The Tax Cuts and Jobs Act (TCJA) of 2017, which was signed into law during President Donald Trump’s first term, lowered tax rates overall. While the current legislation is slated to expire on Dec. 31, 2025, if Congress doesn’t act to extend it, the bill’s renewal is very likely given that Trump is back in office again and there’s a Republican majority in Congress.
Advertisement: High Yield Savings Offers
For You: The Best Tax Deductions and Tax Breaks for 2024-2025
Try This: Here's the Minimum Salary Required To Be Considered Upper Class in 2025
Despite the majority support, the administration and Congress will need to find a source to fund extensions or any budget resolutions. Here are a few key takeaways for how this could impact your finances and tax bill in the future:
-
It’s estimated that any tax cuts of the TCJA could decrease federal tax revenue by $4.5 trillion from 2025 through 2034.
-
This has the president’s full support, as he has called for permanent extension of the 2017 tax cuts which include not only the Jobs Act but also Social Security benefits, taxes on tips, and more.
-
Trump’s tariffs means higher taxes on U.S. imports, which will likely increase the cost of goods you regularly buy or consume.
Here are two ways that the renewal of the TCJA under the Trump administration could affect your wallet.
The Wealthy Will Benefit From Unchanged or Lower Tax Rates
Kaufman Rossin explained that there will likely be a tax break for “just about everyone” on the list of cuts that President Trump promised. These range from putting a stop to income-tax rate increases scheduled for 2026 as well as eliminating taxes on tips and Social Security income. However, the wealthier you are, the more tax benefits you will probably enjoy under Trump’s second term.
Overall, the outlook for middle- and lower-income taxpayers is less optimistic with Trump in office. He has floated the idea of more narrow tax breaks for targeted groups of lower-income Americans. In short, the renewal of the TCJA would likely pave the way for tax-friendly policies that may disproportionately benefit top earners at the expense of middle- and lower-income Americans.
Find Out: 7 Tax Loopholes the Rich Use To Pay Less and Build More Wealth
New Tariffs Could Drive Up the Cost of Consumer Goods
One of Trump’s biggest campaign promises was to implement sweeping tariffs, and he’s following through on what was promised. He’s issuing tariffs as high as 145% on imported Chinese goods as well as a 10% or 20% tariff on imports from anywhere else in the world. The Trump administration’s introduction of new tariffs will impact American families across the board and could greatly increase the cost of living.