House lawmakers are using former President Donald Trump’s own words as leverage to pressure their colleagues into preserving the original state and local tax deduction, with a fight set to take shape next year.

The SALT deduction allows tax payers to deduct up to $10,000 of property, sales or income taxes that have already been paid to state and local governments. Historically, most of the tax payers who claim the deduction reside in high tax states such as New York, Connecticut, New Jersey and California.

But the cap on SALT became law when Trump was president and after he signed his $1.5 trillion tax bill in 2017, using the new version of the deduction as a pay for method. There was no cap on SALT prior to the Trump tax bill.

House lawmakers are now strategizing how to maintain what could be an unlimited SALT tax deduction in the next Congress, as the SALT cap provision from the Trump tax bill is set to expire on Dec. 31, 2025.

If Trump becomes president again, and Republicans have a majority in both the House and Senate, some House Republicans are pushing their party’s leadership to look at alternative payment methods for Trump’s tax plan, which includes cutting the corporate tax rate from 21% to 15%, according to Rep. Andrew Garbarino, R-N.Y.

Some of those recent conversations have featured Trump’s new stance on bringing back the full SALT deduction, despite his bill being the cause for the $10,000 cap.

Garbarino said he, along with Reps. Anthony D’Esposito, R-N.Y and Nick LaLota, R-N.Y., met with House Ways & Means Committee chairman Jason Smith, R-Mo., as recently as Tuesday on Capitol Hill about the need to restore the full SALT deduction.

During the meeting, the three New York Republicans pointed to Trump’s promise in a social media post to “get SALT back” if he were to become president as a way to encourage Smith to stay away from making any major alterations to the SALT deduction once it expires late next year. House Ways & Means is responsible for helping write and pass tax legislation.

“He [Trump] wants it back,” Garbarino told CNBC in an interview about how they made their recent pitch to Smith.  The House Ways & Means chair “said ‘look guys, we are looking at all [pay for] options,'” Garbarino said.

Rep. Young Kim, R-Calif., told CNBC in a statement that the SALT cap is “hurting” her constituents and said Trump’s most recent take on SALT shows he’s listened to “Americans across the country hurting from the SALT cap.”

“We’ll be sure to have a seat at the table during discussions for the 2025 tax package,” Kim said, pointing to lawmakers in SALT reliant states who also want to maintain the original deduction next Congress.

Garbarino said he estimates there are at least a dozen House Republicans who won’t support a tax bill with a SALT cap at $10,000 and, at a minimum, will fight for the cap to be at a much higher level.

Some House Democrats have their own plans to bring back and keep the standard SALT deduction after the cap expires, according to Rep. Josh Gottheimer, D-N.J.

The New Jersey House lawmaker said in an interview with CNBC he wants to see the SALT cap expire in 2025 and if Democrats and Republicans from states which rely on the full SALT deduction prove to be critical votes in the House, they’ll stand in the way of legislation that maintains the cap.

“I would just say if you have a five seat Democratic majority, we will have enough people from SALT states to put the full deduction back in place and lower taxes for middle class families,” said Gottheimer. “It will be a battle.”

If you’ve inherited a pretax individual retirement account since 2020, you could face a sizable tax bill without proper planning, experts say. 

Previously, heirs could take inherited IRA withdrawals over their lifetime, known as the “stretch IRA.”

However, the Secure Act of 2019 enacted the “10-year rule,” which requires certain heirs, including adult children, to deplete inherited IRAs by the 10th year after the original account owner’s death.

But waiting until the 10th year to make IRA withdrawals “could mean sitting on a tax bomb,” said certified financial planner Ben Smith, founder of Cove Financial Planning in Milwaukee.    

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Pretax IRA withdrawals incur regular income taxes. The 10-year rule can mean higher yearly taxes for certain heirs, particularly for higher earners with bigger IRA balances.

Shortening the 10-year withdrawal window can compound the issue, experts say.

Larger withdrawals can significantly boost your adjusted gross income, which can have other consequences, such as higher capital gains tax rates or phaseouts for other tax benefits, Smith said.

