Many new presidential administrations bring changes to tax law, but the current one’s gotten the ball rolling sooner than most. To have action on international tax law “literally within the first hour” of a new term, as we saw happen last week, is, in the words of PwC US national tax office co-leader Pat Brown, “unprecedented in my lifetime.”
But as PwC US tax leader Krishnan Chandrasekhar noted, part of tax leaders’ job is to “curate” new tax laws to “provide clarity” for organizations. In that spirit, PwC tax experts, speaking at the firm’s 2025 Tax Policy Media Breakfast last week, shared their predictions for what we’ll see in terms of tax this year:
TCJA extensions are a shoo-in. The new administration will be highly motivated to pass extensions for the provisions of the Tax Cuts and Jobs Act (TCJA) before they expire on December 31, Rohit Kumar, PwC US national tax office co-leader, said. The “Republican trifecta” of the president, the Senate, and the House “is not going to allow those tax cuts to expire,” he noted.
What is in question is the timing of the extensions, and that depends on whether they’re included as part of one big bill alongside border security, energy, and other provisions, or whether they get a separate bill of their own. If Republicans opt to make TCJA extensions part of a broader bill that includes other issues, we’ll see action on it by September 30, when the 2025 fiscal year ends, Kumar said. Republican leaders are leaning toward this one-bill approach and hope to take action on it by the end of May, PwC wrote in its 2025 Tax Policy Outlook.
If Congress chooses to do a border security bill first and a TCJA extensions bill later, Kumar said he’d “be very surprised if the tax [bill] got done before…that lovely Thanksgiving end-of-year period.” This two-bill approach is less likely to happen, he said, as both would be reconciliation bills that are procedurally onerous to pass.
Kumar predicts that Republicans will try for either a four-year or a six-year extension of the expiring provisions. There’s a possibility they’ll attempt to make the provisions permanent, he said, but that’s unlikely as they’d need a majority of both chambers to vote for it.
No taxes on tips: Trump has proposed to eliminate taxes on tipped income. That measure is likely to move forward, Kumar said, as it “has the virtue of being very popular” with voters while being “less expensive” to implement. Congress generally supports the measure, according to PwC’s report, though lawmakers observe that any legislation around it would need to be drafted carefully to prevent “unintended tax avoidance” and keep costs down.
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Pillar Two will crumble (at least in the US): Many countries have implemented the OECD’s Pillar Two, which levies a global minimum tax of 15% on multinational companies. The EU has directed all its member states to adopt Pillar Two. But in the US, the legislation has faced opposition from Congress, who argue that it’s detrimental to US businesses and undermines the US’s sovereignty in developing its own tax policy, Brown said.
President Trump echoed these sentiments in two executive orders released this week. The first requests that the secretary of the Treasury and the US permanent representative to the OECD tell the OECD that “Congress and Congress alone makes tax policy for the United States, and Pillar Two has no force in effect in the United States unless it’s adopted by Congress,” Brown said. It also asks the Treasury secretary to look into what options the US has if it finds “other countries are violating US tax treaties or imposing discriminatory taxation on US companies,” he added.
The second order, among other directives, asks the secretary of the Treasury, the secretary of commerce, and the US trade representative to investigate the possibility of applying Section 891. This never-before-used provision of the tax code, drafted in the 1930s, authorizes the president to double tax rates on countries that are imposing “extraterritorial or discriminatory taxation measures on the United States,” Brown said.
Brown believes that the US will remain in the OECD and work within its processes to make changes to any legislation. “Everything that I have gotten indications of,” he said, “suggests to me very strongly that we are headed toward a series of discussions in which the United States will say,” perhaps backed up by changes to the tax code, “‘we’re going to need to see some changes here, and let’s have a conversation.’”
US Republican lawmakers, he said, seem to hold the position that the US should be exempt from the GMT. He characterized it as “We’re going to do what we’re going to do, and you are going to make sure that our choices in the international tax area are fully compatible with what you are otherwise doing.”