The Tax Cuts and Jobs Act (TCJA), signed into law by former President Donald Trump in 2017, was one of the most significant overhauls of the U.S. tax code in decades. Its primary goal was to stimulate economic growth through lower corporate tax rates and tax relief for individuals. Since its enactment, Americans have wondered whether we are still under Trump’s tax policy or if changes have been implemented that affect how much we pay in taxes.
As of September 2024, much of Trump’s tax policy remains intact, with certain provisions set to expire unless further action is taken by Congress. In this article, we’ll explore the current state of tax laws, how they’ve evolved under the Biden administration, and what may happen in the near future.
Trump’s Tax Policy: A Quick Overview
The Tax Cuts and Jobs Act brought significant changes to both individual and corporate tax rates:
- Lowered corporate tax rate from 35% to 21%.
- Reduced individual tax brackets, including doubling the standard deduction.
- Capped the state and local tax (SALT) deduction at $10,000.
- Increased the child tax credit and introduced new tax brackets for high-income earners.
- Introduced a pass-through business deduction for small business owners.
While these provisions were aimed at boosting economic growth and investment, critics argued that the policy disproportionately benefited the wealthiest Americans and corporations. Regardless of opinion, the effects of Trump’s tax policy are still being felt today.
Are We Still Operating Under Trump’s Tax Laws?
As of 2024, most of the key elements of Trump’s tax plan are still in place, although some have been modified or are set to expire. Here’s a detailed look at which provisions remain active and how they affect taxpayers today.
Individual Tax Rates and Brackets
The individual tax brackets under Trump’s TCJA remain mostly unchanged, with the top tax rate at 37%, down from 39.6% pre-TCJA. The standard deduction is still doubled, which means a significant number of taxpayers no longer itemize deductions.
However, the income thresholds for these tax brackets have been adjusted annually for inflation, as per the original TCJA provisions. For example, in 2024, the standard deduction for single filers is $14,000, and $28,000 for joint filers.
One of the key elements still active today is the child tax credit, which was expanded under the TCJA. Currently, taxpayers can claim $2,000 per child under the age of 17, with up to $1,400 refundable.
Expiration of Key Provisions
Although many of Trump’s tax cuts are still in place, certain individual tax provisions are scheduled to expire by 2025 if not extended by Congress. These include:
- Lowered individual tax rates.
- The doubled standard deduction.
- The increased child tax credit.
If these provisions expire, individuals may face higher tax rates and a return to itemized deductions for those who have previously benefited from the standard deduction.
Corporate Tax Rates Under Trump
The most substantial change under Trump’s tax policy was the permanent reduction in the corporate tax rate from 35% to 21%, which remains in effect as of September 2024. This has allowed corporations to retain more profits and potentially reinvest in their businesses, although it has also contributed to a widening federal deficit.
Critics argue that the reduction primarily benefited large corporations, and there have been calls to raise the corporate tax rate under President Biden. So far, no changes have been made to the corporate tax rate, though future reforms may be on the horizon as budget negotiations continue in Congress.
Pass-Through Business Income Deduction
Another important feature of Trump’s tax reform was the creation of a 20% deduction for pass-through businesses, which includes small businesses, partnerships, and LLCs. As of 2024, this deduction remains active and is available to qualifying businesses. This provision has been crucial for small business owners, reducing their taxable income and enabling more growth and hiring.
Like the individual tax cuts, this deduction is scheduled to expire in 2025, unless extended by Congress. If allowed to expire, many small businesses will face higher tax liabilities, which could potentially hinder their growth.
Biden’s Approach to Tax Reform
Since taking office in 2021, President Biden has expressed interest in reforming parts of the Trump tax plan, specifically targeting wealthier individuals and corporations. However, as of September 2024, most of Trump’s tax cuts remain intact.
Biden’s proposed changes have faced significant hurdles in Congress, where Republican opposition has prevented the full enactment of tax reforms. Some of the key proposals from the Biden administration include:
- Raising the corporate tax rate from 21% to 28%.
- Increasing the top individual tax rate back to 39.6% for high-income earners.
- Raising capital gains taxes for individuals making over $1 million annually.
These proposals, while politically contentious, have not yet been passed into law, leaving Trump’s tax cuts largely untouched.
State and Local Tax Deduction (SALT)
One of the most controversial provisions of Trump’s TCJA was the cap on SALT deductions, which limits the amount of state and local taxes that individuals can deduct to $10,000. This has disproportionately affected taxpayers in high-tax states like California, New York, and New Jersey.
As of 2024, the SALT cap remains in place despite efforts by some Democratic lawmakers to raise or eliminate the cap. While there has been some political momentum to address this issue, it remains one of the most hotly debated aspects of Trump’s tax plan.
Impact of Trump’s Tax Policy on the Economy
The economic impact of Trump’s tax plan is a matter of ongoing debate. Supporters argue that the corporate tax cuts led to increased business investment, job creation, and overall economic growth. However, critics point to the widening federal deficit, which has ballooned in part due to lost revenue from the tax cuts.
As of September 2024, the U.S. national debt has exceeded $33 trillion, raising concerns about the long-term sustainability of Trump’s tax cuts without significant spending cuts or new revenue streams.
In terms of overall economic growth, the COVID-19 pandemic had a profound impact on the economy, making it difficult to fully assess the long-term benefits of the TCJA. However, certain sectors, such as technology and real estate, have seen substantial growth during the post-pandemic recovery period, possibly aided by the tax relief provided under Trump’s policy.
What’s Next for U.S. Tax Policy?
With 2025 fast approaching, many of the key provisions of Trump’s tax cuts are set to expire. This could lead to a dramatic shift in tax policy unless Congress acts to extend the individual tax cuts and other provisions.
The debate over future tax reform will likely intensify as both parties prepare for the 2024 elections. Republicans are expected to push for an extension of Trump’s tax cuts, while Democrats will likely continue advocating for reforms aimed at raising taxes on wealthier individuals and corporations.
Conclusion
As of September 2024, the U.S. tax system remains largely influenced by the Tax Cuts and Jobs Act implemented under Donald Trump. Although certain provisions are scheduled to expire in 2025, much of Trump’s tax policy is still in place, particularly with respect to corporate taxes and individual tax brackets.
The political landscape will play a crucial role in determining whether these policies are extended or reformed. With the 2024 elections approaching, tax reform is certain to be a key issue, and Americans can expect ongoing debates about the future of the U.S. tax code.
To stay updated on U.S. tax policy and potential changes in the future, readers should follow sources like the Internal Revenue Service (IRS) and the Congressional Budget Office (CBO).
