What Are the Effects of Extending the TCJA Tax Cuts

The Congressional Budget Office has released a new estimate of the costs of extending the TCJA tax cuts. It is a large number over 10 years.

 

Photo by nathan kosmak on Unsplash

Congress created the Tax Cuts and Jobs Act back in late 2017 commonly referred to as the Trump Tax Cuts. All individuals saw a reduction in tax rates, while some individuals still saw an increase in income taxes primarily due to the $10,000 SALT limit.

The Congressional Budget Office (CBO) has released a new report on the cost of extending these tax cuts over a 10-year period and it is steep.   If all of them are extended for 10 years, the cost would approach $4 trillion and increase the deficit annually by about 10% of that number (many would argue it would be much less due to economic growth).

But which tax cuts has the largest effect on the budget. We are guessing you might know number 1, but we bet most of you don’t know what the second highest cost would be. The following chart outlines most the major changes from extending the TCJA tax cuts for 10 years for 2025-2034: