Wait-and-see mode – that was the prevailing consensus from a panel of financial professionals regarding the upcoming leadership changes in the executive branch.
On Jan. 14, the Northern Kentucky Chamber of Commerce hosted a government forum where wealth managers, tax professionals and estate planners shared their outlooks on how the incoming Trump administration could shape the United States fiscal environment over the next four years.
The event’s purpose was to explore how potential shifts in tax policy, legislative priorities, and economic strategies may impact businesses and citizens in Northern Kentucky.
“It can be devastating for your business owners, too, if they don’t already know the what ifs that could be coming, and that hard pivot, going back to the football analogy – that put that foot in the ground and be running instead of getting flattened by something you didn’t see coming,” Cinergy Wealth Life & Legacy Senior VP Patrick Roberson said.
One area that looms on the horizon is the expiration of several provisions from the Tax Cuts and Jobs Act, sometimes referred to as the ‘Trump Tax Cuts’, that passed in 2017. Panelist John Wood, a tax manager at Rudler, PSC in Fort Wright, warned that 41 provisions would sunset in 2026 if Congress doesn’t vote to extend them.
In Wood’s opinion, if some of the provisions are sunset, individuals and small businesses will experience higher tax rates overall.
“Due to the concerns of the deficit and slim (Congressional) majorities, I’m not sure I’d be optimistic that they’ll have a full permanent extension, as well as all of these tax provisions, will be extended in the in their current form – we’ll have to see,” he said.
One such deduction Wood mentioned is the Qualified Business Income Deduction for S-Corporations, which are corporations that pass on their taxable income, losses, deductions and credits to their shareholders for federal tax purposes.
Essentially, the provision allows S-corporations to deduct up to 20% of their qualified business income from their personal income tax returns.
The provision will expire at the end of 2025 unless Congress extends it beforehand. Wood said the expiration will adversely impact small—to medium-sized businesses.
“You’re getting 20% off the top from this deduction that goes away in 2026 and with that going away, that leads to some pretty significant tax increases for a lot of the small business clients that we work with,” Wood said.
The panel also discussed estate planning. Maggie Gibson, an estate planner at Katz Teller in Cincinnati, said it is important for business owners to take advantage of the doubled Federal Estate and Gift Tax Exemption before it expires in 2026.
“We want to use that higher exemption while it’s available,” Gibson said.
The Federal Estate and Gift Tax Exemption refers to the amount of wealth an individual or family can transfer during their lifetime as a gift or at death as part of their estate without being subject to federal estate or gift taxes. Under the Tax Cuts and Jobs Act of 2017, the exemption amount doubled and is also adjusted annually for inflation.
“It’s the highest it’s ever been is $13.99 million per person,” Gibson said. “A person can gift that amount or pass on that amount free of federal estate tax, but on 1/1/26, that’s going to reduce. The exemption amount will now be $7 million per person.”
Critics of the exemption argue that it disproportionately benefits wealthy individuals and families, allowing them to avoid paying taxes on unrealized capital gains.
Ultimately, Wood said he expected Congress to extend some expiring exemptions, although they may not be in their current form.
