The 2024 election is over, and Republicans won big. So what does it mean for your pest control company’s taxes?
Republican tax policies traditionally center around tax cuts to spur on economic growth. Given their strong stance on reducing taxes to stimulate the economy, the likely result of the election will be a variety of tax-related shifts.
Here is a partial list of provisions the PCO Bookkeepers & M&A Specialists team predicts will be affected.
The Tax Cuts and Jobs Act (TCJA) of 2017, passed by the last Trump administration, contained many provisions that are set to expire at the end of 2025, essentially rolling back to the prior rules. The major items that are set to expire but have gathered steam to either be extended or made permanent include the following.
Individual Tax Changes
Lower income tax rates: Most individual income tax brackets were lowered, resulting in lower tax bills for many. These lower rates will most likely become permanent
Increased standard deduction: The standard deduction nearly doubled, simplifying tax filing for many, which also reduced taxes. This component will most likely become permanent.
Increased Child Tax Credit: The child tax credit was increased, providing tax relief for families with children. As this measure has bipartisan support it will almost certainly be made permanent.
Limited State and Local Tax (SALT) deduction: The deduction for state and local taxes (including property and income taxes) was capped at $10,000, impacting taxpayers in high-tax states. President-elect Trump has argued for either removing the SALT cap or significantly increasing it.
Business Tax Changes
Lower corporate tax rate: The corporate tax rate was permanently reduced from 35 percent to 21 percent — a significant change intended to boost business investment and competitiveness. While this was a bold move and many argued that it provided less revenue to the government, those in business received great benefit. Because the Trump administration sees itself as very pro-business, I expect the rate to remain constant or even be lowered.
Pass-through business deduction: A new 20 percent deduction (section 199A) was created for income from pass-through businesses (like partnerships and S corporations), providing tax relief to many small business owners. I believe this deduction will be a no brainer to keep, especially because most small businesses are not set up as C corporations but rather pass-throughs, and this deduction gives a sort of parity to businesses that aren’t subject to corporate taxes.
Bonus depreciation: This provision allows businesses to immediately deduct a large percentage of the cost of new equipment. While it has stimulated investment, its high cost and potential for abuse might make it a target for modification or elimination. That said, I believe that this provision will stay intact or even be extended.
Estate Taxes
The TCJA significantly increased the estate tax exemption.
Before 2017, the estate tax basic exclusion amount was $5.49 million per individual.
The 2017 tax cuts doubled the basic exclusion amount to $11.18 million per individual. Due to inflation adjustments, the estate tax exemption has continued to increase. For 2024, it stands at $13.61 million per individual. It was scheduled to roll back to $7 million at the end of 2025.
This issue was a hot topic during the lead up to the election. With a Trump administration, the estate tax exemption will not only be preserved but may be extended. At a minimum, this means that an individual can leave an estate worth up to $13.61 million to their heirs without incurring federal estate tax. For married couples, this amount is effectively doubled to $27.22 million.
As a result of the recent Republican victory, tax policy is likely to undergo significant changes, with notable implications for individual, business and estate taxpayers. For higher-income earners, reduced tax rates and potential simplifications in the tax code could lead to lower overall tax burdens.
