The Future of the Tax Cuts and Jobs Act: What You Need to Know Post-2024 Elections
The fate of the Tax Cuts and Jobs Act (TCJA) post-2024 elections is a critical issue with major implications for the U.S. economy. As the legislation is set to expire in 2025, discussions on extending or letting it lapse are intensifying. The decision will impact tax rates, the federal budget, and economic growth.
Economists at Wells Fargo highlight key scenarios depending on the election outcome. A full expiration of the TCJA could lead to a tax hike in 2026, tightening fiscal policy. However, this alone may not push the U.S. into a recession, with modest impacts on economic growth.
On the other hand, extending the TCJA would come at a significant fiscal cost, adding $4.6 trillion to the federal deficit over the next decade. Despite this, it may not drastically alter economic growth projections.
Republicans generally favor extending or expanding the TCJA, while Democrats may pursue a partial extension. Vice President Harris supports extending tax cuts for those earning under $400,000 per year, with limited economic drag expected.
The decision on the TCJA will depend on the 2024 election results. A Republican victory could lead to a full extension or further tax cuts, while a Democratic win may result in a more limited continuation of the law.
The macroeconomic effects of any changes to the TCJA are unlikely to be felt until 2026, giving lawmakers time to negotiate a solution. Stay informed on this crucial issue for your finances and the economy's future.