The Internal Revenue Service began accepting 2024 tax returns last week|Matthew G. Bisanz|CC BY-SA 3.0
The battle over tax reform is set to intensify in 2025, with President Donald Trump pushing to extend several provisions of his 2017 Tax Cuts and Jobs Act (TCJA) expiring this year.
The news comes as the Internal Revenue Service began accepting 2024 tax returns last week.
Funding remains a key challenge. Republicans in Congress have outlined potential ways to offset the estimated $4.6 trillion cost over 10 years, if TCJA is kept.
A 50-page GOP document details potential funding options, including eliminating popular tax breaks and social programs, and adding new tariffs.
Several longstanding tax breaks stand elimination.
- Scrapping the mortgage interest deduction. It could be cut or capped at $500,000, saving up to $1 trillion over a decade.
- Eliminating the “head of household” tax status, which could save $192 billion in 10 years.
- Cutting student loan interest deduction, allowing to save up to $50 billion over 10 years.
- Take down the estate tax, for the ultra-rich with assets of nearly $14 million. It would benefit wealthy families and cost the US $370 billion over 10 years.
One of the suggestions, which is a 10% import tariff could bring in $1.9 trillion but may cost US households an extra $2,600 annually.
Analysts say the changes could benefit the wealthy but take a toll on low-income groups. Any tax reform will take until the 2026 financial year to take effect.