Taxes

Eric Boehm | From the January 2025 issue

When the new session of Congress opens on January 3, the clock will already be ticking toward the most important set of fiscal decisions lawmakers will make this decade.

Decisions made through the end of 2025 will determine the fate of literally trillions of Americans' dollars. Will they remain in wallets, bank accounts, and retirement portfolios, or will they flow to the U.S. Treasury to fund wars and welfare?

This "fiscal cliff" is eight years in the making. The 2017 Tax Cuts and Jobs Act (TCJA) revamped both the federal corporate and individual income tax codes. But while the new, lower, corporate income tax rate (and associated changes) were made permanent, many changes to the individual tax code were temporary. That includes the higher standard deduction, expanded child tax credit, and the lower tax rates that have allowed nearly all taxpayers to keep more of their own money these past several years.

Unless those provisions are extended or made permanent by the end of 2025, the higher pre-TCJA policies will automatically return. That would mean higher taxes for nearly all taxpaying Americans.

Of these complex and interconnected issues, those individual income tax rates are the most pressing for Congress to solve. Under the TCJA, the top marginal rate was reduced from 39.6 percent to 37 percent—with rates for other tax brackets falling similarly.

Donald Trump's victory and the Republican takeover of the U.S. Senate (the........

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