For example, Smith has seen people lose eligibility for the electric vehicle tax credit, worth up to $7,500, by taking a large inherited IRA withdrawal in a single year.

Since 2019, there’s been confusion over whether certain heirs needed to take yearly withdrawals, known as required minimum distributions, or RMDs, during the 10-year window. 

After years of waived penalties, the IRS finalized RMD rules for inherited IRAs in July.

Starting in 2025, certain beneficiaries — heirs who are not a spouse, minor child, disabled, chronically ill or certain trusts — must begin taking yearly RMDs from inherited IRAs. The RMD rule applies if the original account owner reached their RMD age, or “required beginning date,” before death.

Starting in 2020, the Secure Act raised the required beginning date for RMDs to age 72 from 70½. But Secure 2.0 enacted two increases: RMDs beginning at age 73 starting in 2023, and age 75 in 2033.

Even if RMDs aren’t required, heirs should still consider spreading out inherited IRA withdrawals, experts say.

“If you decide not to take a distribution from an inherited IRA in a year and it continues to grow, the tax bill increases right along with it,” according to CFP Carl Holubowich, principal at Armstrong, Fleming & Moore in Washington, D.C. “That money will be taxed at some point, it’s just a matter of timing.”  

Some heirs may consider bigger inherited IRA withdrawals in lower-income years during the 10-year window or other tax-planning strategies, experts say.

Individuals may also consider future federal income tax brackets, IRA expert and certified public accountant Ed Slott previously told CNBC.

Without changes from Congress, dozens of individual tax provisions, including lower federal income tax brackets, will sunset after 2025. That would revert rates to 10%, 15%, 25%, 28%, 33%, 35% and 39.6%.

“Every year you don’t use [the lower brackets] is a wasted opportunity,” Slott said. 

But with control of the White House and Congress uncertain, it’s difficult to predict whether the federal tax brackets will change after 2025.

You can start by finding your total federal taxes paid for 2023, which is listed on line 24 of your tax return. If your gross income and tax situation has not changed from last year, you are likely to owe a similar amount for 2024, Lucas explained.   

Next, you will need to review your pay stubs.

If you have paid roughly 75% of last year’s total taxes by the end of September, “you’re going to be pretty darn close, assuming everything is the same as the prior year,” he said.  

However, “there’s a whole slew of things that can change” from year to year, such as a second job, higher income, divorce, marriage or birth of a child, which makes your tax situation different, Lucas said. 

In those scenarios, you will need a more in-depth analysis to double-check your 2024 withholding, he said.    

If your tax situation changed this year, experts recommend periodically using a free tool from the IRS, known as the “tax withholding estimator.”

The tool factors in your marital status, dependents, number of jobs, other sources of income, most-recent paystub, taxes withheld, estimated tax payments and other details.  

After plugging in your information, the IRS provides a prefilled Form W-4, which you can then provide to your employer to increase or decrease your withholding.

Alternatively, you could make payments directly to the IRS to cover your 2024 tax shortfall, Lucas said.

Either way, “you’ve got to keep an eye on it,” or you could face an unexpected tax bill, along with penalties and interest, said Mark Steber, chief tax information officer at Jackson Hewitt.

If you update your tax withholding via Form W-4, you will want to make sure the change is accurate and reflected in future paychecks through the end of the year, Lucas said.

But your withholding should be temporary through 2024 and you will need to resubmit Form W-4 again in January, he warned. Otherwise, you could withhold too much for 2025. 

Seniors looking to reduce expenses while also boosting their quality of life may find the idea of settling abroad appealing, financial experts say.

To that point, nearly one-third of retirees have relocated either domestically or outside the country after leaving the workforce, according to a new CNBC survey, which polled more than 6,600 U.S. adults in early August.

Some of the top reasons for retiree moves were a lower cost of living, a more comfortable lifestyle or better weather, the survey found.   

While many older Americans have opted for a less expensive city or state, others are choosing to spend their golden years abroad. 

