Tax policy will be on the 2025 agenda

Question: How might election results impact taxes and munis?

Ann Ferentino: While the result of the presidential election is clearly uncertain, one thing that is certain is that tax policy will be impacted by the results of the election. And this is because key provisions of the 2017 Tax Cut and Jobs Act, that was implemented under President Trump, are set to expire at the end of 2025. Key to this is what individuals pay in federal income tax rates. The TCJA reduced income taxes for individuals, across the board. Without action from Congress, these tax cuts will lapse at the end of 2025. Now as tight as the presidential election is, in terms of the outcome, the same is the case for the House and Senate. So really, tax policy will be influenced by who controls Congress. Regardless of who is in control of the House or Senate, without action from Congress, the tax system will largely revert back to this tax structure before the TCJA. Therefore, we fully expect that Congress will be hammering out new tax policy as the TCJA provisions lapse. With this, we expect that there could be many muni issues on the table. Of course, the tax rates for individuals and corporations, but also that cap on state and local deductions, the advanced refundings for tax-exempt debt that went away with the TCJA, and potentially even the tax exemption on municipal bonds could be in play.