Tax Cuts and Jobs Act

Tax Cuts and Jobs Act
Great Seal of the United States
Long titleAn Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018
Acronyms (colloquial)TCJA
NicknamesTax Cuts and Jobs Act
GOP tax reform
Trump tax cuts
Cut Cut Cut Act[1]
Enacted bythe 115th United States Congress
EffectiveJanuary 1, 2018
Citations
Public law115–97
Statutes at Large131 Stat. 2054
Codification
Acts affectedInternal Revenue Code of 1986
Agencies affectedInternal Revenue Service
Legislative history
  • Introduced in the House of Representatives as H.R. 1 by Kevin Brady (R–TX) on November 2, 2017
  • Committee consideration by House Committee on Ways and Means; passed committee on November 9, 2017, as "Tax Cuts and Jobs Act" (24–16)
  • Passed the House of Representatives on November 16, 2017 (227–205)
  • Passed the Senate as the Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018. on December 2, 2017 (51–49)
  • Reported by the joint conference committee on December 15, 2017; agreed to by the Senate on December 20, 2017 (51–48) and by the House of Representatives on December 19, 2017 and December 20, 2017 (227–203 224–201)
  • Signed into law by President Donald Trump on December 22, 2017
United States Supreme Court cases

The Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018,[2] Pub. L. 115–97 (text) (PDF), is a congressional revenue act of the United States originally introduced in Congress as the Tax Cuts and Jobs Act (TCJA),[3][4] that amended the Internal Revenue Code of 1986. The legislation is commonly referred to in media as the Trump tax cuts. Major elements of the changes include reducing tax rates for corporations and individuals, increasing the standard deduction and family tax credits, eliminating personal exemptions and making it less beneficial to itemize deductions, limiting deductions for state and local income taxes and property taxes, further limiting the mortgage interest deduction, reducing the alternative minimum tax for individuals and eliminating it for corporations, doubling the estate tax exemption, and reducing the penalty for violating the individual mandate of the Affordable Care Act (ACA) to $0.[5][6] The New York Times has described the TCJA as "the most sweeping tax overhaul in decades".[7]

Most of the changes introduced by the bill went into effect on January 1, 2018, and did not affect 2017 taxes.[8] Many tax cut provisions contained in the TCJA, notably including individual income tax cuts, such as the changes to the standard deduction in §63 of the IRC, are scheduled to expire in 2025; while many of the business tax cuts expire in 2028.[9][10] Extending the cuts have caused economists across the political spectrum to worry it would boost inflationary pressures[11][12] and worsen America's fiscal trajectory.[13] The Congressional Budget Office estimates that extending the expiring provisions would add $4.6 trillion in deficits over 10 years.[14]

Studies show the TCJA increased the federal debt, as well as after-tax incomes disproportionately for the most affluent.[15] It led to an estimated 11% increase in corporate investment, but its effects on economic growth and median wages were smaller than expected and modest at best.[16]

  1. ^ Graham, David A. (November 1, 2017). "The 'Cut Cut Cut Act' Is Effective Branding". The Atlantic.
  2. ^ "H.R.1 – An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018." Congress.gov. December 22, 2017. Retrieved December 29, 2017.
  3. ^ Watkins, Eli. "Senate rules force Republicans to go with lengthy name for tax plan". CNN. Retrieved December 20, 2017.
  4. ^ Tax Cuts and Jobs Act of 2017#Name of the law
  5. ^ "Reconciliation Recommendations of the Senate Committee on Finance". Congressional Budget Office. November 26, 2017. Retrieved July 9, 2018.
  6. ^ United States. Congress. Joint Committee on Taxation (2018). General Explanation of Public Law 115-97. Washington, D.C.: U.S. Government Publishing Office. Retrieved December 19, 2018.
  7. ^ Kaplan, Thomas (December 20, 2017). "House Gives Final Approval to Sweeping Tax Overhaul". The New York Times.
  8. ^ Pullen, John Patrick (December 20, 2017). "Here's When the GOP Tax Reform Bill Will Take Effect". Fortune. Retrieved December 23, 2017.
  9. ^ Luhby, Tami (June 13, 2024). "$3.4 trillion in individual tax cuts are expiring next year. Biden and Trump would handle it very differently". CNN. Retrieved August 26, 2024.
  10. ^ Wire, Sarah D. (August 25, 2024). "Harris or Trump will be busy in 2025: Next president will face these issues in office". USA TODAY. Retrieved August 26, 2024.
  11. ^ Cite error: The named reference :13 was invoked but never defined (see the help page).
  12. ^ Cite error: The named reference :14 was invoked but never defined (see the help page).
  13. ^ Cite error: The named reference :15 was invoked but never defined (see the help page).
  14. ^ Bogage, Jacob (June 24, 2024). "The national debt is ballooning. The next president probably won't stop it". Washington Post.
  15. ^ Gale, William G.; Hoopes, Jeffrey L.; Pomerleau, Kyle (2024). "Sweeping Changes and an Uncertain Legacy: The Tax Cuts and Jobs Act of 2017". Journal of Economic Perspectives. 38 (3): 3–32. doi:10.1257/jep.38.3.3. ISSN 0895-3309.
  16. ^ Chodorow-Reich, Gabriel; Zidar, Owen; Zwick, Eric (2024). "Lessons from the Biggest Business Tax Cut in US History". Journal of Economic Perspectives. 38 (3): 61–88. doi:10.1257/jep.38.3.61. ISSN 0895-3309.