Cameron Miranda
Former President Donald Trump's tax laws, passed during his first term in 2017, are set to expire at the end of 2025. The laws, known as the Tax Cuts and Jobs Act (TCJA) or the Big, Beautiful Bill, included sweeping changes to the tax code, such as reduced income tax rates, an expanded child tax credit, and a larger standard deduction. While some provisions of the TCJA are permanent, many are temporary and set to expire at the end of 2025, including tax breaks for individuals and businesses. The expiration of these tax cuts is expected to impact millions of Americans, with marginal tax rates potentially increasing for many households.
| Characteristics | Values |
|---|---|
| Name of the Law | Tax Cuts and Jobs Act (TCJA) |
| Year of Enactment | 2017 |
| Year of Expiry | 2025 |
| Impact | Tax cuts for individuals and businesses |
| Tax cuts for individuals | Expire in 2025 |
| Tax cuts for businesses | Do not expire in 2025 |
| Marginal tax rates | Ranging from 10% to 37% |
| Standard deduction | Nearly doubled |
| Child tax credit | Increased to $2,000 |
| SALT deduction | $10,000 |
| Estate tax exemption | $13.99 million for single filers |
| Gift tax exemption | $13.61 million per individual or $27.22 million for spouses |
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What You'll Learn
The One Big Beautiful Bill Act
The TCJA was a major overhaul of the tax code, signed into law by President Trump in his first term on January 1, 2018. The reform impacted taxpayers and business owners, particularly through tax cuts. Many of the tax reform benefits for individuals, including tax breaks for families, were set to expire in 2025. The law created a single flat corporate tax rate of 21%, down from 35%.
The passage of the One Big Beautiful Bill Act locks in the current income tax brackets beyond 2025, avoiding a reversion to higher pre-2018 rates. Marginal rates ranging from 10% to 37% will remain in place, affecting how different portions of income are taxed going forward. By preventing the expiration of the 2017 brackets, the law preserves lower tax rates for many households. However, the law is also projected to add $3.4 trillion to the federal deficit by 2034, according to the Congressional Budget Office.
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Individual tax cuts
The individual tax cuts introduced by former US President Donald Trump as part of the Tax Cuts and Jobs Act TCJA are set to expire at the end of 2025. The TCJA was signed into law by Trump in 2018 during his first term and was the largest tax code overhaul in three decades.
The individual tax cuts were designed to reduce tax rates for individuals and simplify the tax filing process through structural reforms. The law also nearly doubled the standard deduction, making it less likely that filers would itemize tax breaks. However, this could change after 2025 if the standard deduction reverts to 2017 levels. The TCJA also included a higher limit on the amount of state and local taxes (SALT) that could be deducted, primarily benefiting higher-income earners.
The individual tax cuts under the TCJA also impacted taxpayers based on their income level, filing status, and deductions. For example, the law cut the top individual income tax rate from 39.6% to 37% for married couples with over $600,000 in taxable income. Additionally, the law dramatically weakened the Alternative Minimum Tax (AMT), which was designed to ensure that higher-income individuals who take advantage of numerous deductions pay at least a minimum level of tax. As a result, the TCJA delivered significant tax cuts to many affluent households.
The pending expiration of the individual income and estate tax provisions of the 2017 Trump tax law has sparked a high-stakes tax policy debate, with some calling for a more progressive and equitable tax code that raises more revenue. According to the Tax Policy Center (TPC), the 2017 Trump tax law was skewed towards high-income households, with households in the top 1% receiving an average tax cut of more than $60,000 in 2025, compared to less than $500 for households in the bottom 60%.
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Tax benefits for families
The 2017 Tax Cuts and Jobs Act (TCJA) was a major tax code overhaul that cut taxes for individuals and businesses. Many of its provisions expire in 2025, including some that affect families with low and moderate incomes.
One of the key provisions of the TCJA that benefits families is the Child Tax Credit (CTC). The TCJA nearly doubled the size of the CTC from $1,000 to $2,000 per child, providing significant relief to many families. For the 2024 and 2025 tax years, the refundable portion of the CTC is $1,700, and these changes will expire in 2025.
The TCJA also lowered statutory tax rates at all income levels and nearly doubled the standard deduction for married couples from $13,000 to $24,000 in 2018. Additionally, the TCJA included a new savings plan for children, with a one-time deposit of $1,000 from the federal government for newborns, known as the "baby bonus".
However, it is important to note that the TCJA also included some provisions that raised taxes on families, such as the elimination of personal exemptions and the new permanent inflation adjustment for key tax parameters. These changes resulted in only modest tax cuts for most families, while the wealthy received much larger net tax cuts.
The TCJA has been criticized for being skewed towards the rich and failing to deliver on its promises to benefit low- and moderate-income families. Some have argued that the tax cuts have driven up deficits and national debt, and cuts to critical family support programs have impacted healthcare, food assistance, and public safety programs.
Despite these criticisms, the TCJA has provided some tax benefits for families, and there have been calls to extend the expiring provisions beyond 2025 to avoid tax increases for many Americans.
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Student loan provisions
The 2017 Tax Cuts and Jobs Act (TCJA) was a major tax code overhaul that cut taxes for individuals and businesses. Many of the tax benefits for individuals and families will expire in 2025.
The TCJA allows 529 plans to fund K-12 private school tuition—up to $10,000 per year, per child. This means that parents can use 529 savings plans to pay for private kindergarten through 12th grade. Previously, these plans could only be used for college savings. Under the SECURE Act of 2019, the benefits of 529 plans were expanded, allowing plan holders to withdraw a maximum lifetime amount of $10,000 per beneficiary penalty-free to pay down qualified student debt.
The student loan provisions of the TCJA are set to expire in 2025, along with many other provisions of the Act. It is important to note that the expanded benefits of 529 plans under the SECURE Act are not tied to the TCJA and will not expire in 2025.
The expiration of the TCJA student loan provisions will likely impact many Americans, as it will result in higher taxes for those claiming the student loan interest deduction. It remains to be seen if Congress will take any action to extend these provisions or allow them to expire as scheduled.
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Estate tax exemption
The Tax Cuts and Jobs Act (TCJA) was a major overhaul of the US tax code, signed into law by President Donald Trump in 2018 during his first term. The law impacted taxpayers and business owners, particularly through tax cuts.
The TCJA cut taxes for shareholders and individual taxpayers, with many of the tax benefits for individuals and families set to expire in 2025. The estate tax exemption, currently $13.61 million per person for 2024 ($13.99 million for single filers) and $28 million for couples, is set to revert to approximately $7 million in 2026 unless legislative action is taken.
The Trump administration has historically advocated for lower taxes and has proposed eliminating or significantly reducing estate taxes, often referred to as the "death tax," to support wealth preservation across generations. The potential for reforms that either extend the current high exemptions or eliminate estate taxes entirely exists, but political dynamics in Congress could influence the final outcome.
Individuals should consider making large gifts before the sunset date in 2025 to leverage current exemptions. Advanced planning techniques such as trusts, gifting, and charitable donations can help minimise future estate tax liability.
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Frequently asked questions
Many of the tax cuts enacted by former President Donald Trump are set to expire at the end of 2025.
If the TCJA is not renewed after 2025, many Americans will face tax increases as marginal rates will revert to their previous higher levels.
Some key provisions of the Trump tax laws that are set to expire include:
- Section 199A, which allows non-corporate businesses to exempt 20% of their profits from taxes.
- The expanded state and local tax (SALT) deduction, which increased the cap from $10,000 to $40,000.
- The child tax credit, which doubled the maximum tax break to $2,000 and increased the refundable portion.
