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| Long title | An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018 |
|---|---|
| Acronyms (colloquial) | TCJA |
| Nicknames | Tax Cuts and Jobs Act GOP tax reform Trump tax cuts Cut Cut Cut Act[1] |
| Enacted by | the 115th United States Congress |
| Effective | January 1, 2018 |
| Citations | |
| Public law | 115–97 |
| Statutes at Large | 131 Stat. 2054 |
| Codification | |
| Acts affected | Internal Revenue Code of 1986 |
| Agencies affected | Internal Revenue Service |
| Legislative history | |
| |
| United States Supreme Court cases | |
| |
The Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018,[2] Pub. L. 115–97 (text) (PDF), is a congressional revenue act of the United States originally introduced in Congress as the Tax Cuts and Jobs Act (TCJA),[3][4] that amended the Internal Revenue Code of 1986. The legislation is commonly referred to in media as the Trump tax cuts, as it was a key agenda piece of the Trump administration. Major elements of the changes include reducing tax rates for businesses and individuals, increasing the standard deduction and family tax credits, eliminating personal exemptions and making it less beneficial to itemize deductions, limiting deductions for state and local income taxes and property taxes, further limiting the mortgage interest deduction, reducing the alternative minimum tax for individuals and eliminating it for corporations, doubling the estate tax exemption, and reducing the penalty for violating the individual mandate of the Affordable Care Act (ACA) to $0.[5][6] The New York Times has described the TCJA as "the most sweeping tax overhaul in decades".[7]
The U.S. House of Representatives passed the penultimate version of the TCJA on December 19, 2017. The Senate passed the final bill, 51–48, on December 20, 2017. On the same day, a re-vote was held in the House for procedural reasons; the bill passed, 224–201. The bill was signed into law by President Donald Trump on December 22, 2017. Most of the changes introduced by the bill went into effect on January 1, 2018, and did not affect 2017 taxes.[8]
Supporters argued that the law would increase GDP growth, increase levels of business investment, increase wage and salary income for households, that the tax cuts would pay for themselves, and that the law would simplify tax codes.[9][10][11][12] Opponents argued that the law would result in adverse impacts, including a higher budget deficit,[13] higher trade deficit,[14] greater income inequality,[15][16] and lower healthcare coverage and higher healthcare costs,[17] and a disproportionate impact on certain states and professions.[18][19] Critics also argued that advocates misrepresented the law.[20][21] Some of the reforms enacted by the Republicans have become controversial (particularly the $10,000 cap on state and local tax deductibility) and were challenged in federal court[22] before being upheld.[23]
Many tax cut provisions contained in the TCJA, notably including individual income tax cuts, are scheduled to expire in 2025;[24] however, its corporate tax cuts are permanent. The CBO estimated that implementing the Act would add an estimated $2.289 trillion to the national debt over ten years,[25] or about $1.891 trillion after taking into account macroeconomic feedback effects.[26] According to Bloomberg, the Act has simplified the tax code for some, but not others; has lowered corporate debt; has led investment to temporarily increase before declining; and has brought money back from overseas without bringing back business activity.
Plan elements
Individual income tax
| Under previous law | Under TCJA | ||
|---|---|---|---|
| Rate | Income bracket | Rate | Income bracket |
| 10% | $0–$9,525 | 10% | $0–$9,525 |
| 15% | $9,525–$38,700 | 12% | $9,525–$38,700 |
| 25% | $38,700–$93,700 | 22% | $38,700–$82,500 |
| 28% | $93,700–$195,450 | 24% | $82,500–$157,500 |
| 33% | $195,450–$424,950 | 32% | $157,500–$200,000 |
| 35% | $424,950–$426,700 | 35% | $200,000–$500,000 |
| 39.6% | $426,700 and up | 37% | $500,000 and up |