Congress Is Gearing Up for a Fight Over Trump’s Tax Cuts

Once the fanfare of Donald Trump's inauguration fades, Congress has to get to work on taxes — and it won't be pretty.

At issue is the Tax Cuts and Jobs Act of 2017, which was a hallmark of Trump's first term. Abbreviated TCJA, the law made sweeping changes to the U.S. tax code that slashed the average person's income taxes by about $1,600 in 2018 (but benefited wealthy households the most).

Several key provisions in the TCJA expire at the end of 2025, leading Trump and the Republican Party to vow during their campaigns last fall to make the changes permanent if elected. The GOP platform specifically said it wanted to cement the policies "that doubled the standard deduction, expanded the Child Tax Credit, and spurred Economic Growth." That's in addition to nixing taxes on tips and pursuing other cuts.

Now the election is in the rearview, and the TCJA's No. 1 fan is back in the Oval Office. Republicans have a majority in the House and Senate, but both margins are very narrow, leaving little room for defectors. In order for his tax cuts to pass as intended, Trump needs every single vote he can get.

So what happens next?

There's no easy answer to that question, but the drama has already begun. On Jan. 5, the president-elect posted on Truth Social that "members of Congress are getting to work on one powerful Bill" that touches on border security, American energy and renewing his tax cuts, rather than tackling each topic separately as previously thought.

"Republicans must unite, and quickly deliver these Historic Victories for the American People," he wrote. "Get smart, tough, and send the Bill to my desk to sign as soon as possible."

Although everything Trump says should be taken with a grain of salt — he also claimed in his post that his 2017 tax cuts "were the largest in History," which is not true — his stance will guide the legislative agenda in the near future. Experts say his signature confidence, however, might be overblown.

"I don't think you can take for granted that if the president says he wants a certain thing done, it's going to be done that way when you have such a thin margin," Bob Dietz, national director of tax research at Bernstein Private Wealth Management, says.

What's at stake

Even if you're not a politics junkie, it's worth keeping an eye on the Trump tax debate because of its potential impact on your wallet.

For example, one of the expiring TCJA provisions is the increase to the standard deduction, which is claimed by 90% of taxpayers. According to the Brookings Institution, the standard deduction for a married couple filing jointly will be $16,525 in 2026 if the policy isn't extended. If it is, their standard deduction will be about $30,725.

Individual income tax rates may be affected, too. The TCJA slashed the top marginal tax rate to 37%; if this rule expires, it could rebound to its previous level of 39.6%, according to the Tax Foundation.

Keep in mind that it's unlikely the TCJA will be extended in its entirety, says Jim Bertles, head of wealth planning at AlTi Tiedemann Global.

"The Trump administration [and] the Republican Party [have] been saying for some time that they want to quote-unquote 'reduce taxes,' and that translates into, if they can get away with it, extending the TCJA," he says. "Not all the provisions of the TCJA, if they're extended, are favorable to taxpayers."

Bertles says the cheapest, most consumer-friendly policies are probably the lowest-hanging fruit. But those perks aren't even across the board.

An analysis published by the Institute on Taxation and Economic Policy found that Trump's tax proposals would cut taxes for the wealthiest 5% of Americans — and raise them for other income groups. The Tax Foundation, for its part, has estimated that 62% of filers would see their taxes go up if the TCJA expires.

How to pay for it

Dietz says the price tag associated with the TCJA is controversial — and an issue that's likely to prolong the discussion on Capitol Hill. It's not going to be cheap: Last May, the Congressional Budget Office said extending the expiring individual income tax provisions for another decade would add $3.3 trillion to the national deficit.

The president-elect has repeatedly hyped up his plan to enact tariffs, or taxes on imported goods, on countries like Mexico and China as a way to pay for the tax changes (as well as create U.S. manufacturing jobs and slash the national deficit).

But that may have "real consequences to consumers," Dietz says.

Many economists have raised alarm that companies may raise their prices in order to cope with the tariffs, hitting the pocketbooks of everyday Americans. (Some executives, like the CEO of AutoZone, have explicitly said as much.) The Peterson Institute for International Economics reported in August that the Trump tariffs would cost the average U.S. household over $2,600 annually.

"There's not necessarily entire consensus on that, but there is a risk that prices increase as a result of these tariffs," Dietz adds.

For a president obsessed with public opinion and who partially campaigned on lowering prices, that may be a tough pill to swallow. The same could be true for some of the lawmakers Trump needs on board to pass TCJA 2.0 — not all of whom agree with the idea of using tariffs to generate revenue.

One question that looms larger than the rest is when, exactly, this may get done. House Speaker Mike Johnson told Fox News he wants to get the "one big, beautiful bill" passed within the first 100 days of Trump's presidency "because we'll begin to see the effects of the economy very quickly, and that will be important for the midterm elections in two years."

But having the 2025 debate wrapped up by May might be ambitious, Dietz says. Given the tight margin and wide variety of opinions, he says "it'll be tough to get everybody on board" in just a matter of weeks.

"There's just a lot of pieces up in the air," Dietz says.

While any legislation is all but certain to face opposition from the Democrats, there's disagreement even among Republicans about how to address the deduction for state and local taxes, or SALT, and the single-bill approach. ("It took us months to do the first tax cuts bill nine years ago," Andy Harris, R-Md., told Fox News earlier this month. "The bottom line is if that's what the president wants, he's going to have to wait until the summer to get it all ironed out.")

Consumers should remember that whatever the end result is won't be permanent, Dietz says. It's smart to be prepared regardless, though.

Bertles likes to view the uncertainty as an opportunity. So far, his approach has been to say, "let's plan as if these tax law changes are favorable to you ... and then let's put enough flexibility in the documents so that if they don't change" you're still protected.

More from Money:

These 9 States Are Cutting Income Taxes in 2025

2025 Tax Brackets: IRS Bumps Up Income Cutoffs and Standard Deduction

Here's How Much Time and Money America Spends Doing Taxes Every Year