What Trump’s Tax Policies Could Mean for Your Business in 2025

How Trump-Inspired Tax Policies May Impact Your Business? 

With President Donald Trump back in office, tax and trade policies are front and center for business leaders. One of his first moves was signing an executive order to delay the 25% tariffs on products from Mexico and Canada covered under the USMCA agreement until April 2, 2025. It was a temporary relief for importers and manufacturers alike.

But tariffs are just one piece of the puzzle.

During his campaign, Trump outlined several tax proposals, and now that he’s back in the driver’s seat, those ideas are gaining traction, especially as parts of the TCJA begin to expire. 

• Trump’s campaign included multiple tax policy proposals, many of which are now gaining traction with him back in office.
• Key focus areas include the expiration of several TCJA provisions, which are influencing businesses’ plans for capital investments and workforce strategies.
  
• In a recent address to Congress, Trump’s tax cuts got broad support, pointing to their role in previous economic growth. He also proposed going further:

• Eliminating taxes on tips and overtime pay, and
• Making his prior tax cuts permanent.

 

Here’s a closer look at what’s on the table and what it might mean for your business decisions in the months ahead.

Business Tax Impact Analysis Based on Trump Tax Plan 2025

Several corporate tax provisions introduced under the TCJA are set to shift after 2025, potentially increasing tax burdens and federal budget resolutions for United States businesses. Key changes include:

• Bonus depreciation will continue at a reduced 20% rate through 2026, down from the original 100%.
• Interest deductions remain limited based on EBIT instead of the more generous EBITDA.
• R&D expenses must be amortized over five years (15 for foreign), eliminating full upfront standard deductions.
• The GILTI and FDII deductions will shrink, tax increase on foreign income and exports.
• BEAT rates for multinational corporations will increase, adding pressure on cross-border payment structures.

Corporate Tax Provisions: Then vs. Post-2025

Provision	Under TCJA (Pre-2025)	Post-2025 Rules
Expensing (Bonus Depreciation)	100% expensing through 2022, then phased down 20% annually	20% expensing continues through 2026
Interest Deduction – Section 163(j)	Deduction based on EBITDA until 2021	Deduction based on EBIT from 2022 onward
R&D Costs – Section 174	Full deduction allowed before 2022	Must amortize over 5 years (15 for foreign)
GILTI Deduction	50% deduction (Effective tax rate: 10.5%)	37.5% deduction (Effective tax rate: 13.125%)
FDII Deduction	37.5% deduction (Effective tax rate: 13.125%)	21.875% deduction (Effective tax rate: 16.4%)
BEAT (Minimum Tax on Cross-Border Payments)	10% (11% for banks and dealers)	12.5% (13.5% for banks and dealers)

20% Expensing Through 2026

In his recent address to Congress, President Trump strongly signaled that tax relief for manufacturers and producers is high on his agenda. One of the standout proposals is bringing back full expensing for business investments and making it retroactive to January 20, 2025.

Here’s what that means in plain terms.

• Under the TCJA, 100% bonus depreciation was allowed through 2022 but has decreased since 2023.
• Without legislative action, the current expensing rate is 40% for 2025 and will decline to 0% by 2027.
• Full expensing could significantly benefit capital-intensive industries, especially manufacturing, by improving cash flow and accelerating investment.
• While it carries a fiscal cost, supporters argue it would boost long-term economic growth through reinvestment and job creation.
• If this policy is restored, 2025 may be an ideal time for businesses planning large capital purchases to act.

EBIT Rather Than EBITDA Policy

One of the more technical but important tax changes on the radar for 2025 involves how businesses deduct interest expenses. In 2018, the TCJA introduced limits on how much interest a business can deduct, and those limits became even tighter starting in 2022.

• Before 2022, the cap was based on EBITDA, allowing more generous deductions.
• Starting in 2022, the limit shifted to EBIT, excluding depreciation and amortization, tightening the cap significantly.
• This change has placed greater pressure on capital-intensive companies, restricting cash flow and increasing the cost of borrowing.
• A return to EBITDA-based calculations is gaining support. Trump is backing this shift as part of broader tax reform.
• The House has proposed $4.5 trillion in new tax cuts, potentially including this adjustment.
• If restored, EBITDA-based deductions could offer more flexibility for companies with high debt or expansion plans.

Ongoing discussions in Congress may determine whether this change will be included in a comprehensive tax bill later in 2025.

R&D Expenditures 

Thanks to changes under Section 174, companies have been required to spread out their R&D expenses over five years or 15 years if the work was done overseas from 2022. This shift meant no more immediate tax deduction for research costs, putting pressure on cash flow, especially for innovation-heavy firms.

But change could be coming soon.

• There is growing support in Congress and the federal government for repealing the amortization rule and reinstatement of full expensing of R&D costs.
• The proposed change could enhance Section 41 R&D tax credits, making innovation more financially rewarding.
• The House aims to pass a full reconciliation bill by April 2025, with a draft expected mid-spring.
• If successful, the bill could reach President Trump’s desk by August 2025 or later, depending on Senate negotiations. Example impact:

• Under current rules: $10M R&D = $1M deduction in Year 1 → $810K tax benefit
• With full expensing: $10M deduction upfront → $2.7M tax benefit
  

• This potential change could boost cash flow and reduce tax burdens for innovation-driven businesses.
• Companies should consider accelerating eligible R&D activity into 2025 to lock in potential savings.

