#TrumpTaxCuts
Donald 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 Trump's tax cuts ¹ ²:
- *Key Provisions*: The TCJA reduced tax rates for corporations and individuals, increased the standard deduction, and limited deductions for state and local income taxes and property taxes.
- *Expiration*: Most individual income tax cuts are scheduled to expire in 2025, while business tax cuts expire in 2028. If extended, the TCJA would decrease federal tax revenue by $4.5 trillion from 2025 to 2034.
- *Economic Impact*: Extending the TCJA would increase long-run GDP by 1.1% and boost after-tax incomes by 2.9%. However, it would also increase the budget deficit and push up interest costs by an estimated $941 billion.
- *Trump's Proposal*: President 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 also plans to impose new tariffs, which could offset the economic benefits of his tax cuts. Estimates suggest that tariffs and foreign retaliation would together offset more than two-thirds of the long-run economic benefit of his proposed tax cuts.
Some of the proposed tax cuts include ¹:
- *No Taxes on Tips*: Exempting tips from income tax
- *No Taxes on Overtime Pay*: Exempting overtime pay from income tax
- *No Taxes on Social Security Benefits*: Exempting Social Security benefits from income tax for retirees
- *Deduction for Auto Loan Interest*: Creating a deduction for auto loan interest for American-made cars
The impact of these tax cuts on the economy and budget will depend on various factors, including the specifics of the proposals and how they are implemented.
