GOP Unveils Sweeping Tax Reform Bill Ahead of 2025 Expiration Deadline
The House Ways and Means Committee has introduced a major new tax bill that aims to cement and expand the 2017 Tax Cuts and Jobs Act provisions, many of which are set to expire after 2025. Nicknamed by former President Trump as “one big beautiful bill,” this proposal would permanently extend certain tax breaks, offer temporary boosts to key deductions and credits, and reshape aspects of the federal tax code for individuals, families, and businesses.
Standard Deduction: Bigger and Here to Stay
The bill proposes a temporary increase of $1,000 for single filers (bringing it to $16,000) and $2,000 for married couples filing jointly (bringing it to $32,000) for tax years 2025 through 2028. These amounts are then indexed for inflation starting in 2029
Child Tax Credit: Temporary Relief, Long-Term Inflation Protection
The credit is temporarily increased to $2,500 per child for tax years 2025 through 2028. Starting in 2029, it reverts to $2,000 and will be indexed for inflation thereafter.
Tax Brackets: A CPI Switch to Prevent “Bracket Creep”
To ensure federal tax brackets keep pace with inflation, the bill proposes replacing the current chained Consumer Price Index (CPI) adjustment with the traditional CPI method. This change could slow the rate at which taxpayers are pushed into higher tax brackets due to inflation, helping prevent hidden tax hikes.
Estate and Gift Taxes: Higher and Indexed Exemptions
The exemption is set at $15 million per individual ($30 million for married couples) beginning in 2026, with adjustments for inflation in subsequent years.
Business Provisions: Pass-Through and Corporate Cuts Extended
The deduction for qualified pass-through business income is increased from 20% to 23% and made permanent.
SALT Cap Relief: Tripled for Itemizers
The proposed legislation also triples the State and Local Tax (SALT) deduction cap from $10,000 to $40,000. This change primarily benefits taxpayers in high-tax states who itemize deductions and would offer significant relief to homeowners and higher earners.
The Trade-Offs: Benefits vs. Deficits
While the bill provides financial benefits across multiple income brackets and sectors. The Joint Committee on Taxation estimates that the bill would increase federal borrowing by $3.7 trillion over the fiscal year 2025–2034 budget window. Critics warn that this revenue loss could necessitate cuts to federal programs such as Medicaid or clean energy initiatives and raise concerns over long-term national debt levels. Furthermore, low-income families who don’t qualify for the child tax credit may see limited benefit.
Final Thoughts
Aaron concluded the presentation by inviting feedback on the bill, noting that its success depends not only on policy outcomes but also on public understanding of its implications. He also dealt with some humorous technical issues during the presentation, including a flickering battery-powered light and a mystery barking dog in the background.
This tax bill is poised to play a central role in the fiscal debates leading up to the 2025 expiration of key provisions, and its passage could reshape the tax landscape for years to come.
All writings are for educational and entertainment purposes only and does not provide investment or financial advice of any kind.
