The Deduction Will Your Taxes Go Up? Best- and Worst-case Scenarios for Tax Reform in 2025
Jan 22, 2025
In a riveting discussion, Daniel Bunn, President and CEO of the Tax Foundation, sheds light on the looming changes in tax policy with tax cuts set to expire in 2025. Bunn emphasizes the potential for tax hikes impacting over 60% of filers, along with the urgent need for reforms to avoid fiscal crisis. He explores the prospects for bipartisan cooperation, the necessary principles of simplicity and transparency, and the significant real-life impacts of proposed reforms, including possible increases of up to $2,500 in tax bills.
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2017 Tax Cuts Expiration Impact
- The 2017 tax cuts are expiring, impacting rates, child tax credits, and standard deductions.
- Inaction means higher taxes for millions, akin to an extra rent or mortgage payment.
Best-Case Tax Reform Scenario
- Congress should align tax policy with principles of simplicity, neutrality, transparency, and stability.
- They must balance fiscal responsibility with pro-growth policies, potentially finding bipartisan solutions.
Impact of Tax Hikes on Households
- Expiring tax provisions will increase the average tax bill by $2,000-$2,500.
- This increase is comparable to a rent or mortgage payment, significantly impacting household finances.