๐บ๐ธ Trump Tax Cuts: Key Information
Official Name:
Tax Cuts and Jobs Act (TCJA)
Signed Into Law: December 22, 2017
Effective: Most provisions started in 2018
๐ Major Features of the Trump Tax Cuts:
1. Lower Individual Income Tax Rates
Reduced most individual tax brackets.
Example: Top income tax rate dropped from 39.6% โ 37%.
Lower brackets also shifted downward.
2. Doubled Standard Deduction
Single filer deduction: ~$6,500 โ ~$12,000
Married couples: ~$13,000 โ ~$24,000
(Many fewer people needed to "itemize" deductions.)
3. Child Tax Credit Expanded
Credit doubled from $1,000 โ $2,000 per child.
Phase-out thresholds increased, so more middle-class families qualified.
4. Corporate Tax Rate Cut
Slashed corporate tax rate from 35% โ 21%.
Goal: Encourage U.S. companies to invest domestically.
5. Pass-Through Business Deduction (Section 199A)
Certain small businesses (LLCs, partnerships) could deduct up to 20% of their income.
6. Estate Tax Threshold Raised
Estate tax exemption roughly doubled (to about $11 million+ per individual).
7. Limits on State and Local Tax (SALT) Deductions
Capped at $10,000 โ hurt taxpayers in high-tax states (e.g., NY, CA, NJ).
8. Repeal of Obamacare Individual Mandate Penalty
The tax penalty for not having health insurance dropped to $0 after 2018.
๐ Effects (so far):
Economy: Short-term boost in economic growth (especially 2018โ2019).
Deficits: Federal budget deficits increased due to reduced tax revenue (even before COVID-19 spending).
Corporations: Many companies used tax savings for stock buybacks rather than widespread wage increases.
Inequality: Critics argue the wealthiest benefited most; supporters argue middle-class families got tangible tax relief.
๐ฐ๏ธ Expiration Timeline:
Most individual tax cuts expire after 2025, unless Congress renews them.
Corporate tax cuts are permanent (unless changed by new laws).