Month: August 2025

Proposing a New Corporation Tax Rate of 15%

In late 2024 and early 2025, former President Trump proposed further reducing the corporate tax rate, potentially to 15% for companies manufacturing products domestically. 

Here’s some additional context regarding the current U.S. corporate tax rate and Trump’s proposals:

  • Current Rate: The federal corporate income tax rate is currently 21%, a flat rate established by the Tax Cuts and Jobs Act (TCJA) of 2017. Before the TCJA, the top corporate tax rate was 35%.
  • Trump’s Previous Tax Cuts: In 2017, the TCJA lowered the corporate tax rate from 35% to 21%.
  • Proposed 2025 Changes: Trump has proposed a further reduction in the corporate tax rate, possibly to 20% for all companies.
  • Targeted Rate for Domestic Manufacturers: His proposal specifically targets a 15% rate for companies that manufacture goods within the U.S., according to Cherry Bekaert. This is intended to incentivize domestic production and create jobs.
  • Reintroduction of DPAD: This policy could also involve reintroducing a modified Domestic Production Activities Deduction (DPAD), which would effectively lower the rate for domestic manufacturers to 15%. This deduction was previously eliminated under the 2017 tax law.
  • Fiscal Impact: While the 15% rate is proposed specifically for domestic manufacturing, a general cut to 15% for all corporations would have a significant impact on revenue, estimated between $460 billion and $675 billion through FY 2034. The more targeted approach would have a smaller fiscal impact. 

It is important to note that these are proposed changes and their enactment depends on future legislative actions. 

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NEW SALT (State and Local Tax) deduction cap

President Donald Trump signed the “One Big Beautiful Bill Act” into law on July 4, 2025.
This new legislation significantly changes the State and Local Tax (SALT) deduction cap for individual taxpayers.


Here’s a breakdown of the new SALT deduction cap:
Increased Cap: The SALT deduction limit has increased from $10,000 to $40,000 for tax year 2025.
Income Threshold and Phase-out:
The full $40,000 deduction is available to households with a Modified Adjusted Gross Income (MAGI) of $500,000 or less ($250,000 for married couples filing separately).
-For those with MAGI exceeding these thresholds, the $40,000 cap is gradually reduced at a 30% rate, meaning the deduction decreases by 30 cents for every dollar over the limit.
-The deduction never falls below $10,000, even for the highest earners.
MAGI is calculated by adding back certain components to your Adjusted Gross Income (AGI), such as foreign earned income and housing costs.
*For example, if your MAGI is $550,000, you exceed the $500,000 threshold by $50,000. The deduction is reduced by 30% of $50,000 ($15,000), leaving you with a $25,000 SALT deduction ($40,000 – $15,000).
Households with MAGI above $600,000 are limited to the $10,000 SALT deduction.
-Annual Adjustments: The SALT cap and the income thresholds for the phase-out will increase by 1% annually through 2029.
Sunset Provision: The higher SALT deduction cap is temporary and is scheduled to revert to the $10,000 limit in 2030, according to SmartAsset.com.
-Important Considerations:
Itemization: You must itemize your deductions to claim the SALT deduction. If your itemized deductions (including SALT) do not exceed the standard deduction, it’s more beneficial to take the standard deduction.
Benefits: The increased SALT cap will primarily benefit individuals and families in high-tax states with incomes at or below $500,000. Many low- and middle-income households may find that the increased standard deduction is still more advantageous.


“SALT Torpedo”: Tax experts are warning of a potential “SALT torpedo” or artificially high tax rate for individuals with MAGI between $500,000 and $600,000, as the deduction phases out rapidly in this range.
Business Taxes: The changes to the SALT deduction generally do not apply to businesses. According to Optima Tax Relief, businesses may continue using existing deduction rules or state workarounds, such as Pass-Through Entity Taxes (PTETs).

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