I know it doesn’t feel this way, but for the last six years, you’ve had a pretty good deal on your federal taxes. Thanks to the TCJA passed in 2017, the standard deduction was almost doubled, the child tax credit was doubled, tax brackets were widened and marginal tax rates were lowered. But it was a limited time deal. Offer ends January 1, 2026… unless Congress decides that it doesn’t.
The TCJA lowered average tax rates in 2018 for every income group by at least 0.6% and up to 2.3%. Tax rates have remained lower than pre-2017 levels ever since, and the Tax Foundation predicts that making the individual provisions of the TCJA permanent would decrease taxes for 62% of filers, leave taxes unchanged for about 29% of filers, and increase taxes for just 9% of filers. Rising costs and strained personal budgets make these potential tax savings more important than ever for taxpayers. Implementing these savings by extending or making permanent the TCJA is a no-brainer for Congress and a huge win for taxpayers.
These tax increases are not hypothetical. They are inevitable and impending unless Congress acts to prevent them. The Tax Foundation has produced a calculator that predicts the changes to tax liability if the TCJA provisions are extended or if they expire.
The following screenshot shows data from our imaginary “Beehive Family”, using income figures from our 2024 report which will be published shortly. The family has an annual income of just over $94,000 and three children. Their situation is typical of many Utah families and demonstrates the significant impact the expiration of the TCJA will have on taxpayers across the nation.
The Beehive Family would see a $2,300 increase in their federal tax and a 2.69% decrease in their take-home pay were the TCJA to expire – primarily because of changes to the standard deduction and the child tax credit. Again, this tax hike is inevitable unless Congress takes action to extend the provisions.
The Utah Legislature has done significant work to reduce taxpayers’ burden, but now the onus is on Congress to prevent an unnecessary and untimely hike in federal taxes.