Just days before President-elect Donald Trump is set to be inaugurated, a group of House Republicans is advocating for a rapid extension of the GOP’s 2017 tax legislation. If Congress doesn’t act, numerous tax advantages are set to vanish post-2025. This includes lower tax brackets, an enhanced child tax credit, and a 20% pass-through business deduction, to name a few. The Tax Foundation suggests that without extending these provisions from the Tax Cuts and Jobs Act (TCJA), more than 60% of taxpayers could face increased taxes in 2026.
Jason Smith, who chairs the House Ways and Means Committee, shared his perspective during a Tuesday hearing, urging, “We can’t afford to leave families and small businesses in limbo, anxiously waiting for Congress to offer tax relief at the very last minute.”
In other personal finance news, around 30 million people could soon use the IRS free Direct File program, new legislation on Social Security benefits has highlighted the need for broader reforms, and in his final days in office, Biden has forgiven student loans for over 150,000 borrowers.
Taking advantage of their complete control of both Congress and the White House, Republicans have the opportunity to pass this legislation via “reconciliation,” a process that sidesteps the filibuster.
Smith emphasized, “It’s crucial we make the Trump tax cuts permanent as quickly as possible.”
Yet, there are voices of dissent from both sides of the political spectrum. Some lawmakers have expressed concerns over the financial implications of fully extending Trump’s tax measures, especially with the mounting federal budget deficit.
As recently reported by the U.S. Department of the Treasury, the fiscal year 2025’s three-month deficit surged to $710.9 billion in December, marking nearly a 40% increase from the previous year during the same timeframe.
Democrats have also voiced opposition to the TCJA extensions, arguing they predominantly favor the wealthy over middle-class families. Richard Neal, a Democrat from Massachusetts and the ranking member of the House Ways and Means Committee, commented during the hearing, “It’s clear most of these cuts have favored those at the very top. The average Americans are enduring this tax plan and are still seeking relief.”
The Treasury’s report from last week estimates that extending Trump’s expiring tax cuts fully could cost about $4.2 trillion over a decade. If these cuts are prolonged, the report indicates the average family could save 2.2% of after-tax income, while the top 0.1% of earners could enjoy a 4.2% reduction. Translating these percentages into actual savings, the average family might save around $2,000 each year, whereas the wealthiest 0.1% could potentially pocket about $314,000 annually, based on 2025 data.
