The 2025 U.S. Presidential election is now history. However, the tax implications of it are just coming into view on the horizon and they could have a significant impact on freelance businesses and individual freelance business owners. 

Keep in mind that none of these changes are guaranteed, since they would need to have the approval of the House and Senate to be enacted into law. The price tag of the proposed tax cuts could significantly increase the national debt, which is already a major concern. 

It is worthwhile to consider the following breakdown of what to expect and how these post-election 2025 tax changes might affect you as you look ahead to tax planning for your freelance business. 

1.  The 2017 Tax Cuts and Jobs Act Tax Provisions Could Become Permanent

One of Trump's primary goals is to make the tax cuts introduced in the 2017 Tax Cuts and Jobs Act (TCJA) permanent. This includes maintaining lower individual income tax rates, wider tax brackets, and higher standard deductions. Without legislative action, these provisions are set to expire after 2025, reverting to pre-2017 levels.

2. Corporate Tax Rates May Be Lowered

Trump plans to further reduce the corporate tax rate, potentially dropping it to 15% for many C corporations. This move aims to stimulate business investment and economic growth by providing companies with more capital to reinvest in their operations.

3. The Child Tax Credit May Increase

Another significant change on Trump's agenda is increasing the child tax credit. The proposal includes raising the credit to $5,000 per child, a substantial increase from the current $2,000 per child. This change is designed to provide more financial support to families with children.

4. Green-Energy Tax Breaks May Be Eliminated

Trump has expressed intentions to eliminate many of the green-energy tax breaks introduced in the 2022 Inflation Reduction Act. This includes tax incentives for renewable energy projects and electric vehicles. The goal is to shift focus towards other economic priorities.

5. Say Good-bye to Obamacare Healthcare Subsidies

The plan from President-Elect Trump also includes ending the expansions to the Obamacare healthcare subsidies that were implemented in 2021 and 2022. These subsidies currently allow more people without affordable workplace health coverage to qualify for the premium tax credit for buying health insurance through the marketplace.

6. Eliminating Taxes on Income Derived from Tips 

Trump proposes making tips nontaxable. This change would allow employees to keep more of their earnings without the burden of additional taxes. If you derive income in this manner it may boost your income without raising your tax bill.

7. Making Overtime Pay Tax-Free

Trump has also proposed eliminating taxes on overtime pay, a move that could significantly benefit millions of American workers. This plan could potentially make any earnings from overtime work tax-free, providing financial relief to those who work beyond the standard 40-hour workweek. 

By exempting overtime pay from income tax, Trump hopes to incentivize additional work hours and boost overall productivity. However, this move would need to have approval and the impact on federal and even state tax revenue would need to be reconciled by the administration. 

Stay Tuned! Tax Changes Are Likely Ahead in 2025

As we approach 2025, it’s crucial to stay informed about these potential tax changes and how they might affect your freelance business and tax planning. Watch for updates as we learn more about how the election and other economic factors will impact the tax code next year and beyond.