The Legal Play Blog

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Previously we covered what taxpayers should plan for in light of the recent United States presidential election and its results. Of course, there’s much more to consider than just taxes, so this week we are considering the legal landscape in 2025 and what various business owners should expect going into the new year.

The Biggest Takeaway is That the Regulatory Environment is Going to Ease in Most Areas

One of the Trump campaign’s overarching themes was reducing the regulatory reach of the federal government. So far, comments from the incoming Trump administration suggest that it will follow through with slashing federal regulations.

Some industries and segments of the economy will feel this impact more than others. In particular, the energy and consumer finance industries will be on the front of this regulatory pullback.

The Biden administration’s relationship with oil and gas companies (federal land leasing for oil drilling, in particular) was a subject of discussion the previous four years. The Trump administration will likely roll back some of the regulations concerning federal land leasing requirements, making it easier for these companies to expand their oil and gas drilling and extraction operations.

Consumer finance is another industry that will probably see some regulatory easing with the new president. The Consumer Financial Protection Bureau (CFPB) has recently developed and put in place various regulations aimed at banks and lending institutions. These regulations limit certain fees that banks can charge their customers. The CFPB has also created similar fee-limiting regulations at airlines, capping what airlines can charge for certain services. While it isn’t clear what will happen to the regulations already on the books, it is probable that the CFPB will have less influence in regulating industries.

Overturning the Chevron Doctrine Will Also Have Regulatory Impacts

In fact, a notable Supreme Court decision came down earlier in 2024 that will steer the regulatory direction further.

The Chevron Doctrine, in place for more than 40 years, was overturned in June. This legal concept required courts to accept a federal regulatory body’s “reasonable interpretation” of the regulations they pass. In other words, the Chevron Doctrine required courts to give preference to the federal regulator’s perspective when making legal judgements.

Now that the Chevron Doctrine has been overturned, courts now have the latitude to interpret regulatory language as it sees fit, which may be in contradiction to what federal regulators intended. In effect, federal regulators will have less power to enforce their actions through the courts.

One Example of Regulatory Changes is with Nondisclosure Agreements and Covenants

It’s still too early to make firm predictions on what the legal landscape will look like in 2025 and what regulatory bodies will be targeted by the Trump administration. However, there is one example of what these changes might look like for business owners – nondisclosure agreements and covenants.

Non-disclosure agreements are made between employers and employees – typically new hires. They restrict what the employee may do with the inside knowledge they gain by working with the business. This includes trade knowledge, customer lists and other important company assets.

Non-disclosure agreements and covenants are a matter of debate because they can either be too restrictive (which makes it difficult for employees to work in the same industry if they leave the business) or too lax (which exposes the employer to significant risk). While campaigning, the Biden administration stated that it would make employer-employee non-disclosure agreements difficult to enforce – coming down on the employee’s side in this regard.

The Trump administration will likely take a different approach. Currently, covenant agreements are enforced at the state level and are therefore enforced differently all over the country. If the Trump administration does differ from the democrats in this area, it may keep the existing state-level regulations in place for non-disclosure agreements. As such, it’s important for employers and employees to check with their state’s restrictions on covenant agreements before authoring or signing the document.

The Legal Landscape in 2025 will Bring Changes, but a Trusted Attorney Can Help You Be Prepared

With a new executive in place and control shifting in the legislature, 2025 will be a year of transition and change. Many of these changes will be aimed at drawing down the regulatory strength to the federal government, which will have impacts on industry and the economy.

If you own a business or are planning on making a major life change in 2025 – like switching jobs or retiring – an experienced attorney can advise you on how to proceed and what to consider so you won’t be caught off guard in the new year.

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Election season is behind us. The U.S. has a new incoming president and likely a new tax philosophy for the country. That means it’s time for taxpayers to review their tax planning strategies and position themselves for potential changes to the tax code.

Starting in 2025, the Republicans will control the executive branch, along with both parts of Congress, albeit with a tight margin in the House that may be an obstacle to major tax-related changes. Regardless, there are certain policies that tax experts are preparing for, including the Hap May legal team.

The Tax Cuts and Jobs Act – What to Expect

During President Donald Trump’s first term in office, his signature tax-related piece of legislation was the 2017 Tax Cuts and Jobs Act (TCJA). The TCJA made many major changes to the tax code that are still in effect today, as most of the relevant provisions are set to sunset (expire) at the end of 2025. One provision that will remain is the corporate tax rate, which was permanently set to 21 percent following the TCJA’s passage.

However, if another tax bill isn’t passed prior to 2026, the following tax provisions are set to revert back to their 2017 standards:

• Estate taxes – The TCJA doubled the estate tax exemption from around $6-7 million to about $14.3 million. In other words, an estate owner can currently leave $14.3 million in assets from their estate to their heirs before estate taxes are assessed. If the TCJA provisions expire without a replacement, the estate tax threshold will return to its $6-7 million mark.
• State and local tax deduction (SALT) – The SALT deduction allows taxpayers to deduct a portion of their state and local taxes (such as property and sales taxes) from their federal income tax return.The TCJA imposed a $10,000 cap on the SALT deduction, lowering the amount that (typically wealthy) taxpayers could deduct from their federal income taxes. If the TCJA expires, this cap will be lifted.
• Marginal income tax rates – The TCJA made some slight but significant adjustments to marginal tax rate brackets. The top marginal tax rate in 2017, for example, was 39.6 percent, which the TCJA lowered to 37 percent. If the TCJA expires, tax rates will revert to the 2017 levels.
• Small business income deduction – The TCJA implemented a 20 percent tax deduction for qualified pass-through income. S-corporations, partnerships and sole proprietorships were the beneficiaries of this deduction, which will be eliminated with the 2025 TCJA sunset.
• Standard deduction – The standard deduction is the simplified flat deduction that most taxpayers take when filing taxes. The TCJA increased the standard deduction from $6,500 to $12,000 for individuals, and from $13,000 to $24,000 for those that are married and filing jointly. The TCJA also eliminated personal exemptions. If the TCJA expires, the deduction and personal exemption amounts would revert back.
• The Child Tax Credit – The Child Tax Credit was increased from $1,000 to $2,000 for each child under 17 in the household under the TCJA. The maximum refundable portion of the credit was increased from $1,000 to $1,400 per child and was indexed to inflation. Further, the TCJA increased the income limits before phasing out the Child Tax Credit. These are set to revert back to the 2017 standard once the TCJA sunsets.

It’s likely that with President Trump’s re-election the above provisions will be extended with the passage of a TCJA “part two” piece of legislation.

What Might Interfere with the Republican’s Post-Election Tax Approach?

There are reasons to believe that both parties would want to avoid a TCJA sunset. The provisions contained in the act benefits a number of constituencies, and allowing the TCJA to expire without an alternative would have potentially serious political blowback for Republicans and Democrats. As such, it’s safe to expect that a new tax law of some kind will be passed in 2025.

It’s also safe to expect that the new tax law will look a great deal like the old one – Trump has even said as much in interviews – but passing the law will mean overcoming a zero-room-for-error margin in the House. As some blue state Republicans may be interested in lifting the SALT cap (which would impact states with a high state or local income tax), there may be contentious negotiations ahead for Republicans behind the scenes.

If You Need to Update Your Tax Planning Tactics, Our Team Can Help

Although tax experts have a general idea of what the next four years will hold from a tax perspective, politics are unpredictable as a rule. That’s why if you’re reviewing your tax planning strategies, it’s best to do so with a tax planning expert. With a professional tax and business attorney providing guidance on your tax planning, you’ll be best positioned for 2025 and beyond.