Welcome to Extreme Investor Network! As experts in personal finance, we are committed to providing you with valuable insights and information to help you navigate the complex world of taxes, investments, and financial planning.
Today, we want to talk about a pressing issue that could impact your wallet in the near future: the fate of the Trump-era tax cuts. Trillions of dollars in expiring tax breaks are at stake this election season, and the decisions made could have far-reaching implications for your taxes after 2025.
The Tax Cuts and Jobs Act of 2017 (TCJA) brought about temporary tax cuts for most Americans, including lower federal income tax brackets, a higher standard deduction, and a more generous child tax credit. Now, with the 2025 tax cliff looming, both President Joe Biden and former President Donald Trump have outlined their positions on extending these tax breaks.
Trump is in favor of extending all TCJA provisions, while Biden is focused on extending tax breaks for taxpayers earning less than $400,000, which covers the majority of Americans. Despite their differences, both candidates aim to provide tax relief for 95% of taxpayers.
However, the future of these tax cuts ultimately depends on which party controls Congress. Legislative updates in the coming years could have a significant impact on your tax bill.
One of the key provisions set to expire is the lower federal income tax brackets, which reduced rates across the board. Without an extension, tax rates will increase after 2025, reverting to pre-TCJA levels. Additionally, the higher standard deduction, which reduced the number of itemizers, could revert back to pre-TCJA levels, affecting how you file your taxes.
Another crucial provision is the more generous child tax credit, which was expanded under the TCJA. Lawmakers are currently debating how to further expand this credit, with Biden calling for additional changes.
Finally, there is also the issue of tariffs, which both Trump and Biden have supported in some capacity. While their approaches may differ, the bottom line is that consumers could end up bearing the brunt of these tariffs through higher prices on imported goods.
As we approach 2025, questions remain about how to fund these tax cuts amid the federal budget deficit. Extending the TCJA provisions could add trillions to the deficit, prompting discussions about raising taxes on the wealthy and corporations to offset the costs.
At Extreme Investor Network, we are committed to providing you with the latest insights and analysis on personal finance topics that matter most to you. Stay tuned for more updates and expert advice to help you make informed financial decisions.