#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 soon. Here's what's happening:

Key Provisions

- *Individual Income Tax Cuts*: The TCJA reduced tax rates for individuals, nearly doubling the standard deduction and reducing the number of people who itemize deductions. However, these cuts are set to expire in 2025.

- *Corporate Tax Cuts*: The TCJA reduced the corporate tax rate from 35% to 21%, making the US more competitive globally. These cuts are not set to expire.

- *Estate Tax Exemption*: The TCJA doubled the estate tax exemption, allowing more wealthy individuals to pass on their assets without paying estate taxes.

Proposed Extensions and Additions

- *Permanent Extension*: President Trump has called for a permanent extension of the 2017 tax cuts, which would decrease federal tax revenue by $4.5 trillion from 2025 to 2034.

- *New Proposals*: Trump has also proposed additional tax cuts, including:

- *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.

- *Deduction for Auto Loan Interest*: Creating a deduction for auto loan interest for American-made cars.

Potential Impact

- *Economic Growth*: Extending the TCJA could boost long-run GDP by 1.1% and increase after-tax incomes by 2.9%.

- *Deficits*: However, extending the TCJA would also increase the budget deficit by $4.5 trillion over 10 years, potentially worsening America's fiscal trajectory.¹

Legislative Progress

- *Budget Reconciliation*: The House and Senate have passed budget resolutions, which will allow lawmakers to use the budget reconciliation process to enact new tax cuts.

- *House and Senate Bills*: The House and Senate have different versions of the budget resolution, with the House allowing for $4.5 trillion in tax cuts and the Senate allowing for up to $1.5 trillion in tax cuts.