#TrumpTaxCuts President Trump's tax cuts, also known as the Tax Cuts and Jobs Act (TCJA), were enacted in 2017 and are set to expire in 2025. Here's what's happening with the Trump tax cuts ¹:
- *Extension Plans*: President Trump has called for permanent extension of the 2017 tax cuts, which would decrease federal tax revenue by $4.5 trillion from 2025 to 2034. The House and Senate have passed budget resolutions to start the reconciliation process, with the House allowing a $4.5 trillion increase in the deficit from tax cuts over the next decade.
- *Economic Impact*: Extending the TCJA would boost long-run GDP by 1.1% and increase after-tax incomes by 2.9%. However, it would also increase the budget deficit and push up interest costs by an estimated $941 billion.
- *Proposed Changes*: Trump has proposed additional policies, including:
- *No taxes on tips*: Exempting tips from income tax
- *Overtime pay exemption*: Exempting overtime pay from income tax
- *Social Security benefits exemption*: Exempting Social Security benefits from income tax
- *Auto loan interest deduction*: Creating a deduction for auto loan interest for American-made cars
- *Tariffs*: Imposing new tariffs on US imports, which could offset the economic benefits of the tax cuts
- *Concerns*: Economists worry that extending the expiring provisions would boost inflationary pressures and worsen America's fiscal trajectory, adding $4.6 trillion in deficits over 10 years.
It's worth noting that the TCJA has been analyzed by the Tax Foundation, which estimates that Trump's proposed tariffs would offset more than two-thirds of the long-run economic benefit of his proposed tax cuts ².