Tax Reform Takes Center Stage as Expiration Looms
With only days to go before the new administration takes office, House Republicans are pushing for swift action to extend the 2017 tax legislation. If Congress fails to act, trillions of dollars in tax breaks will expire after 2025, leaving millions of taxpayers facing higher bills.
The Stakes Are High
More than 60% of taxpayers could see their taxes increase in 2026 if provisions in the Tax Cuts and Jobs Act (TCJA) are not extended, according to the Tax Foundation. This includes lower tax brackets, a more generous child tax credit, and a 20% deduction for pass-through businesses.
A Call to Action
House Ways and Means Committee Chairman Jason Smith is urging Congress to take immediate action to provide tax relief. “We must not leave families and small businesses waiting for Congress to do the right thing,” he said during a committee hearing.
The Path Forward
With full control of Congress and the White House, Republicans can pass legislation through a process known as “reconciliation,” bypassing the filibuster. However, some lawmakers on both sides of the aisle have expressed concerns about the cost of fully extending Trump’s expiring tax provisions, particularly amid growing concerns about the federal budget deficit.
Critics Weigh In
Some Democrats have pushed back on TCJA extensions, arguing that they disproportionately benefit the wealthy rather than middle-class families. “We know that most of these [tax] cuts went to people at the very top,” said Richard Neal, ranking member of the House Ways and Means Committee.
The Cost of Extension
Fully extending Trump’s expiring tax cuts could cost an estimated $4.2 trillion over 10 years, according to a recent Treasury report. While the average family would save 2.2% of after-tax income, the top 0.1% of earners would receive a 4.2% reduction.
What’s at Stake for Taxpayers
If extended, the average family would save roughly $2,000 per year, while the highest 0.1% could see an average tax savings of about $314,000. These figures are based on 2025 data and highlight the significant impact of tax reform on American families and businesses.
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