Federal Policy Changes

The federal government modifies its policies every year. New administrations going into office after an election year cause the most disruption. Changes could include new labor regulations, tax code modifications, or the addition/elimination of subsidies and deductions. This article will review some of the policies we might see in 2025, and how they could affect your business.
It’s important to understand how the system works before you review this. The president can issue executive orders that impact specific industries, but the legislative and judicial branches of government can challenge them. That means nothing is etched in stone. Changes in the tax code require Congressional approval, so you’ll know about them a year in advance.
Tax Policy Adjustments
The most impactful tax adjustment in 2025 could be the expiration of the 2017 Tax Cuts and Jobs Act (TCJA). It provides a deduction for state and local taxes (SALT), a reduced corporate tax for domestic production, and several exemptions for specific types of income. It also repeals green energy tax credits and imposes steep tariffs on imports.
President Trump wants to extend the TCJA. He needs congressional approval. His party’s majority in the Senate and the House does not guarantee his policies will pass. The green energy component may be a sticking point. Despite the new administration’s push to ramp up fossil fuel production, support for alternatives has grown in recent years.
Minimum Wage and Labor Costs
The federal minimum wage is $7.25 per hour, but the states can set higher standards. Eight states set their state rate to match the federal rate. They are Alabama, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, and Louisiana. If the federal minimum wage goes up, the labor costs in those states will increase. President Trump has no plans to do that.
Congress may have something to say about this. The average monthly cost of living for a single person in the United States is $1,164. Supporting a family of four costs $4,146.50 per month. Do the math on that when you’re making $7.25 an hour. It doesn’t add up. Expect this to be a continuous debate on Capital Hill over the next four years.
Small Business Loan Programs
Federal loans through the US Small Business Administration (SBA) are not scheduled for an overhaul in 2025. The Federal Reserve Bank (FED) could increase or decrease interest rates, but the federal funds rate is expected to remain steady at 4% to 4.5% in 2025. Unfortunately, that means returns on savings accounts will also remain low.
Before you apply for an SBA loan, check your financial ratios to see whether you can afford it. The current and debt-to-equity ratios are useful because a loan is a liability. Calculate what those ratios will be if you take on more debt. Another exercise is to do pro forma financial reports to project your future cash flow. Our accountants at D&M can help you with that.
Healthcare and Employee Benefits Regulations
Two new laws passed in December 2024 will affect the Affordable Care Act (ACA). The first is called “The Paperwork Burden Reduction Act.” It applies to large employers formerly required to send a 1095-C to eligible employees. That requirement has been removed. The forms will still be available, but only sent when an employee specifically requests it.
The second law is the “Employer Reporting Improvement Act.” It allows employers to use an individual’s full name and social security number if a TIN is unavailable for a Form 1095-C. The two acts cut down on paperwork for larger employers, which is a cost reduction. That savings could trickle down to small businesses reliant on larger firms for supplies and materials.
Inflation and Cost of Goods
This is where the federal government can impact small businesses the most. Interest rates directly affect inflation. Tariffs on imports will disrupt the global supply chain. The Federal Reserve Bank sets interest rates. The president can impose tariffs with an executive order. Neither requires congressional approval. There are no real checks and balances.
The president argues that import tariffs will help balance the trade deficit and increase domestic production. On a macro scale, that makes sense, but small businesses will feel the bite before long-term changes take effect. That makes accurate accounting and financial planning essential for operating a company in 2025. Contact us if you need help.
Environmental and Sustainability Policies
In President Trump’s first term, he repealed the Clean Water Act, rewrote the EPA’s pollution control policies, and withdrew the United States from the Paris Climate Accords. In 2025, he’s already withdrawn us from the Paris Agreement (again) and issued an emergency energy order authorizing more drilling for fossil fuels on the North American continent.
The pivot from green energy and sustainability to fossil fuels will affect small businesses. Increasing domestic oil production should drive gas prices down, but it will reduce profits for companies producing green energy equipment and infrastructure. That includes the push to build more EV charging stations and wind farms.
Digital Commerce and Payment Reporting
Changes to tax reporting from third-party payment providers directly impact e-commerce retailers and sole proprietors trying to get online businesses up and running. The threshold for 1099K reporting was raised from $600 to $5,000 in 2023. In 2025, that reporting also includes money received on third-party payment apps like Venmo, CashApp, and Zelle. This change necessitates a more vigilant approach to tracking income and expenses.
How Do These Policy Changes Affect Your Small Business?
Adjusting to new policies may require some professional help. D&M Accounting can provide that for you. Outsourcing your accounting to our firm can help you navigate through the upheavals of a new administration. Contact us today to find out how we do that.