More than 450,000 retirees were receiving Social Security benefits outside the U.S. as of December 2023, according to the latest Social Security Administration data. That’s up from less than 250,000 retirees in December 2003.   

“Each year, there are more and more,” said certified financial planner Leo Chubinishvili of Access Wealth in East Hanover, New Jersey. “And I think that will continue to grow.” 

Despite cooling inflation, higher costs are still prompting significant changes to retirement plans, a 2024 survey from Prudential Financial found.

Meanwhile, roughly 45% of U.S. households are predicted to fall short of money in retirement by leaving the workforce at age 65, according to a Morningstar model that analyzed spending, investing, life expectancy and other factors. 

But some retirees can stretch their nest egg by living somewhere with a lower cost of housing, health care and other expenses, depending on their needs, Chubinishvili said.

Some retirees are also motivated to move abroad for the “cultural exchange,” said CFP Jane Mepham, founder of Austin, Texas-based Elgon Financial Advisors, where she specializes in international planning.  

“There’s a sense of adventure,” she said. “People really want to travel.”

However, retiring overseas does require advance planning. For example, you’ll need to understand visa and residency requirements, local laws, international taxes and other logistics.

Plus, you’ll need to research whether you can get into your new country’s health system or whether you’ll need to purchase private insurance. Medicare won’t cover you abroad, Mepham said.

“For many people, [living abroad] could be a money-saving option, depending on how they want to live their lives,” said CFP Jude Boudreaux, partner and senior financial planner with The Planning Center in New Orleans, who works with several expat clients.

But other factors, such as proximity to aging parents or grandchildren, can weigh heavily on the decision, said Boudreaux, who is also a member of CNBC’s Financial Advisor Council.

To that point, of retirees who moved, some 36% wanted to be closer to family, only slightly lower than the 37% seeking a lower cost of living, according to the CNBC survey.

But your retirement, including a choice to live abroad, could change later, depending on your circumstances, he said.

“Everybody makes decisions based on their life priorities,” Boudreaux said. “Being clear about that helps people make good choices.”

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Tax breaks worth trillions of dollars are scheduled to expire after 2025 without extension from Congress — including a hefty deduction for millions of self-employed filers and business owners.  

Enacted by former President Donald Trump, the Tax Cuts and Jobs Act of 2017 created the qualified business income deduction, or QBI, which is worth up to 20% of eligible revenue, subject to limitations.

The temporary deduction applies to so-called pass-through businesses, which report income at the individual level, such as sole proprietors, partnerships and S-corporations, along with some trusts and estates. 

“The hope is that this gets extended because it’s going to be very disruptive for a lot of business owners” if the tax break is allowed to expire, said Dan Ryan, a tax partner at law firm Sullivan and Worcester.

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Lawmakers added the temporary QBI deduction to the Tax Cuts and Jobs Act to create tax rates for pass-through businesses that are similar to tax rates for corporations.

But while the QBI deduction will sunset after 2025, the legislation permanently reduced corporate taxes by dropping the top federal rate from 35% to 21%.

For tax year 2021, the most recent data available, there were roughly 25.9 million QBI claims, up from 18.7 million in 2018, the first year the tax break was available, according to the IRS. 

“It’s something that is very important to a lot of privately held businesses,” said Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center.

As the 2025 tax cliff approaches, there have been “very strong feelings” about whether to extend the QBI deduction, according to Garrett Watson, senior policy analyst and modeling manager at the Tax Foundation.  

Business advocates say the deduction promotes growth and have pushed to make the tax break permanent. Meanwhile, some policy experts and lawmakers point to the high cost and the deduction’s complexity.

The QBI deduction is “fairly pricey,” with an estimated 10-year cost of more than $700 billion, Watson said. That could pose a challenge amid debate over the federal budget deficit.

Other critics say the QBI deduction primarily benefits the wealthy because higher earners are more likely to have pass-through income. However, there are millions of middle-income taxpayers also claiming the deduction, according to IRS data.

Watson said some Democrats are eager to see the tax break expire, “but that runs right into the president’s tax pledge.”

