#TrumpTaxCuts The Trump Tax Cuts, also known as the Tax Cuts and Jobs Act (TCJA), were implemented in 2017 and are set to expire at the end of 2025. Here's what's happening with the Trump Tax Cuts ¹:
- *Key Provisions Expiring*: Individual tax cuts, estate tax provisions, and business provisions will expire, potentially increasing taxes for 62% of taxpayers.
- *Economic Impact*: Extending the TCJA would decrease federal tax revenue by $4.5 trillion from 2025 to 2034, but long-run GDP would increase by 1.1%, offsetting $710 billion of the revenue loss.
- *President Trump's Proposal*: Trump has called for permanent extension of the 2017 tax cuts, additional policies like no taxes on tips and Social Security benefits for retirees, and creation of a deduction for auto loan interest for American-made cars.
- *New Tariffs*: Trump has also proposed higher taxes on US imports through new tariffs, which could offset more than two-thirds of the long-run economic benefit of his proposed tax cuts.
*Potential Effects on Small Businesses*:
- *Expiration of Small Business Provisions*: If TCJA expires, small businesses will face higher taxes, particularly those with pass-through income who benefited from the 20% deduction (Section 199A).
- *Impact on Investment*: Expiration of provisions like full expensing for machinery and equipment, and research and development costs, could discourage investment and innovation.
- *Consequences for Family Businesses*: Expiration of estate tax provisions could lead to a devastating 40% federal tax on assets passed down to family members, potentially forcing them to sell the business to pay the tax.
*Current Status*:
- *Budget Reconciliation*: The House and Senate have passed budget resolutions, with the House allowing for $4.5 trillion in deficit-financed tax cuts, while the Senate permits up to $1.5 trillion in tax cuts over 10 years.
- *Legislative Process*: Lawmakers will use the budget reconciliation process to enact new tax cuts, with the Senate Finance Committee proposing an increase in the debt limit by up to $5 trillion.