#TrumptaxCuts
Trump Tax Cuts Explained Simply
What Was It?
The Tax Cuts and Jobs Act (TCJA), passed in 2017 under President Trump, was a major tax reform aimed at reducing taxes for individuals and businesses. Here’s a breakdown:
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Key Changes for Individuals
1. Lower Tax Rates: Most people paid less income tax temporarily (until 2025). For example, the top rate dropped from 39.6% to 37%.
2. Higher Standard Deduction: More people used this simplified deduction ($12,000 to $24,000 for couples) instead of itemizing expenses.
3. SALT Deduction Cap: Deductions for state/local taxes (like property taxes) were capped at $10,000, affecting some in high-tax states.
4. Child Tax Credit: Increased slightly (e.g., up to $2,000 per child).
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Key Changes for Businesses
1. Corporate Tax Cut: Rates dropped sharply from 35% to 21% (permanent).
2. Pass-Through Businesses: Owners (e.g., LLCs, freelancers) could deduct 20% of their income to lower taxable profits.
3. International Rules: Companies were taxed only on U.S. profits (not worldwide), and a one-time tax encouraged bringing overseas cash back to the U.S.
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Other Changes
- Estate Tax: Fewer families paid this tax, as the exemption doubled (e.g., up to $11 million per person).
- Health Care: The penalty for not having insurance (“individual mandate”) was removed, potentially raising costs for some.
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Pros & Cons
👍 Supporters Say:
- Boosted jobs and economy (e.g., companies invested more).
- Made U.S. businesses more competitive globally.
👎 Critics Argue:
- Mostly helped the wealthy and corporations.
- Added $1.5 trillion to the national debt.
- Individual savings expire in 2025, while corporate cuts stay.
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Today’s Status
- Individuals: Tax cuts expire after 2025; Congress must act to extend them.
- **Businesses**: Most cuts, like the 21% corporate rate, are permanent.
In short, the law aimed to stimulate growth but sparked debate over fairness and long-term costs.