Cameron Miranda
Tax laws are subject to change, and there is a lot of uncertainty surrounding them. In 2025, the U.S. House of Representatives Budget Committee circulated a memorandum with a list of potential budget proposals, including tax-related suggestions. These included repealing certain tax credits and deductions, such as the Green Energy tax credits and the SALT deduction. The FairTax Act of 2025 also proposed repealing the income tax and other taxes, replacing them with a national sales tax. The estate tax is another example of a tax law that has been considered for repeal due to its complexity and burden on taxpayers. However, the impact of repealing the estate tax on federal deficits could be an impediment. The future of tax laws is unpredictable, and it is challenging to determine the direction of changes.
| Characteristics | Values |
|---|---|
| Tax laws can be repealed | Yes |
| Tax laws can be reinstated | Yes |
| Tax laws can be amended | Yes |
| Tax laws can be complex and difficult to administer | Yes |
| Tax laws can be uncertain | Yes |
| Tax laws can be unpredictable | Yes |
| Tax laws can have far-reaching consequences | Yes |
| Tax laws can impact estate planning, will drafting, investment planning, etc. | Yes |
| Tax laws can be subject to political changes | Yes |
| Tax laws can be used to promote freedom, fairness, and economic opportunity | Yes |
| Tax laws can be used to increase the role of state governments in federal tax administration | Yes |
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What You'll Learn
Estate tax repeal
The Death Tax Repeal Act of 2025, introduced by Republican lawmakers in the House of Representatives and the Senate, aims to permanently eliminate the federal estate tax, also known as the "death tax". This tax, which affects a small percentage of taxpayers, has been branded as a burden on family farms, ranches, and small businesses, inhibiting the transfer of assets to children. The Act has gained support in the Senate and among House Republicans, but it is uncertain whether it will become law.
The estate tax is a complex and difficult area of taxation, and its repeal could have far-reaching consequences. If the estate tax is repealed, individuals would be able to transfer an unlimited amount of property at death without incurring tax. This would particularly benefit the wealthiest taxpayers, who would be able to pass on their fortunes to their heirs tax-free.
The repeal of the estate tax has been a long-standing goal of the Republican Party, and it was endorsed by former President Trump, who settled for increasing the exemption level during his administration. However, there is a possibility that a future Democratic administration could reinstate the tax. Additionally, the impact on already large federal deficits could be a hindrance to the repeal.
The Death Tax Repeal Act of 2025 also includes provisions for a permanent gift tax exemption of $10 million, adjusted for inflation, and the retention of the step-up in basis, which allows beneficiaries to minimize capital gains taxes on inherited assets. The passage of the Act would significantly alter the landscape of estate taxation and planning.
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SALT cap repeal
In the context of tax law, SALT stands for state and local tax. The SALT deduction allows taxpayers who itemize to deduct state and local taxes from their federal taxable income. The Tax Cuts and Jobs Act (TCJA) imposed an annual $10,000 limit on SALT deductions from 2018 through 2025, applied equally to individuals and married couples.
In January 2025, the U.S. House of Representatives Budget Committee circulated a memorandum containing a list of budget proposals that may be considered in connection with the new Congress's expected budget reconciliation legislation. The memorandum included a number of tax-related proposals, such as tariff proposals and the repeal of certain tax credits.
One of the tax-related proposals in the memorandum was the repeal of the SALT deduction for businesses and individuals. The SALT deduction is currently capped at $10,000 per tax filing, which has been criticized as a double taxation that disproportionately impacts middle-class and high-income families in high-tax states like New York, California, and New Jersey.
In response to the memorandum, Congressman Brad Schneider introduced bipartisan legislation, the SALT Deductibility Act, to fully repeal the SALT cap. The Act would amend Section 164(b) of the Internal Revenue Code of 1986 to repeal the limitation on the deduction of state and local property and income taxes. Supporters of the legislation argue that the SALT cap has resulted in unfair double taxation and has hurt families and communities in their districts. Repealing the SALT cap is expected to cost an estimated $1.2 trillion over ten years, according to the Committee for a Responsible Budget.
While there is support for repealing the SALT cap from both sides of the aisle, some fiscal conservatives have raised concerns about the cost and the potential impact on federal revenue and deficit reduction. It remains to be seen whether the repeal of the SALT cap will be included in any final tax legislation passed by Congress.
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Corporate alternative minimum tax repeal
Tax laws can be repealed, and this is often a complex and uncertain process. The repeal of a tax law can have far-reaching consequences, and it is challenging to predict the actions of each successive administration in terms of tax laws.
