President Trump, and the administration has initiated various activities around immigration and the deportation of residents who have entered the country illegally.
The result is likely to be higher levels of scrutiny for visa eligibility and issuance that may affect companies with employees in different countries and greater complexity around hiring processes for international employees. It also may lengthen the amount of time it takes for visa application approval and business travel authorization. Overall, there may be significant impacts on the mobility of employees of US MNEs across borders that could affect hiring, applicant pools and business travel trends.
Business actions to consider
- Review employee mobility and travel policies.
- Have a system in place for pre-assessing business travelers to make sure they have appropriate documents, to better manage risk, prepare for greater scrutiny, and comply with evolving immigration policies.
US positioning within global tax regime – forging a new path
Developments
Immediately upon taking office, President Trump rejected the idea of the US adopting the Pillar Two global minimum tax regime, and the administration has since underscored efforts to maintain its own separate international tax system. The administration has taken a position that the US’s international tax framework should coexist on an equal footing with Pillar Two and that US companies should not be subject to any foreign Pillar Two rule on income over which the US has taxing rights.
In his January 20, 2025 EO, President Trump directed the U.S. Treasury Department to notify the OECD that the commitments by the Biden administration related to Pillar Two have “no force or effect within the United States absent an act by Congress.” The administration has more recently clarified its position that the US intends to ensure its tax system maintains its sovereignty, and that the GILTI regime should exist “side-by-side” with the emerging Pillar Two system to address base erosion and profit shifting.
President Trump also requested that the U.S. Treasury Department and the Office of the United States Trade Representative investigate and report back on foreign countries that have tax rules that are extraterritorial or disproportionately affect American companies. Drawing upon previous legislative efforts, the tax reconciliation legislation includes a proposal to increase tax rates on US income of certain foreign persons that are tax residents in countries with an “unfair foreign tax” that is deemed discriminatory against US taxpayers, directly or indirectly. In this context, unfair taxes include an undertaxed profits rule, digital services tax, diverted profit tax, and other taxes as determined by the U.S. Treasury Department.
Business actions to consider
- Continue to monitor developments as discussions between the U.S. Treasury and other countries continue.
- Consider engaging with policymakers in countries in which your company operates.
- Seek out opportunities to collaborate with similarly situated stakeholders to provide input on ways to reduce complexity and increase certainty in the global tax arena.
The importance of business engagement in shaping policy outcomes
Businesses have an important role to play in educating policymakers about potential industry-specific and broader economic implications of policy changes. There will continue to be opportunities to communicate and provide perspectives that can help refine policies, elevate the discussion and shape outcomes. As tax legislation moves from the conceptual to the concrete and broader economic policy pieces begin to fall into place, businesses will want to understand the implications for their future activities and have a seat at the table as final decisions are being made. Business engagement is key to managing change in this rapidly evolving policy landscape.
