President Trump has issued a budget proposal for fiscal year 2021. Among its provisions are an extension, through 2035, of the wealth transfer tax (i.e., estate, gift, etc.) cuts and individual income tax cuts contained in the 2017 Tax Cuts and Jobs Act.
The TCJA contained provisions that cut tax rates and made other changes to individual income tax rules; these provisions are scheduled to expire for tax years beginning before Jan. 1, 2026. The TCJA also increased the estate/gift tax exclusion to $11 million plus annual cost of living increases for estates of decedents dying and gifts made before Jan. 1, 2026.
President’s budget would extend TCJA provisions. The budget states that the administration supports the extension of the individual and estate tax provisions of the Tax Cuts and Jobs Act through 2035.
Other tax provisions in President’s budget:
The budget proposes $12.0 billion in fiscal year 2021 base funding for IRS. The budget provides $300 million to continue IRS efforts to modernize its information technology infrastructure and enhance taxpayers’ ability to interact with the IRS securely and electronically.
The budget includes funding to digitize more IRS communications to taxpayers so they can respond quickly and accurately to IRS questions; create a call-back function for certain IRS telephone lines so taxpayers do not need to wait on hold to speak with an IRS representative; and make it easier for taxpayers to make and schedule payments online.
The budget also proposes legislation enabling additional funding to expand tax enforcement. These additional proposed investments are estimated to generate approximately $79 billion in additional revenue at a cost of $15 billion, yielding a net savings of $64 billion over 10 years.
The budget also includes several compliance proposals, including: improving oversight of paid tax preparers; giving IRS the authority to correct more errors on tax returns before refunds are issued; requiring a valid Social Security Number for work in order to claim certain tax credits; and increasing wage and information reporting.