The New Administration’s 2025 Plan: the First 100 Days and What it All Means

With a new administration, there are a lot of questions left to be answered on economic policy. While seismic shifts are expected, the lack of clarity is leaving many businesses unsure on how to prepare for the coming year. There are, however, legislative things that we feel confident will happen.

For instance, we can safely predict that the Tax Cuts and Jobs Act will largely be extended, which will include a fix to the 174 R&D expense amortization requirement. Being prepared for this change early can potentially result in a six figure increase to a businesses bottom line.

Below we’ll lay out what else you can bank on when the new administration takes over.

Three Bills in 100 Days

Our Strategic Advisory Board has had conversations with high level policymakers across Capitol Hill since the election, and the legislative agenda is starting to come into focus. We are expecting three major bills in the first 100 days.

Spending Bill

The first bill will be a spending bill that will likely pass through reconciliation. The three pillars of the spending bill will be based on the border, energy policy and national security.

The first issue, immigration, was also a touchstone of the president-elect’s first term, and it’s something he has shown no intention of easing up on. Policy-wise, it will result in a heightened focus on border security, more scrutiny on visas, work permits, and visitors – and potentially even a large-scale deportation program. Any flux in the workforce – let alone an outright reduction – will mean a seismic shift in the ability to recruit and retain international talent.

Next is the reconfiguration of American energy policy. Though the country has for years now been a net exporter in primary energy, this will doubly ramp up under the new presidential agenda, due to decreased regulations, new drilling exploration, and energy-friendly changes to environmental policy. With a fresh slate of laws, companies in every adjacent industry will be reaping the benefits of lower energy costs and an economic stimulus injection. Such a boon will create newfound projects, more research programs for cutting-edge engineers and specialists, and exploratory projects in and around the industrial sector. The benefits of R&D are essential to staying competitive in this fast-moving field, providing increased opportunities in applied research, technology development, and new production methods.

Third is the realignment of America’s national security. Domestically, this translates to extensive changes in the military’s supply chain, with a focus on having things bought, produced, and manufactured here in America. It means a bigger piece of the pie for the American manufacturing sector, and a tighter, more US-centric supply chain for aircraft, vehicles, weapons, and all the different parts and parcels that help create these assets.

Extension of the Tax Cuts and Jobs Act

The second bill will be the much anticipated extension of the Tax Cuts and Jobs Act. This bill will also likely pass through reconciliation, and business owners can expect a continuation of the favorable tax policies the Trump administration passed eight years ago.

Leaders on the Hill largely expect a straight extension, and the prevailing view is that additional pay-fors will not be required. What this means is that Congress will not necessarily need to look for new means of offsetting the cost of the bill, which is expected to be in the $4-5 trillion range.

One immediate benefit is that businesses should expect that Section 174 will be fixed so that they can immediately deduct their R&D expenses, instead of having to amortize them over five years. Knowing this change is on the horizon should give business owners confidence to take advantage of unclaimed R&D credits, especially for credits that went unclaimed in 2021. Those credits are set to expire this upcoming tax season. Likewise, R&D credits can substantially reduce a business’s next quarterly estimated payment, but waiting for the bill to pass could be an unnecessary six figure expense.

Supplemental Tax Bill

The third bill will be a supplemental tax bill. We expect that this bill will have miscellaneous tax provisions outside that don’t necessarily fit neatly into the TCJA extension. There is less clarity on what all will go into this bill, but we do know it will likely include incentives for domestic manufacturing.

This could allow for businesses to receive not only the benefits of the R&D credit for activities related to product and process improvement, but also an additional benefit for fabricating domestically.

“WHY NOT WAIT FOR THE CHANGE TO COME TO ME?”

This incoming mandate will have a profound effect on America’s economic ecosystem, but especially for manufacturing, energy, and the workforce. With impending changes so widespread, every American business owner needs to be prepared and aware. Though the economy may be likely to remain strong, the benefits of this high tide won’t come without a readied vessel. All companies should be prepared to reinvest and recalibrate their business to accommodate these changes.

With so much on the horizon, companies must take full advantage of the tax-advantaged opportunities they have – while they still have them. Partnering with alliant means the guidance of five former IRS commissioners; it means access to the knowledge of former governors, senators, and cabinet secretaries; and it means centuries of combined experience at the highest levels of government, policy, and industry leadership. Most of all, it means someone has your back amidst a changing landscape and complex world. To learn more about how your business or industry might be affected, talk to an alliant expert today.