MOORE: The Biggest Tax Increase in History is Coming, if Congress Doesn't Act

The TCJA doubled the estate tax exemption. If this provision expires the exemption in 2026 will be cut from $28.6 million to $14.3 million for married couples.

By Steve Moore

WASHINGTON, D.C. (Texas Insider Report) — Here is our analysis of what happens if Congressional Democrats (and pro-SALT Republicans) have their way and the Tax Cuts & Jobs Act (TCJA) of 2017 is not extended or is allowed to expire over the coming few months. (With some of the data from the Brookings Institution.)
 

• Millions more Americans will have to itemize deductions: If TCJA expires, the standard deduction for a married couple will be cut to $16,525 in 2026, versus $30,725 if the tax cut remains.
  • This means about four times as many Americans will have to itemize deductions making tax preparation much more complicated.
• Individual Income Tax Rates rise: TCJA lowered marginal income tax rates for all tax filers.
  • The highest tax rate will rise from 37% to 39.6%.
• State & Local Tax (SALT) deduction for the very rich: TCJA imposed a $10,000 cap on the deductibility of state and local taxes (SALT).
  • If this provision of the TCJA expires, all state and local taxes will be deductible, primarily benefiting rich people in high-tax states.
• Child Tax Credit cut in half:  If TCJA is repealed the tax credit for each child under 17 falls from $2,000 to $1,000, penalizing families with kids.
• Small Business Income Tax rises by 25%: TCJA provided a 20% deduction for most small businesses.
  • If the bill is not extended, the tax on qualified small businesses rises by that amount.
• Alternative Minimum Tax (AMT) hits millions more families: Failure to extend the TCJA would mean roughly seven million more families hit with the unfair AMT.

Twice as many families hit with death taxes: The TCJA doubled the estate tax exemption. If this provision expires the exemption in 2026 will be cut from $28.6 million to $14.3 million for married couples.

Stephen Moore– a former Wall Street Journal Editorial Page writer and Chief Economist for The Texas Insider – is a Senior Fellow at both FreedomWorks and the Heritage Foundation, who along with Steve Forbes & Art Laffer is Co-Founder of the Committee to Unleash Prosperity. Using compelling charts, videos, and maybe even a little humor, Moore and the Committee's free Daily Newsletter provides you with short and timely insider updates on the economy, the D.C. political landscape, and numerous other issues that will help you stay informed and allow you to be the smartest person in the room. Its information not readily available anywhere else.