Sen. John Thune, a Republican from South Dakota, is on track to become the next Senate majority leader, and Rep. Mike Johnson, R-La., seems likely to continue to be the House speaker.
Neither is a fan of tax increases, but neither is a fan of debt, and the United States has piled up $36 trillion in debt.
That means anyone in Washington who wants the federal government to spend money on a new program, increase funding for an existing program or create or expand a tax break will be looking for a way to pay for that move, by adding a tax or, possibly, by cutting or eliminating a "tax expenditure."
Under federal law, a "tax expenditure" is defined as "revenue losses attributable to provisions of the federal tax laws which allow a special exclusion, exemption, or deduction from gross income or which provide a special credit, a preferential rate of tax, or a deferral of tax liability."
The Office of Management and Budget, an arm of the White House, creates a long list of federal tax expenditures every spring when it prepares the budget proposal for the following year.
Some of the biggest tax expenditures are housing-related tax rules and the exclusion for employer spending on health benefits. Those certainly help clients build retirement nest eggs.
Many of the others more directly to the investments, insurance programs, special accounts and other arrangements clients may use for retirement and estate planning.
Some of the tax expenditures have broad support and are unlikely to change much, but tax policy specialists at think tanks like the Cato Institute have long dreamed of finding ways to simplify the tax code in ways that would eliminate most or all of them.
For a look at 16 of the biggest tax incentives, ranked by projected 2025 size, see the gallery accompanying this article. Each slide also includes the estimated impact of the item in 2023 and how big the budget analysts think the impact will be over the 10-year period for 2023 through 2033.
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