FOMC Minutes & Rising Future Taxes, LFG Daily - October 9, 2025

Colin Symons, CIO Lloyd Financial Group

FOMC Minutes said most think it makes sense to keep easing.

The Senate rejected funding bills again as the shutdown enters a second week.

China announced export controls on rare earth materials.

While headline credit numbers still look fine, we are starting to see individual issues falter, such as subprime auto lender Tricolor and auto part company First Brands. Seeing some smoke but this can go on for a while. It has been hitting senior secured loans, private equity, and business development companies.

Taiwan Semi (TSM) reported a 31% Y/Y jump in sales, though shares were unchanged in the premarket. They report earnings next week.

What does it all mean? The market is staying resilient into earnings, but a shutdown resolution would likely be welcome news for bigger gains. Some smoke in subprime is concerning but the market can potentially ignore that for a very long time if we don’t see more trouble for a while.

Luke Lloyd, CEO Lloyd Financial Group

The Fiscal Challenge: Why Taxes Are Poised to Rise

The writing’s on the wall — taxes are likely headed higher. Here’s why, and what you can do about it.

Mounting Debt and Deficits

The U.S. debt is projected to surpass 150% of GDP within a few decades. Interest costs alone are nearing $1 trillion per year, crowding out other priorities. When spending can’t be cut, revenue must rise — meaning higher taxes are the most likely outcome.

Entitlement Pressures

Programs like Social Security and Medicare face funding shortfalls as the population ages. Politicians may talk about reform, but raising revenue is the easiest lever to pull.

Political & Market Realities

Washington’s spending appetite isn’t shrinking — from defense to green energy to social programs. If investors start doubting America’s fiscal discipline, interest rates could rise even more, forcing tax hikes to restore confidence.

Implications for Financial Planning: How to Prepare

Given the strong odds that taxes will rise, individuals, businesses, and advisors should anticipate and adapt. Here are practical considerations:

For individuals & households

1. Lock in favorable tax treatment while available

   • Accelerate income or deductions to years before tax increases.

   • Make use of tax-advantaged accounts (401(k), IRA, Roth, HSAs) as much as possible.

   • If you have flexibility, consider realizing gains or executing transactions in lower-tax years.

2. Diversify across tax regimes

   • Hold a mix of tax-deferred (traditional retirement accounts) and after-tax or tax-free (Roth) assets.

   • Consider municipal bonds (if in higher tax brackets) or other tax-efficient investments.

3. Plan for “tax shock” in retirement

   • Model “what-if” scenarios where your marginal tax rate increases by several percentage points.

   • Avoid overly aggressive withdrawal strategies that could push you into higher brackets.

4. Mind your deductions & credits

   • Don’t count permanently on deductions that might be curtailed.

   • Stay abreast of legislative changes (e.g. SALT deduction limits, charitable deduction rules).

5. Estate & gift planning

   • The federal estate exclusion has been rising, but its future is uncertain.

   • If you expect higher estate or wealth taxes, strategies such as gifting, trusts, and life insurance planning may become more valuable.

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For businesses & high net worth individuals

1. Reassess entity structure and tax strategies

   • Consider whether S corporation, partnership, C corporation, or pass-through status is optimal under shifting rules.

   • Be cautious of tax “loopholes” that may be tightened — e.g. carried interest, deductions, accounting rules.

2. Global tax exposure and international rules

   • Multinationals should monitor changes to GILTI, FDII, BEAT, and other cross-border tax regimes.

   • Consider supply chain, transfer pricing, and location of profits relative to tax jurisdictions.

3. Use tax incentives smartly

   • Many tax credits (for energy, R&D, investment) may remain attractive as lawmakers seek to incentivize desired industries.

   • But the window for certain incentives may narrow; act early where possible.

4. Scenario tax budgeting in forecasts

   • In business forecasts or valuation analyses, include sensitivity for higher tax burdens (e.g. assume 2–5 point increases in effective rate).

   • Use more conservative after-tax cash flow assumptions.

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For advisors, planners, and institutions

• Monitor legislation proactively — keep close watch on tax bills, baseline debates, and sunset provisions.

• Stress-test client plans under multiple tax paths.

• Educate clients about tax risk and the value of flexibility in timing and structuring income, investments, and retirement plans.

• Incorporate tax-driven decision-making (e.g. when to sell, hold, relocate, or invest) as a core part of planning — not an afterthought.

  
  

Bottom Line

Fiscal math doesn’t lie — higher taxes are coming. The best defense is proactive planning: diversify your tax exposure, optimize your withdrawals, and make smart moves while the window for lower rates remains open.

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