The Tax Cuts and Jobs Act: What is at Stake in 2025
Blog post
05/14/25The Tax Cuts and Jobs Act (“TCJA”) of 2017 introduced the most significant changes to the tax code we have seen in nearly thirty years. It was enacted in President Trump’s first term in office and reduced average tax burdens for individual taxpayers across all income levels and simplified the tax filing process for many. Several key provisions of the TCJA are scheduled to expire at the end of this year unless Congress acts.
With Republicans currently controlling both chambers of Congress, many believe there is a strong chance these provisions will be extended. President Trump and Republican lawmakers are advocating for a comprehensive tax package that would make many of the TCJA’s tax cuts permanent. Several bills related to the TCJA are presently circulating in Congress.
What Provisions are set to Expire?
Although the TCJA made substantial changes across corporate, international, and individual tax rules, the individual tax provisions are the ones highlighted here. Without an extension, pre-2017 income tax rules will return, likely resulting in higher taxes for most and potentially stifling incentives for investment. Major individual provisions that are set to expire include:
- Higher individual tax rates (a rollback of the TCJA’s rate cuts),
- A reduction in the standard deduction and charitable deduction,
- A lower child tax credit, and
- A reduced estate tax exemption, which would fall from its current $13,990,000 to approximately $7,000,000.
Legislative Process and Timeline
Extending these provisions will be costly. Republicans argue that extending and potentially expanding the TCJA is necessary to maintain economic growth and encourage investment. Democrats, on the other hand, are focused on expanding tax relief for lower-income households and increasing taxes on high-income earners.
While Republican’s control both chambers of Congress, their margins are razor-thin, making it challenging to pass a comprehensive tax package. To navigate this, lawmakers will likely use the budget reconciliation process. This mechanism allows tax and spending legislation to pass the Senate with a simple majority vote, bypassing the 60-vote threshold needed to overcome a filibuster.
This is the same legislative path used to pass the TCJA in 2017, the American Rescue Plan Act in 2021, and the Inflation Reduction Act in 2022.
Republicans aim to have a bill ready for President Trump’s signature by Memorial Day, though internal disagreements and the bill’s projected cost may delay progress. A more realistic timeline may see a bill finalized in the second half of the year.
Conclusion
There is momentum to extend the TCJA, but the path forward will depend on political negotiations and the legislative process. With budget reconciliation likely in play and intra-party disagreements to resolve, the next few months will be critical in determining the future of U.S. tax policy.
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