By Julie Zauzmer Weil, The Washington Post (c) 2024
Many tax cuts enacted during President-elect Donald Trump’s first term are set to expire at the end of 2025. That means taxes will rise for most Americans unless Congress acts to renew them.
Some key features of the 2017 Tax Cuts and Jobs Act – including cutting the corporate tax rate to 21 percent – are permanent. But most of the breaks for individuals and households are temporary.
Trump has promised to extend almost all of the cuts, but that would come at a hefty price. By some projections, renewing the cuts would add $4 trillion or more to the federal debt over the next decade.
Here are the expiring provisions most likely to affect you, and how extending them would affect the federal budget over the next decade, according to the nonpartisan Congressional Budget Office.
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New tax brackets
The 2017 law lowered tax rates, dropping the marginal tax rate for the highest earners to 37 percent from 39.6 percent, for example. Unless Congress acts, the rates will snap back in 2026. This calculator from the nonprofit Tax Foundation can help you see how your rates would be affected.
Extending current law would reduce revenue by $1.8 trillion.
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A much larger standard deduction
The 2017 law almost doubled the standard deduction, one of several steps that greatly reduced the number of people who itemize deductions (currently 1 in 10 taxpayers). If the standard deduction reverted to pre-2017 levels, less money would automatically be shielded from taxes and more households would itemize.
Extending current law would reduce revenue by $1 trillion.
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The personal exemption
The 2017 law eliminated the personal exemption for each member of a household, which was $4,050 at the time. Without congressional action, that would return in 2026, which would allow people to shield more income from taxes.
Extending current law would raise revenue by $1.6 trillion.
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A larger child tax credit
The maximum child tax credit doubled from $1,000 per child to $2,000. Extending current law to keep the $2,000 credit would reduce revenue by $592 billion.
Democrats and some Republicans, including Vice President-elect JD Vance, have called for a bigger child tax credit.
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Moving expenses and bike commuting
Under the 2017 law, everyone but members of the military lost the ability to claim a deduction for moving expenses. The law also took away the option for employers to reimburse workers tax-free for moving expenses or for up to $20 a month in bike commuting expenses. Those benefits are set to return in 2026.
Extending current law would raise revenue by more than $15.6 billion: $15.5 billion with the continuation of the moving-expenses provisions and $136 million with the continued suspension of the bike commuting benefit.
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State and local tax deduction
The 2017 law capped at $10,000 the amount of state and local taxes – often abbreviated as SALT – each household can deduct from federal income taxes. The cap is unpopular in blue states with high taxes, but removing it would benefit primarily the wealthiest households. On the campaign trail, Trump said he favors letting this provision lapse so people everywhere can deduct all their state and local taxes again.
The Congressional Budget Office did not specifically estimatethe cost of extending the SALT cap in and of itself, but the Penn Wharton Budget Model estimated in September that lifting the SALT cap would cost the federal government as much as $1.1 trillion over the next decade.
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Other itemized deductions
The law made changes to several other itemized deductions, including allowing people to deduct more charitable expenses, restricting the mortgage interest deduction for newly purchased homes to the first $750,000 of the mortgage instead of $1 million, blocking victims of theft from claiming their losses, and removing tax preparation fees and unreimbursed employee expenses as eligible deductions. All of those changes are set to expire.
Extending current law would raise revenue by $908 billion.
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Estate tax
The 2017 law raised the threshold at which estates are subject to federal taxation when someone dies, increasing it from just over $5 million to just over $11 million. Since then, inflation adjustments have raised the threshold to more than $13 million. The threshold is set to snap back, with adjustments for inflation, to an estimated $7 million in 2026.
Extending current law would reduce revenue by $126 billion.
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Alternative Minimum Tax
The 2017 law reduces the number of households subject to the Alternative Minimum Tax, a parallel tax system designed to ensure that wealthier households pay a minimum amount of income tax. The tax – often abbreviated as the AMT – has been criticized as overly complicated and hard to calculate. Many more households would be subject to this tax again if the provision expires.
Extending current law would reduce revenue by $1 trillion.
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Pass-through business income
The 2017 law created a generous deduction for business owners whose business income “passes through” to their personal income tax return (instead of being taxed as corporate income). The provision allows gig workers such as Uber drivers and dog walkers, partners in massive business interests, and others to deduct up to 20 percent of their business income. Some Republicans have concerns about the complex ways this deduction was structured and want to revise it in a 2025 tax bill. Others want to simply renew it to prevent it from expiring.
Extending current law would reduce revenue by $548 billion.