Tax Model Analysis Extending Provisions of the Tax Cuts and Jobs Act

SUMMARY

TPC estimates that extending provisions of the 2017 Tax Cuts and Jobs Act (TCJA) would:

  • Reduce federal revenues by $4.4 trillion through fiscal year 2035 ($3.5 trillion from extending certain individual and estate tax provisions and $860 billion from extending certain business tax provisions).

  • Decrease taxes by about $2,100, increasing after-tax incomes by 2.1 percent, for the average household in 2026. In general, higher income households would receive larger average tax cuts as a percentage of their after-tax income. Taxpayers in the top income quintile (or highest 20 percent) would receive 65 percent of the net tax cuts.

 

 

 

 

 

MODEL ESTIMATES

Tables show the change in federal tax revenues and the distribution of federal tax changes from extending provisions of the Tax Cuts and Jobs Act. Revenue estimates are for fiscal years 2026–2035 and distributional estimates are for calendar years 2026 and 2035.

Extend Provisions of the Tax Cuts and Jobs Act

Revenue Impact

FY2026–FY2035

Distributional Impact

2026

2035

Distribution of Federal Tax Change

Levels    Percentiles

Levels    Percentiles

Tax Units with Tax Increase or Tax Cut

Levels    Percentiles

Levels    Percentiles

 

Extend Individual Provisions of the Tax Cuts and Jobs Act

Distribution of Federal Tax Change

2026

Levels

Percentiles

 

 

ADDITIONAL INFORMATION

TPC’s estimates include extending the following provisions:

  • Individual provisions: reducing individual tax rates; increasing the standard deduction; repealing personal exemptions; modifying the child tax credit, itemized deductions, and the individual alternative minimum tax (AMT); allowing a 20 percent deduction for qualifying pass-through income; limiting excess business losses for noncorporate businesses; electing to invest capital gains in opportunity zones; and repealing tax benefits for moving expenses
  • Business extenders: extending 100 percent “bonus” depreciation, expensing research and experimentation expenditures, reinstating a more generous limit on net interest deductions, and repealing scheduled changes to TCJA’s international tax provisions
  • Estate tax: increasing the exemption amount
Simulation Run March 27, 2025
  • T25-0031 – Extend Certain Provisions in the 2017 Tax Act, Impact on Tax Revenue 2026-35 Fiscal Years
  • T25-0032 – Extend Certain Provisions in the 2017 Tax Act, by ECI Level, 2026
  • T25-0033 – Extend Certain Provisions in the 2017 Tax Act, by ECI Percentile, 2026
  • T25-0034 – Extend Certain Provisions in the 2017 Tax Act, by ECI Level, 2035
  • T25-0035 – Extend Certain Provisions in the 2017 Tax Act, by ECI Percentile, 2035
  • T25-0036 – Extend Certain Major Provisions in the 2017 Tax Act, Tax Units with a Tax Increase or Tax Cut, by ECI Level, 2026
  • T25-0037 – Extend Certain Major Provisions in the 2017 Tax Act, Tax Units with a Tax Increase or Tax Cut, by ECI Percentile, 2026
  • T25-0038 – Extend Certain Major Provisions in the 2017 Tax Act, Tax Units with a Tax Increase or Tax Cut, by ECI Level, 2035
  • T25-0039 – Extend Certain Major Provisions in the 2017 Tax Act, Tax Units with a Tax Increase or Tax Cut, by ECI Percentile, 2035
    • Simulation Run March 27, 2025
  • T25-0040 – Extend Certain Individual Income Tax Provisions in the 2017 Tax Act, by ECI Level, 2026
  • T25-0041 – Extend Certain Individual Income Tax Provisions in the 2017 Tax Act, by ECI Percentile, 2026