Global intangible low-taxed income (GILTI)

If you’re a global business, the tax conversation is getting more complex, especially with the mix of U.S. tax foundation rules and global agreements like the OECD’s Pillar 2 framework. Let’s break down what’s happening and why it matters.

First, there’s, short for. Currently, U.S. corporations can deduct 50% of their GILTI, which reduces the tax rate to 10.5%. 

• Under the current GILTI (Global Intangible Low-Taxed Income) rules, U.S. corporations can deduct 50% of their GILTI, resulting in a 10.5% effective tax rate.
• Starting in 2026, that deduction will drop to 37.5%, increasing the effective rate to 13.125%, a notable economic effects for companies earning abroad.
• Meanwhile, OECD’s Pillar 2 framework is being adopted globally. It ensures multinationals pay at least 15% tax in every country they operate.
• Pillar 2 introduces “top-up taxes” for lower-interest jurisdictions, aiming to shut down profit shifting and base erosion.
• The U.S. has not aligned GILTI with Pillar 2, and current rules don’t meet OECD’s minimum standards, putting U.S. firms in a unique position.
• In a recent executive order, President Trump made it clear:

• The U.S. won’t honor prior commitments to the global tax deal without congressional approval.
• Treasury has been asked to investigate retaliatory options if foreign tax rules disproportionately impact U.S. companies.

Even without U.S. participation, Pillar 2 will still affect U.S. multinationals operating in countries that adopt it. Companies with international exposure should start assessing how future GILTI changes and global tax pressures could reshape their tax strategy.

Foreign-Derived Intangible Income (FDII)

Foreign-derived intangible Income, or FDII, applies more broadly to income earned from selling products or services to foreign customers, even if the assets involved are tangible. 

• Under Trump tax law, companies can deduct 37.5% of their FDII, reducing the effective tax rate to 13.125%, giving U.S. exporters a competitive edge.
• Starting in 2026, the deduction drops to 21.875%, bumping the tax rate to 16.4%, a noticeable increase for businesses with international revenue streams.
• President Trump supports preserving TCJA provisions, including FDII, and there’s a real possibility of the current deduction being extended.
• However, competing legislative priorities and the rising global influence of the OECD’s Pillar 2 minimum tax may limit the benefits exporters, especially multinationals operating in high-compliance jurisdictions, can retain.
• That makes 2025 a critical planning window: accelerating FDII-eligible income into this year could lock in permanent local tax savings before the rate shifts.

If your company sells globally, this is a good time to revisit your tax strategy and consider how the changing rules could impact your bottom line.

Base Erosion and Anti-Abuse Tax (BEAT)

If you’re part of a multinational business making payments to foreign affiliates, you’ll want to monitor the Base Erosion and Anti-Abuse Tax, or BEAT, especially with changes coming in 2026.

BEAT was introduced under the Tax Cuts and Jobs Act to discourage U.S. corporations from shifting profits abroad through deductible payments like interest, royalties, or service fees to related entities in low-tax countries. 

Instead of letting those deductions reduce taxable income, BEAT is a kind of alternative minimum tax calculated on a modified income base under Trump’s agenda.

Current BEAT rates:

• 10% for most corporations
• 11% for banks and securities dealers

From 2026, those rates will increase to:

• 12.5% for general corporations
• 13.5% for financial institutions

Not every company is affected. BEAT mainly targets larger corporations. Those with average annual gross receipts over $500 million and who make a certain percentage of deductible payments to foreign affiliates. 

The rules use an aggregation method, meaning your entire corporate group is considered when determining whether you meet the thresholds.

With rate hikes ahead, U.S.-based multinationals should start reviewing:

• Intercompany payment structures
• Transfer pricing policies
• Tax planning strategies

As international tax rules evolve, BEAT remains a key part of the U.S. effort to keep profits and tax revenue onshore.

Get Ahead of 2025 Tax Shifts with The Pun Group by Your Side

Trump’s return to office brings renewed momentum for his signature tax policies—just as key TCJA provisions are set to expire. If you’re running a business, especially one with foreign operations, major investments, or R&D expenses, these upcoming tax changes could increase your costs unless you plan ahead.

At The Pun Group, we help businesses stay ahead of tax policy shifts with flexible, forward-looking strategies. Whether it’s adjusting for BEAT, maximizing expensing, or navigating global tax pressures like GILTI and FDII, our team offers the insights and tools to protect your bottom line—and unlock new value.

Next Steps for Business Owners and Financial Leaders:

1. Evaluate your 2025 capital investments and R&D spending to see if accelerating them before deduction rules tighten makes financial sense.
   
2. Review your international tax exposure, especially if BEAT, GILTI, or FDII changes could raise your effective tax rate or disrupt current strategies.
   
3. Book a strategy call with The Pun Group to build a proactive tax plan tailored to your risk profile, cash flow goals, and industry challenges.

There’s still time to plan before the rules change—don’t wait until it’s too late. Reach out to The Pun Group today and make 2025 a year of smart, strategic moves.

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