The Tax Cuts and Jobs Act (TCJA) of 2017 made sweeping changes throughout the tax code, but many provisions were temporary and are set to expire at the end of 2025. The Trump administration has been on a desperate hunt for cuts to fund an extension, which raises the question: what’s worth risking the continued operation of the government to preserve?
What Isn’t Expiring?
It is worth noting, right off the bat, that the TCJA was only a temporary tax cut for provisions that benefited individuals and families—corporate tax cuts were permanent right from the start.
Prior to the TCJA, corporations faced a top tax rate of 35%. The TCJA slashed that rate to 21%—a massive and permanent windfall for businesses. Beyond just the lower corporate tax rate, many business-friendly provisions were made permanent:
- Changes to taxes on foreign profits: the TCJA shifted the US toward a territorial tax system, which allows multinational corporations to avoid US taxes on most foreign earnings.
- Repeal of the alternative minimum tax (AMT): The AMT for corporations was eliminated, reducing potential tax liabilities for large businesses.
- Inflation adjustments: A change was made as to how inflation is calculated. This means tax brackets will creep up over time, pushing more people into higher tax brackets. Unlike the cuts, this was made a permanent feature of the law.
The one major business-related tax cut that was made temporary is bonus depreciation—that is the ability for businesses to immediately deduct 100% of the cost of new eligible assets in the year that equipment is put into service.
What Is Expiring: Tax Cuts With a Sunset Date
While corporate America will continue to enjoy its slashed rate regardless of how extension negotiations proceed, the provisions benefiting individuals and families were designed to disappear after 2025. At the time of the passage of the TCJA, this was a budget end-around: Republicans needed to keep the bill’s official cost under control, at least ostensibly, and so the cuts were made temporary.
The assumption is that once the provisions were set to expire, future lawmakers would feel political pressure to extend them rather than oversee the “raising” of taxes. Of course, Trump himself likely expected to have just wrapped up his second term by the time the bill came due.
Here’s what’s expiring:
Individual Rates
The TCJA lowered tax rates across much of the income spectrum, including the top marginal rate—which was reduced to 37% from 39.6%. If the law expires, the rates will return to pre-TCJA levels:
- 12% bracket returns to 15%
- 22% bracket returns to 25%
- 24% bracket returns to 28%
- 37% bracket returns to 39.6%
Standard Deduction vs. Personal Exemptions
The TCJA almost doubled the standard deduction but eliminated personal exemptions. If the TCJA is allowed to expire, personal exemptions will return. For the average family, however, the loss of the increased standard deduction will result in higher taxable income.
The Child Tax Credit (CTC) is Halved
The TCJA expanded the CTC from $1,000 per child to $2,000 per child. The refundable portion will also fall back, which means fewer families will be able to enjoy the full credit.
The Return of Full State and Local Tax (SALT) Deductions
The TCJA capped SALT deductions at $10,000 – disproportionately effecting residents in high-tax states. If the TCJA expires, the cap goes away, and high-income earners in blue states like New York, California and New Jersey will once again be able to fully deduct their state and local taxes.
The SALT deduction primarily benefits wealthier households—as they are more likely to itemize their deductions and pay more in state taxes.
The Alternative Minimum Tax Returns
The TCJA increased the AMT exemption threshold, which kept millions of households out of this parallel tax regime. If the law expires, many upper-middle-class households will need to navigate AMT calculations and potentially pay higher taxes.
The 20% Small Business Deduction Disappears
Small business owners operating as pass-through entities (sole proprietorships, partnerships, S-corps, etc.) currently get a 20% deduction on qualified business income. This is a major tax break for small businesses and it goes away in 2026.
Estate Tax Exemption Shrinks
The TCJA doubled the estate tax exemption, which pushed more wealthy families out of the federal estate tax. If the TCJA provisions expire, the estate tax threshold will fall back to $14.3 million—which could mean a major tax increase for wealthy estates.
The Stakes
The expiration of these provisions represents an estimated $4.6 trillion in new revenue over the next decade. In other words, letting the TCJA sunset as was planned would significantly reduce further deficits.
Republicans don’t want to let these tax cuts expire—as that could be politically unpopular—but they also don’t want to add another $4.6 trillion to the deficit—as that could be political poison.
The expiration of the TCJA temporary provisions will hit different income groups in different ways, however. A worker earning $60,000 per year would see about $8,500 in tax liability under the TCJA—if the law expires, that total would jump to about $10,700, or a 26% increase.
An individual earning $1,000,000 per year, however, would only see a 6.5% increase in tax liability—from about $330,300 to $351,800. Their top rate jumps from 37% to 39.6%, but the overall percentage increase in their burden is smaller than for low- and middle-income earners.
This reflects the core reality of the TCJA’s design: the rich got the biggest breaks in dollar terms and the middle class got smaller cuts that will nonetheless feel more painful when they sunset.
Republicans are pushing for an extension for all of the cuts chiefly to ensure the estate tax exemption remains and the 20% pass-through deduction doesn’t disappear. The individual rates and standard exemption provide political cover and ensure the extension doesn’t appear to be purely a tax break for the ultra-wealthy.
The issue they face is a simple one: they want to keep rates low for the wealthiest Americans, they are reticent to raise taxes elsewhere because that could be politically unpopular, and they need to rhetorically refuse to accept higher deficits. That leaves only one option: cutting spending on entitlement programs like Social Security and Medicare.