Lots of changes in Washington these days, obviously. And more to come due to new tax rules being kicked around in Congress. Here's an update on what is expected.

REPEAL THE FEDERAL INCOME TAX

Although there's plenty of talk about the IRS in the news these days, the reality is that Congress is mainly discussing what will and will not be included in the bill regarding the extension of soon-to-expire tax breaks. The repeal of the income tax is not on the table. So, for better or worse, it's here to stay.

CLOSE THE IRS

Similarly, there is a small group of Republicans, including Billy Long (Trump's pick to run the agency), who openly support closing down the IRS. However, there isn't enough real support from the rest of the group; they realize that the federal government needs an agency to handle tax collections. The IRS isn’t going away anytime soon.

IRS LAYOFFS

Trump’s goal is to cut IRS labor in half. We don’t really know how far he and Musk will go, but what we do know is that cuts will be made. It’s been my experience over time that what suffers most is service. It just becomes more difficult to get through on the phone. What it also means is that, in recent years, due to labor shortages, audit rates have dropped. This means that as more labor cuts are made, audit rates will drop even more.

TAX-FREE SOCIAL SECURITY

Another Trump goal is to end all taxes on Social Security payments. Right now, if your taxable income (not including MUNI income) is less than $50,000 annually, chances are you already pay almost zero tax. If your taxable income is above that, most people pay tax on up to 85% of the benefits received. It’s hard to say which way this will go, but given that the bulk of tax receipts on Social Security are designated to the Social Security Trust Fund, any changes in taxation, no matter how much bluster, will still need really tight review by the House Ways and Means Committee. Although it's a hot political issue, the reality is that Social Security exists—and, in my opinion, will continue—and it needs adequate funding, regardless of the politics and optics.

CAPITAL GAINS BASIS INDEXING

This is a new one. Right now, when you sell stocks or mutual funds, your cost basis is what you paid. Instead, it’s being discussed to increase your cost basis by a certain index, based on how many years you hold the position. This would mean your net gain could possibly be less than it is under current rules. Not much has been said by Trump on this; time will tell.e will tell.  Probably a long shot.

Hope this helps!

Hope this helps!