Mastering Tax Policy Tracking: Tools for Public Affairs Professionals

Why track federal tax policy?

Tax policy is a cornerstone of government action, shaping the economy and impacting businesses and individuals alike. Monitoring tax policy developments empowers organizations to:

• Assess business impact: Understand how proposed tax laws might affect operations, profitability, and compliance.
• Advocate effectively: Equip lobbying and advocacy teams with timely, accurate information to engage policy makers.
• Mitigate risk: Prepare for potential risks associated with new or amended tax laws.
• Maintain a competitive advantage: Align business strategies with emerging tax regulations to stay ahead of competitors.

Given the high stakes, tracking tax policy developments isn’t optional – it’s a necessity.

Current tax policy developments to watch

Federal tax policy will be a top legislative debate in the 119^th Congress as lawmakers have to address expiring provisions of the 2017 Tax Cuts and Jobs Act (TCJA). The shift in the balance of power after the 2024 election has given Republicans control over the process, though a tax package could become wrapped up with other legislative fights, including the budget. While congressional Republicans are broadly aligned on extending the 2017 tax cuts, offsetting its costs – estimated to be $4.6 trillion over a decade – could prove difficult if lawmakers insist on doing so.

Tax changes can be passed without a Senate supermajority through the budget reconciliation process, meaning Democrats will likely have little say or leverage over negotiations. However, details of the tax deal could prove to be a sticking point between Congress and the White House, including its scale.

Public affairs professionals must stay informed about these developments to anticipate their impact on stakeholders and industries.

Corporate tax rates

A corporate tax rate cut could be a priority for the White House. While the TCJA permanently reduced the corporate tax rate to 21% from 35%, Candidate Donald Trump called for a further rate cut for domestic manufacturers, suggesting a 15% corporate tax rate for companies that make products in the U.S.

Congress could consider increasing the corporate tax rate to help offset other costs in a tax package. While this is unlikely in a Republican-led Congress, a large unpaid-for tax cut could face opposition from fiscal conservatives favoring balanced budgets. Some conservative lawmakers have said a corporate tax rate increase should be on the table in tax discussions.

Clean energy incentives

The Republican-led Congress may repeal the clean energy tax credits that were passed as part of the sweeping 2022 Inflation Reduction Act (IRA). While many Republicans have supported rolling back tax breaks for clean energy investments, those representing congressional districts that have benefited from those green energy investments may face a tough vote.

In particular, Congress could weaken the electric vehicle (EV) tax credit, which provides a $7,500 credit for purchasing a qualifying EV, either by repealing the EV tax credit through the reconciliation process or cutting funding for EV chargers and other infrastructure. However, some Republicans have warned against cutting clean energy tax credits supporting the U.S. manufacturing of EV batteries as a vast majority of new investments in EV manufacturing have been in Republican-held districts. But even without congressional action, the White House could issue rules to weaken the EV tax credit, in keeping with Trump’s campaign promises to roll back EV rules and incentives.

SALT deduction cap

The debate over the state and local tax (SALT) deduction cap is poised to intensify in 2025 as Republicans navigate a narrow House majority. The TCJA limited the tax deduction to $10,000, disproportionately impacting those congressional districts with higher taxes and property values, which tend to be dominated by Democrats.

Trump has pledged to repeal the SALT deduction cap during his second term. The SALT cap has also been criticized by Republican members of Congress from high-tax, Democratic-leaning states such as New York, who are pushing for adjustments including raising the cap or introducing means-tested deductions. With the cost of repealing the SALT cap predicted to be as much as $1.16 trillion, Congress is likely to look for a compromise by increasing the cap rather than eliminating it.

Global minimum tax

Efforts to implement the OECD’s global minimum tax framework would have significant implications for multinational corporations. However, Trump could withdraw from the OECD international agreement, which includes a 15% global minimum tax.

Child tax credit

The TCJA doubled the maximum child tax credit to $2,000 from $1,000. Without congressional action, the child tax credit would revert to $1,000 if the TCJA expires. However, there’s general bipartisan agreement to prevent the enhanced credit from expiring at the end of 2025.

A 2024 bipartisan tax package, the Tax Relief for American Workers and Families Act, negotiated by then-Senate Finance Committee Chair Ron Wyden (D-Ore.) and House Ways and Means Committee Chair Jason Smith (R-Mo.) may serve as a starting model for 2025 child tax credit provisions. The tax framework builds upon several TCJA tax provisions, including the child tax credit, the research and development (R&D) deduction, and bonus depreciation.

While Senate Finance Committee Chair Mike Crapo (R-Idaho) opposed the Wyden-Smith bill, he has said he’s open to increasing the maximum credit – however, pay-fors would continue to be a heated topic. House Speaker Mike Johnson (R-La.) has also suggested tying the child tax credit to a work requirement.

Challenges in tracking tax legislation

Monitoring tax legislation is a complex task. Key challenges include:

• The sheer volume of legislation: Thousands of bills are introduced in Congress each year, making it difficult and time-intensive to pinpoint relevant tax-related proposals.
• Legislative complexity: Tax laws often involve intricate details and cross-references to other laws and statutes.
• Timing: Updates to proposed legislation can occur quickly during active legislative sessions, requiring constant vigilance.
• Stakeholder coordination: Sharing updates with internal and external stakeholders in real time adds another layer of complexity.

Traditional methods such as manual research or basic news alerts can leave gaps in coverage and timeliness. Public affairs software offers a more effective solution.

How to choose the right legislative and policy tracking tools

When selecting public affairs software to track tax policy, look for features that align with your needs. Key considerations include:

• Ease of use: Look for tools with intuitive interfaces that are easy to navigate to reduce the learning curve.
• Customization options: Ensure the platform offers the ability to tailor alerts and dashboards to your specific tax policy interests and strategy needs.
• Scalability: Choose a solution that will grow with your organization’s requirements and scope of work.
• Support and training: Find a provider that offers robust customer support, including onboarding and training resources, so you can be sure to get the most out of the platform.