Post-Election Analysis: What a GOP White House and Republican-Controlled Senate and House Mean for Key Tax Incentives

Navigating the Shifts: How GOP Control Could Shape Key Tax Incentives and Opportunities

With President-elect Trump securing the White House, the GOP controlling the Senate, and very likely the House, there are significant tax policy implications on the horizon, especially regarding key incentives and the 2017 Tax Cuts and Jobs Act (TCJA). Here’s an analysis of expected outcomes for critical tax incentives:

R&D and Section 174 Deduction

With a GOP-led government, we expect a stronger push to renew the TCJA tax cuts, potentially well ahead of the 2025 expiration date, and even before the upcoming spring tax deadline. Here’s what that could mean:

• Sec. 174 Fix Could be on the Table: Section 174, which currently mandates amortizing domestic R&D expenses over five years, could see a reversal bundled with other tax cut renewals. With GOP resistance to associating a win with Democrats removed, there’s heightened likelihood of movement on this issue.
  
  
• Early Action Expected: Trump’s administration is likely to aim for quick wins, which could position changes to be enacted within the first quarter of 2024.
  
  
• Strategic Action for Companies: Given the possibility that any restoration of 174 may not be effective for tax year 2024 filings, companies should focus on maximizing eligible R&D Tax Credits and carefully examining Sec. 174 expenses to avoid overstating these costs.
  
  

Green Energy Incentives: Sections 179D and 45L

Incentives like 179D (Energy Efficient Commercial Buildings Deduction) and 45L (Energy Efficient Home Credit) are expected to remain available for 2024 tax filings. However, GOP control could signal potential adjustments in future years:

• Potential Adjustments to the IRA: Trump has signaled intentions to repeal portions of the Inflation Reduction Act (IRA), though 179D and 45L would likely be spared from major changes due to their popularity. Instead, we may see adjustments to the new prevailing wage and apprenticeship requirements rather than a full repeal.
• Act Now: Businesses should consider these deductions for their 2024 filings while they remain fully available, as any significant legislative overhaul would be unlikely to impact this tax year.
  

Other IRA Incentives: Section 48 and 45X

Similar to 179D and 45L, the 48 Energy Credit and 45X credit are expected to remain available for 2024 filings, though future adjustments could be on the table as part of a broader IRA reconsideration.

Cost Segregation

With anticipated tax adjustments, we will closely align cost segregation strategies to reflect the latest policies and maximize client benefits under a GOP-led administration. Although at this point in time, we do not anticipate any changes to cost segregation.

Employee Retention Tax Credit (ERTC)

The GOP is likely to continue efforts to combat fraudulent ERTC claims, with the IRS stepping up audit and compliance activities through its increased budget. The GOP could rely on increased IRS enforcement of ERTC claims as an avenue to help fund other tax cuts. Expect intensified oversight on these claims.

Key Takeaway

With President-elect Trump and the GOP at the helm, companies should capitalize on current tax incentives while preparing for potential legislative shifts. We’ll continue to provide timely updates and strategic guidance to help you optimize your tax savings under the evolving landscape.

About ABGi USA

ABGi USA is a leading tax consulting and business solutions provider specializing in 179D Tax Deductions, 45L Tax Credits, R&D Tax Credits, Cost Segregation, Executive Recruitment, Fractional HR & HR Consulting, Recruitment Process Outsourcing (RPO), and more.

With a proven track record of driving results for CPA firms and clients across industries, ABGi USA leverages its expertise to help clients optimize financial strategies and achieve business goals. Founded in 1985, ABGi operates in 10 countries, including the UK, France, Canada, and Brazil, and is committed to delivering innovative, customer-focused solutions that empower businesses to thrive.

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