Trump Signs Sweeping Tax Bill Into Law, With Major Implications for Corporate Clients Worldwide

President Trump has signed into law a comprehensive tax reform package that permanently extends several expiring provisions of the Tax Cuts and Jobs Act (TCJA) and enacts key tax measures central to his 2024 reelection campaign. The legislation, signed during a July 4th ceremony at the White House, carries significant implications not only for individual taxpayers but also for corporate clients operating both within and outside the United States.

Key Provisions for Individuals
The law makes permanent several TCJA provisions previously set to expire, including lower individual income tax rates and an expanded standard deduction. It raises the state and local tax (SALT) deduction cap from $10,000 to $40,000. It also eliminates federal taxes on tip income and overtime pay for eligible workers, introduces a new senior deduction, and allows car loan interest deductions.

Qualified Small Business Stock (QSBS) Enhancements
Section 1202’s gain exclusion has been strengthened:

• Holding period increased from 3 to 5 years.
• Eligibility expanded to corporations with up to $75 million in assets (adjusted for inflation).
• Maximum gain exclusion raised to $15 million (also inflation-adjusted).
  These enhancements apply to stock issued after July 4, 2025.

Corporate Tax Changes
The legislation locks in the reduced 21% corporate tax rate and offers expanded incentives for domestic investment, including:

• Enhanced immediate expensing of capital investments.
• Broadened deductions for R&D expenses.

Multinational corporations face new challenges under tightened rules for profit shifting and offshore income. Key changes include:

• Higher minimum tax under revised GILTI rules.
• Tougher anti-base erosion measures.
• Enhanced FDII deduction to encourage exports.

International clients must now carefully navigate outbound payment rules and transfer pricing updates that could impact cross-border tax costs.

Impact on International Clients
Foreign companies with U.S. operations may see increased compliance burdens. New inbound investment restrictions and changes to withholding taxes could affect after-tax returns. The U.S.’s departure from the OECD global minimum tax framework further complicates international tax planning.

Fiscal Impact and Energy Policy Rollbacks
The Joint Committee on Taxation projects a $4.5 trillion increase in the federal deficit over the next decade. The law also rolls back several clean energy tax credits from the Inflation Reduction Act, drawing mixed reactions from lawmakers.

Implementation and Next Steps
The Treasury and IRS are already working on regulatory guidance. Corporate taxpayers, especially multinationals, should act now to review and adapt tax strategies, transfer pricing structures, and financing arrangements to align with the new rules.

Conclusion:
This sweeping legislation reshapes U.S. tax policy for the foreseeable future. While many provisions benefit domestic growth and competitiveness, businesses—especially those operating internationally—must prepare for a more complex and potentially costly tax environment.

Author:
Melinda Fellner, Partner
Email. fellner@clm.com,