Estimates show the change in federal tax revenues and the distribution of federal tax burden from extending the 2017 Tax Act (Tax Cuts and Jobs Act, or TCJA) and modifying individual income tax rates. Revenue estimates are for fiscal years 2025-34 and distribution estimates are for calendar year 2026.

TPC previously analyzed the budgetary and distributional effects of extending the expiring provisions of the 2017 Tax Cuts and Jobs Act (TCJA) and the incremental impact of specific major individual provisions.

In this analysis, TPC estimates the impact on federal revenues if all TCJA’s expiring provisions were extended except for the lower individual income tax rates. Allowing individual income tax rates to return to their pre-TCJA levels of 10, 15, 25, 28, 33, 35, and 39.6 percent as scheduled under current law would reduce the $4.0 trillion cost of TCJA extension by 80 percent, to $750 billion through 2034. Distributional results are shown for calendar year 2026 by: ECI Level and ECI Percentile. 

This reduction of $3.2 trillion is larger than the $2.2 trillion revenue loss attributed to the lower tax rates in the estimates from the staff of the Joint Committee on Taxation (JCT) published in May 2024. That is because of interactions with other expiring provisions that are estimated (or “stacked after”) the rate changes in the JCT analysis, most notably the changes that sharply reduced the number of taxpayers affected by the individual alternative minimum tax (AMT).

If only the top individual income tax rate returned to pre-TCJA levels as scheduled, rising from 37 to 39.6 percent in 2026, the cost of TCJA extension would fall by about 10 percent or $360 billion through 2034. Distributional results for that change are shown for calendar year 2026 by: ECI Level and ECI Percentile.