Congress has had their sights on starting off with the expiration of the Tax Cuts and Jobs Act (TCJA) along with the tax foundation to provide the insight and analysis on the policies at stake since the enactment in 2017.
They have overlooked some of the weaknesses and strengths of the TCJAs. “We have also analyzed fundamental reforms that would dramatically improve the U.S. tax system to support economic growth as well as greater efficiency and simplicity,” said the writers of tax foundation.
Whether the lawmarks that are targeting the fundamentals of tax reform or following the outlines made out of the TCJA congress will be making a decision prioritizing what is to come in this forthcoming round of tax reform.
It is said that the alternative reform options may not be politically popular, but that it would grow the economy providing sufficient revenue all to avoid significantly increasing this nation’s debt. There are two alternative options that would broaden the tax base for the individual incoming for the TCJA to maintain the individual rate cuts from the law.
Per a representative from the Tax Foundation, “The two alternative options would further broaden the tax base for individual income (more so than the TCJA), maintain much of the individual rate cuts from that law, improve the business tax base to support investment, and maintain the corporate tax rate of 21 percent.”
Nine states have taken the initiation to no longer tax Social Security Benefits. Social Security is monthly payments that replace a portion of a person’s income when they enter retirement, are no longer eligible to work, or have suddenly passed, the social security benefits are based on your life earnings.
By changing the tax laws on Social Security benefits, the revenue collected by the program will affect future payments.
If tax changes on the Social Security benefits there will be lower future benefits for those that need it, for those that become disabled, or die. It covers retirement, disability, survivors, and medicare.
When the bill is passed in both the Senate and the House, from there it’ll be passed to the president to sign and then become a law.
So far no bills have been passed, and as far as we know many tax bills have been introduced to the house and congress, but while many have passed the House, others have failed the House approval process.
The proposal of changing the new tax laws will impact the Tax Cuts and Jobs Act that should expire by the end of 2025.
Per Claconnect, an accounting firm based in the US, when you crunch the numbers, the biggest breaks get offered to entities who already have wealth to begin with. “Top individual tax rates dropped from 39.6% to 37%, the estate tax exemption was doubled, and some business owners received a 20% pass-through deduction.”
The Trump administration’s tax proposal includes lowering the tax rate from 21% to 15% for companies that produce here in America, along with making it lower for the TCJA top marginal tax rate of 37% permanent, and the biggest one of all, tariffs, to impose 10-20% baseline tariff on imports as an example place tariffs of 60% on imports from China.
Corporate tax rates are going to be lowered by 6% for companies here in the United States, with the TCJA being significantly lower since 2024.
While tariffs are being doubled on import goods from China, making most of the products we use on a daily basis become more expensive.
Overtime wages from income tax, tip income, exclude tips from income tax, social security income, exclude social security income from tax will now become harder for you to claim by the end of the year.
As of now both Congress and the House still have not passed a new bill impling President Trump’s Tax law, though the drastic consequences are a clear sign for citizens to be aware of what changes could come, should these proposals come to fruition.
