Trump Administration Signals Possible Corporate Tax Hike to Offset Other Cuts

As part of its broader tax reform strategy, the administration is reportedly considering changes to the corporate tax rate, revisiting the hallmark provision of the 2017 Tax Cuts and Jobs Act (TCJA) that reduced corporate taxes to 21%.

While no final decision has been made, White House Press Secretary Karoline Leavitt recently confirmed that President Trump is open to adjusting the corporate rate to help fund new proposals aimed at exempting overtime pay, tips, and possibly Social Security benefits from federal taxation.

This development could significantly reshape the tax landscape for U.S. businesses and has sparked early concern among corporate leaders, investors, and tax professionals.

Why the Corporate Tax Rate Is Under Review

The current 21% corporate tax rate was a centerpiece of the 2017 tax overhaul, intended to make U.S. businesses more competitive globally. However, the administration’s latest tax priorities—including permanent extensions of expiring TCJA provisions and proposed income tax exemptions—may require alternative revenue sources to maintain fiscal balance.

By increasing the corporate rate (possibly to 24–26%), the administration could offset:

• Revenue lost from exempting overtime and tips

• Expanding deductions or credits for small businesses

• Increased federal spending on infrastructure and energy

  
  

Potential Impacts of a Corporate Tax Increase

1. Reduced After-Tax Profits for C Corporations

Publicly traded corporations and large private C corps would face higher federal tax bills, potentially lowering after-tax earnings.

2. Increased Scrutiny of Business Structures

Firms may reconsider how they’re structured—potentially opting for pass-through models (LLCs, S-corps) to avoid higher corporate rates if those remain untouched.

3. M&A Slowdowns

Higher tax costs could reduce stock buybacks, and affect decision-making on mergers and acquisitions.

What Business Owners Should Do Now

Although no changes have been finalized, now is the time to review your corporate structure and tax exposure. If your business is a C corporation, consider:

• Forecasting tax impacts of a potential 3–5% rate increase

• Reassessing entity structure for tax efficiency

• Coordinating with your CPA or financial advisor to prepare for midyear tax planning updates

How Bizora Can Help

At Bizora, we help businesses navigate complex and evolving tax regulations with clarity and compliance. Whether you’re:

• Re-evaluating your corporate tax strategy

• Considering entity conversion

• Planning around federal and state-level changes

—we offer support tools and personalized guidance to help you stay ahead.

Prepare Now for What May Come

As the Trump administration outlines its fiscal priorities, business owners should prepare for potential shifts in corporate tax policy. Proactive planning today can help you minimize disruption and maximize after-tax performance tomorrow.

Explore entity strategy, tax forecasting, and advisory support at bizora.ai.