White House National Economic Advisor Lael Brainard in June reaffirmed President Joe Biden’s promise to extend Trump’s tax breaks only for those making less than $400,000.

The IRS will deny billions of dollars’ worth of claims for a pandemic-era tax break while working to process lower-risk filings, the agency said on Thursday afternoon.

Enacted to support small businesses during the Covid-19 pandemic, the employee retention credit, or ERC, is worth thousands of dollars per eligible employee. However, the agency stopped processing new filings in September amid a surge of “questionable claims,” the IRS said in a news release.

The agency added that it will extend that moratorium.  

After investigating more than 1 million claims worth roughly $86 billion, the IRS said in the release that it identified 10% to 20% of the highest-risk filings, and “tens of thousands” will be rejected in the coming weeks, according to the agency. Another 60% to 70% of claims with an “unacceptable level of risk” will be further examined, the IRS said.

“We will now use this information to deny billions of dollars in clearly improper claims and begin additional work to issue payments to help taxpayers without any red flags on their claims,” IRS Commissioner Danny Werfel said in a statement.

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During the ERC review period, the agency processed 28,000 claims received before September 2023 worth $2.2 billion and disallowed more than 14,000 claims worth $1 billion, according to the release.

Overall, compliance efforts for erroneous ERC claims have topped more than $2 billion since last fall, the IRS said.

“This is one of the most complex credits the IRS has administered, and we continue to ask taxpayers for patience as we unravel this complex process,” Werfel said. “Ultimately, this period will help us protect taxpayers against improper payouts that flooded the system and get checks to those truly eligible.”

With more than 1.4 million unprocessed ERC claims and many “questionable” filings, the IRS urges taxpayers with pending ERC claims to consider the agency’s withdrawal program. 

There’s still time to withdraw a claim if you haven’t received a payment for any tax period. If you received a check but haven’t cashed or deposited it, you can use this program to return it.

If eligible, the IRS will undo the original ERC claim and no penalties or interest will apply.

“It’s a mulligan moment” because you can still fix ERC mistakes before the IRS catches them, Dean Zerbe, national managing director at Alliantgroup, previously told CNBC.

The U.S. Department of the Treasury and the IRS on Monday unveiled a plan to “close a major tax loophole” used by large, complex partnerships, which could raise more than an estimated $50 billion in tax revenue over the next 10 years.

The plan targets so-called “related party basis shifting,” where single businesses operating through different legal entities trade original purchase prices on assets to take more deductions or reduce future gains, according to the Treasury.

“These tax shelters allow wealthy taxpayers to avoid paying what they owe,” IRS Commissioner Danny Werfel told reporters on a press call Friday.  

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After a year of studying the basis-shifting issue, the agencies announced their intent to issue proposed regulations. They also released a revenue ruling on related-party partnership transactions involving basis shifting without “economic substance” for the parties or “substantial business purpose.”    

The plan builds on ongoing IRS efforts to increase audits on the wealthiest taxpayers, large corporations and complex partnerships.

“Treasury and the IRS are focused on addressing high-end tax abuse from all angles, and the proposed rules released today will increase tax fairness and reduce the deficit,” U.S. Secretary of the Treasury Janet Yellen said in a statement.

Pass-through business filings with more than $10 million in assets increased 70% between 2010 and 2019, but the audit rate for these partnerships fell from 3.8% to 0.1% during that period, according to the Treasury. 

This has contributed to an estimated $160 billion a year tax gap — the shortfall between what is owed and collected — attributed to the top 1% of tax filers, the agency said.

The announcement comes less than one week after President Joe Biden’s top economic advisor unveiled his “key principles” for tax policy, including sustained IRS funding.  

“We should ensure ultra-wealthy taxpayers pay what they owe and play by the same rules by maintaining the President’s investment in the IRS,” White House National Economic Council advisor Lael Brainard told reporters Wednesday during a press call.

IRS funding has been a target for Republicans since Congress approved nearly $80 billion in funding via the Inflation Reduction Act.