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BusinessEconomyEconomic PolicyPersonal FinanceWorkTechnologyBusiness of Climate
BusinessEconomyEconomic PolicyPersonal FinanceWorkTechnologyBusiness of Climate


THESE TAX CUTS WILL GO AWAY WITHOUT ACTION BY CONGRESS AND TRUMP


MANY OF THE TAX CUTS ENACTED DURING TRUMP’S FIRST TERM ARE SET TO EXPIRE AT THE
END OF 2025, BUT KEEPING THEM COULD ADD TRILLIONS TO THE FEDERAL DEBT.

5 min
40

President Donald Trump signs the Tax Cuts and Jobs Act into law on Dec. 22,
2017. (Jabin Botsford/The Washington Post)
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 1.  New tax brackets
 2.  A much larger standard deduction
 3.  The personal exemption
 4.  A larger child tax credit
 5.  Moving expenses and bike commuting
 6.  State and local tax deduction
 7.  Other itemized deductions
 8.  Estate tax
 9.  Alternative Minimum Tax
 10. Pass-through business income

By Julie Zauzmer Weil
November 12, 2024 at 11:30 a.m. EST

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 Cut and Jobs Act — including cutting the
corporate tax rate to 21 percent — are already permanent. But most of the breaks
for individuals and households are temporary.



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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.


NEW TAX BRACKETS

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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.

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Extending current law would reduce revenue by $1.8 trillion.


A MUCH LARGER STANDARD DEDUCTION

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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.


THE PERSONAL EXEMPTION

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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.

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Extending current law would raise revenue by $1.6 trillion.


A LARGER CHILD TAX CREDIT

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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.

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Democrats and some Republicans, such as Vice President-elect JD Vance, have
called for a bigger child tax credit.


MOVING EXPENSES AND BIKE COMMUTING

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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.

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Extending current law would raise revenue by $15.5 billion for moving expenses
and $136 million for bike commuting.

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STATE AND LOCAL TAX DEDUCTION

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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.

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The Congressional Budget Office did not specifically estimate the cost of
extending the SALT cap in and of itself, but the Penn Wharton Budget Model
estimated in September that lifting the SALT cap alone would cost the federal
government as much as $1.1 trillion over the next decade.


OTHER ITEMIZED DEDUCTIONS

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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.

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Extending current law would raise revenue by $908 billion.


ESTATE TAX

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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.

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Extending current law would reduce revenue by $126 billion.


ALTERNATIVE MINIMUM TAX

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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.

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Extending current law would reduce revenue by $1 trillion.


PASS-THROUGH BUSINESS INCOME

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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 many 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.

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