The Corporate Alternative Minimum Tax (CAMT) is a tax imposed on certain very large corporations with significant accounting earnings. It was first introduced in 1986 to address the issue of large firms paying little to no tax despite substantial profits. The CAMT was repealed in 2017 after undergoing numerous tweaks and reforms. However, the Inflation Reduction Act of 2022 reintroduced the CAMT with different rules. Now, there are proposals to repeal the CAMT again, which is estimated to cost $222 billion over ten years.
The CAMT has been criticised for creating economic inefficiencies, increasing tax burdens, complexity, and resulting in declining tax revenues. It requires corporations to calculate their income tax liability twice, once using the standard tax code and once using an alternative calculation, and pay whichever amount is larger. This process adds complexity and compliance chores for corporations.
The repeal of the CAMT is being considered as part of a broader set of tax proposals by the U.S. House Budget Committee in 2025. These proposals cover a wide range of policy areas and include other tax-related suggestions, such as changes to EV credits, "Green Energy" tax credits, and employee retention tax credits. The CAMT repeal proposal specifically suggests eliminating the 15% corporate alternative minimum tax outlined in IRC Section 55.
The potential impact of repealing the CAMT is uncertain, but it could result in a significant loss of revenue for the government, estimated at $222 billion over a decade.
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Employee Retention Tax Credit repeal
Yes, tax law can be repealed. In fact, there are several examples of tax laws being repealed, one of which is the Employee Retention Tax Credit (ERTC) repeal.
The ERTC was initially created to enable "Main Street" businesses to keep their staff employed during the COVID-19 pandemic. However, it has since become a target for fraud, with the IRS announcing that between 10% and 20% of claims showed "clear signs of being erroneous", while 60% to 70% showed an "unacceptable risk" of being improper. This prompted Senators Joe Manchin, Mitt Romney, and Thom Tillis to introduce the ERTC Repeal Act, which would prohibit the IRS from processing ERTC claims filed after January 31, 2024, and increase penalties for fraudulently claiming the credit. The bill could reduce deficits by up to $80 billion if enacted.
The ERTC Repeal Act was also introduced in the House by Representatives David Schweikert, Jared Golden, Mike Kelly, and Glenn Grothman. Schweikert explained that repealing the ERTC is a critical step towards addressing America's debt crisis and that it is past time to eliminate this fraud-ridden pandemic-era policy. He also noted that there is a 1.4 million return backlog, and moving the deadline up from April 2025 will enable the IRS to approve legitimate claims faster and deliver long-overdue refunds to small businesses, while also going after bad actors taking advantage of taxpayers.
It is worth noting that the ERTC Repeal Act is not the first attempt to address the issues with the ERTC. Before the introduction of the ERTC Repeal Act, the IRS put a moratorium on processing claims, and the bipartisan Tax Relief for American Families and Workers Act included the repeal of the ERTC and increased penalties for fraudulent claims. However, this Act failed to overcome a filibuster in the Senate.
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Federal income tax repeal
Tax laws can be repealed, and there is a precedent for this in the United States. The US House of Representatives Budget Committee has circulated a memorandum containing a list of budget proposals, including tax-related proposals. These proposals cover a wide range of policy areas and include tariff proposals, tax credits, and tax deductions.
One example of a tax repeal proposal is the FairTax Act of 2025, which seeks to repeal federal income taxes, payroll taxes, and estate and gift taxes. The Act also proposes to abolish the Internal Revenue Service and enact a national sales tax to be administered by the states. The stated purpose of the Act is to promote freedom, fairness, and economic opportunity. The Act argues that federal income tax retards economic growth, impedes international competitiveness, and reduces savings and investment.
Another proposal, circulated in January 2025, includes a list of tax-related suggestions, such as eliminating the SALT (state and local tax) deduction for businesses and individuals, repealing the corporate alternative minimum tax, and eliminating the tax-exempt status for hospitals.
The estate tax is also a frequent topic of repeal discussions, with some arguing that it is complex, difficult to administer, and ineffective at dampening wealth concentration. However, the impact of repealing the estate tax on federal deficits is a significant consideration.
The repeal of various tax credits and deductions is also under consideration, including the "Green Energy" tax credits under the Inflation Reduction Act, the Employee Retention Tax Credit, and the exclusion of interest on municipal and private activity bonds.
It is important to note that these are just proposals and may or may not become part of any future legislation. The only certainty in tax law is uncertainty, and it is challenging to predict what changes may be enacted by successive Congresses and administrations.
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Frequently asked questions
Yes, tax law can be repealed. For example, the FairTax Act of 2019 proposed repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national sales tax to be administered by the states.
Some examples of tax laws that have been repealed include the Internal Revenue Code of 1986, which related to estate and gift taxes, and the corporate alternative minimum tax.
Some examples of tax laws that have been proposed for repeal include the estate tax, the SALT deduction cap, and the "Green Energy" tax credits created under the Inflation Reduction Act.
