Tax cuts

Extracted Attributes

• Definition

  A reduction in the amount of tax paid by individuals or corporations.

• TCJA Key Changes

  Reduced tax rates for corporations and individuals, increased standard deduction and family tax credits, eliminated personal exemptions, limited state and local tax deductions, reduced alternative minimum tax, doubled estate tax exemption, reduced ACA individual mandate penalty to $0.

• Critics' Argument

  Benefit the wealthy, reduce necessary government services, increase budget deficit or sovereign debt.

• TCJA Effective Date

  2018-01-01

• Proponents' Argument

  Increase disposable income, spur spending, boost business demand, encourage investment, grow the economy.

• Primary Legislation (US)

  Tax Cuts and Jobs Act (TCJA) of 2017, also known as the Trump Tax Cuts

• TCJA Extension Legislation

  One Big Beautiful Bill Act

• TCJA Impact on Federal Debt

  Increased federal debt

• TCJA Impact on After-Tax Income

  Disproportionately increased for the most affluent

• TCJA Impact on Corporate Investment

  Estimated 11% increase

• TCJA Business Tax Cuts Expiration (Original)

  2028

• Estimated Deficit Increase from TCJA Extension

  $4.6 trillion over 10 years

• TCJA Individual Tax Cuts Expiration (Original)

  2025

• TCJA Impact on Economic Growth and Median Wages

  Smaller than expected and modest at best

Timeline

• The Tax Cuts and Jobs Act (TCJA) was signed into law in the United States. (Source: Wikipedia)

  2017-12-22

• Most provisions of the Tax Cuts and Jobs Act (TCJA) went into effect. (Source: Wikipedia)

  2018-01-01

• Many individual income tax cuts from the TCJA were originally scheduled to expire. Congress passed the 'One Big Beautiful Bill Act' to extend most provisions beyond their original expiration dates. (Source: Wikipedia)

  2025-01-01

• Many business tax cuts from the TCJA were originally scheduled to expire. (Source: Wikipedia)

  2028-01-01

Tax Cuts and Jobs Act

The Tax Cuts and Jobs Act, Pub. L. 115–97 (text) (PDF), is a United States federal law that amended the Internal Revenue Code of 1986, and also known as the Trump Tax Cuts, but officially the law has no short title, with that being removed during the Senate amendment process. The New York Times described the TCJA as "the most sweeping tax overhaul in decades". Studies show the TCJA increased the federal debt, as well as after-tax incomes disproportionately for the most affluent. It led to an estimated 11% increase in corporate investment, but its effects on economic growth and median wages were smaller than expected and modest at best. Major elements of the changes include reducing tax rates for corporations and individuals, increasing the standard deduction and family tax credits, eliminating personal exemptions and making it less beneficial to itemize deductions, limiting deductions for state and local income taxes and property taxes, further limiting the mortgage interest deduction, reducing the alternative minimum tax for individuals and eliminating it for corporations, doubling the estate tax exemption, and reducing the penalty for violating the individual mandate of the Affordable Care Act (ACA) to $0. Most of the changes introduced by the bill went into effect on January 1, 2018, and did not affect 2017 taxes. Many tax cut provisions contained in the TCJA, notably including individual income tax cuts, such as the changes to the standard deduction in §63 of the IRC, were scheduled to expire in 2025 while many of the business tax cuts were set to expire in 2028. However, in 2025, Congress passed the One Big Beautiful Bill Act, which extends most provisions of the TCJA beyond their original expiration dates. Extending the cuts have caused economists across the political spectrum to worry it could boost inflationary pressures and worsen America's fiscal trajectory. The Congressional Budget Office estimated that extending the expiring provisions would add $4.6 trillion in deficits over 10 years.

Web Search Results

• How Tax Cuts Affect the Economy

  Tax cuts reduce government revenues and create a budget deficit or higher sovereign debt. The federal tax system relies on several taxes to generate revenue, including income tax and payroll tax. Proponents of tax cuts argue that cuts increase an individual or family's disposable income, spur spending, and help grow the economy. Critics claim that tax cuts only benefit the wealthy and reduce necessary government services for the lower-income bracket. [...] Tax cuts reduce government revenues and create either a budget deficit or increasedsovereign debt. Critics often argue that tax cuts benefit the rich at the expense of those with fewer resources, as services beneficial to those in a lower income bracket are cut. Proponents claim that cuts put money in consumers' pockets, resulting in spending increases, which grow the economy. Sponsored Build Wealth Without Worry [...] Advocates of tax cuts argue that reducing taxes improves the economy by boosting spending. Those who oppose cuts say they only help the rich and reduce the government services on which lower-income individuals rely. Regardless of opinion, tax cuts reduce government revenues and lead to budget deficits or growth in government debt. Below, find out how tax cuts affect the economy. ### Key Takeaways

