Feature 2025 Tax Cuts Tracker

House and Senate Republicans are seeking to enact President Donald Trump’s tax agenda, which includes extending the expiring pieces of the 2017 Tax Cuts and Jobs Act (TCJA) and restoring TCJA business tax breaks that are phasing out or expired, as well as campaign proposals to exempt tips, overtime pay, and Social Security benefits from federal income taxes.

5/21/25 update: The House version of the reconciliation bill passed through the Budget Committee on May 18th. A slightly modified version was released on May 19th and is currently being considered by the House Rules Committee.

The tax section of the bill addresses expiring provisions of the 2017 Tax Cuts and Jobs Act (TCJA) and includes temporary tax provisions related to President Trump’s 2024 campaign proposals, certain business tax incentives, and revenue raising provisions including repeal of various energy tax incentives. TPC’s analysis of the May 19th version found that 60 percent of the tax benefits go to the top 20 percent of households. For further discussion of TPC’s analysis, see this post at TPC’s TaxVox blog.

TPC’s analysis of the prior May 9th bill can be found here and at our TaxVox blog.

 

PRIOR ESTIMATES AND ANALYSIS

Below are TPC estimates of revenue and distributional effects of various policies under discussion in the 2025 tax debate.
 

Tax Cuts

Revenue Raisers

 

 

 

TAX CUTS

Expiring TCJA Provisions

The following TCJA provisions are set to expire after 2025.

Related TPC research

Business tax extenders

The TCJA permanently lowered the corporate income tax rate from 35 percent to 21 percent. However, several other policies were made temporary.

  • R&D Expensing: Since 2022, deductions for R&D costs must be spread out over multiple years instead of applying the full benefit in year one.
  • Net interest deduction: Since 2022, deductions for net interest expenses have been restricted, based on EBIT (earnings before interest, taxes) instead of EBITDA (earnings before interest, taxes, depreciation, and amortization).
  • "Bonus" depreciation: The ability of businesses to fully expense most equipment purchases (known as bonus depreciation) began phasing down in 2023 and will completely expire at the end of 2026.
  • International business tax provisions: Tax rates on corporation shifting provisions (the global intangible low-taxed income tax, the base erosion and anti-abuse tax, and the foreign-derived intangible income tax) will increase starting in 2026.

Related TPC Research:

State and local tax deduction

The deduction was capped at $10,000 as part of the TCJA to help offset the total fiscal cost. However, the Trump administration and congressional Republicans from high-tax states have signaled an interest in raising the cap.

Related TPC Research:

Child tax credit

The TCJA temporarily doubled the maximum child tax credit from $1,000 to $2,000 per child under 17 and added a $500 nonrefundable credit for children ineligible for the $2,000 credit. Republican and Democratic lawmakers have proposed expanding the credit further, either to raise the credit amount or expand benefits for lower-income families.

Related TPC Research:

Trump Campaign Proposals

During the campaign, President Trump proposed tax exemptions for:

  • Tips income: The fiscal costs would depend on any limitations imposed and whether the exemption applies to both income and payroll taxes.
  • Social Security benefits: TPC estimates that exempting Social Security benefits from taxation would reduce federal revenues by about $1.5 trillion over ten years.
  • Overtime pay: More details on this proposal have not yet surfaced. Trump has said he would include measures to prevent abuse of the exemption.
  • Auto loan interest deduction: TPC estimates such a deduction would cost $10 billion per year if the deduction was "above-the-line" and available to all filers, not just those who itemize when they file a return. The cost would be lower if the deduction were capped or limited to itemizers only.

Related TPC Research:

REVENUE RAISERS

To offset the costs of these tax cuts, President Trump, Congress, and various groups outside government have proposed repealing certain clean energy tax breaks included in the 2022 Inflation Reduction Act, raising tariffs, and other revenue raisers.

Clean energy tax breaks

The Trump administration and congressional Republicans have called for repealing many of corporate and individual income tax breaks for production and consumption of clean energy products adopted as part of the Inflation Reduction Act (IRA).

Tariffs

Since taking office, the Trump administration has levied a variety of higher tariffs on trading partners and certain imports. Our "Tracking the Trump Tariffs" page has more details.

Other payfors

  • Carried interest: General partners in an investment fund generally receive compensation as management fees (usually equal to a percentage of the fund’s assets) and carried interest (a share in the fund’s profits from those assets). While management fees are typically taxes as ordinary income, carried interest is often eligible to be taxed at the lower long-term capital gains tax rate. Taxing all carried interest as ordinary income, as President Trump has proposed, would raise about $15 billion over a decade.
  • Corporate SALT cap: The $10,000 SALT cap does not currently apply to corporate taxes. As a result, corporations still have access to the full deduction. Many states have also adopted pass-through entity taxes to allow unincorporated businesses to bypass the cap.
  • Taxing university endowments: The TCJA enacted a 1.4 percent tax on the endowments of large universities. Republican lawmakers have proposed raising the rate to raise additional revenue for other tax reform priorities.
  • Stock buybacks excise tax: Under the Inflation Reduction Act, stock buybacks are now subject to a 1 percent excise tax. Raising that rate has been floated as a potential revenue offset.
Primary topic Federal Budget and Economy