Trump's tax cuts, officially known as the Tax Cuts and Jobs Act (TCJA), were enacted in 2017 and are set to expire soon. Here's what you need to know:
Key Provisions
- *Individual Income Tax Cuts*: The TCJA reduced tax rates for individuals, doubling the standard deduction and family tax credits. However, it also limited deductions for state and local income taxes and property taxes.
- *Corporate Tax Cuts*: The TCJA reduced the corporate tax rate and improved the international tax system, boosting capital investment.
- *Expiration Dates*: Most individual tax cuts expire in 2025, while corporate tax cuts expire in 2028.
Economic Impact
- *GDP Growth*: Extending the TCJA would increase GDP in the long run by 1.1%, offsetting 16% of revenue losses.
- *Job Creation*: The tax cuts are expected to provide approximately 847,000 full-time jobs.
*Deficit*: Extending the Tax Cuts and Jobs Act (TCJA) will add $4.5 trillion to the budget deficit over 10 years.
Current Developments
- *Budget Resolution*: The House and Senate are working on a budget resolution to approve new tax cuts, with the House having adopted the amended version of the Senate's budget resolution.
*Tariffs*: President Trump proposed new tariffs, which may offset the economic benefits of the tax cuts¹.
Potential Changes
- *Stability*: President Trump called for a permanent extension of the Tax Cuts and Jobs Act (TCJA), along with additional policies such as not taxing tips, overtime wages, and Social Security benefits for retirees.
*New Proposals*: Trump also proposed a deduction for car loan interest for cars manufactured in the United States, and an increase in taxes on American imports through new tariffs¹.