• Tax Cuts and Jobs Act - Wikipedia

  The Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018,( L.115–97 (text)(PDF), is a congressional revenue act of the United States originally introduced in Congress as the Tax Cuts and Jobs Act (TCJA),( that amended the Internal Revenue Code of 1986. The legislation is commonly referred to in media as the Trump tax cuts. Major elements of the changes include reducing tax rates for corporations and individuals, increasing [...] Committee consideration by House Committee on Ways and Means; passed committee on November 9, 2017, as "Tax Cuts and Jobs Act" (24–16) Passed the House on November 16, 2017(227–205) Passed the Senate as the Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018 on December 2, 2017(51–49) [...] The House plan had four income tax brackets ranging from 12% to 39.6%, while the Senate bill kept seven brackets ranging from 10% to 38.5%.( The House plan cut the corporate tax immediately, while the Senate plan delayed it until 2019. The House plan made both individual and corporate taxes "permanent" (i.e., no set expiration) while the Senate bill had most of the individual tax cuts expiring (but not the business cuts).

• How do taxes affect the economy in the short run?

  Tax cuts increase household demand by increasing workers’ take-home pay. Some tax cuts can boost business demand by reducing the cost of capital, thereby making investment spending more attractive. Business tax cuts also increase firms’ after-tax cash flow, which can be used to pay dividends and expand activity. [...] But some things are clear. CBO’s estimates suggest that, dollar for dollar, tax cuts are often a less effective means of stimulus than are spending increases. If the federal government purchases goods and services itself (or helps state and local governments do so), most or all of the spending will boost demand. If the government cuts personal taxes, however, a substantial amount of the added spending power leaks into saving. That dampening effect can be moderated by targeting tax cuts to [...] Primarily through their impact on demand. Tax cuts boost demand by increasing disposable income and by encouraging businesses to hire and invest more. Tax increases do the reverse. These demand effects can be substantial when the economy is weak but smaller when it is operating near capacity.

• Budget Reconciliation: Tracking the 2025 Trump Tax Cuts

  The 2017 Trump Tax Cuts, known as the Tax Cuts and Jobs Act (TCJA), reduced average tax burdens for taxpayers across the income spectrum and temporarily simplified the tax filing process through structural reforms. It also boosted capital investment by reforming the corporate tax system and significantly improved the international tax system. [...] April 10, 2025, the House adopted the Senate’s amended version of the budget resolution, which allows $5.3 trillion in deficit-financed tax cuts (the combination of $3.8 trillion of tax cuts assumed to be “costless” under a current policy baseline plus $1.5 trillion in additional deficits permitted), deficit increases of $521 billion on defense and immigration spending, a minimum of $4 billion in spending cuts, and an increase in the debt limit of up to $5 trillion. [...] April 2, 2025, the Senate introduced an updated budget resolution to provide new guidance to its committees on tax and spending policy changes. It adopts the instructions in the House resolution for the House committees while instructing the Senate Finance Committee to make tax policy changes that reduce revenue by up to $1.5 trillion over 10 years against a current policy baseline, which assumes an additional $3.8 trillion in tax cuts. While the $3.8 trillion would not officially score as a

• A History of U.S. Tax Law Changes - Investopedia

  ### 2017 Tax Cuts and Jobs Act In 2017, Congress passed the Tax Cuts and Jobs Act (TCJA), based on Reagan Administration tax proposals to slash individual, corporate, and estate tax rates. The law made a series of concessions, including cutting tax rates across various income tax brackets. The TCJA lowered tax rates across income levels to reduce Americans' income tax burden and eliminated popular itemized deductions. [...] The 2001 tax cut introduced by former President George Bush once again dialed back the trend of tax increases but continued to increase tax credits and negative income tax. Though not intended for it, this long-term tax cut helped shorten the recession following the dot-com market crash, sparing the economy from any specific stimulus measures. The tax cuts expired in 2010 just as baby boomers were leaving the workforce and the world was reeling from the effects of the financial crisis and the