The US Congressional Research Service (CRS) has released a report titled Expiring Provisions of P.L. 115-97 (the Tax Cuts and Jobs Act): Economic Issues on 26 November 2024.

Most provisions affecting the individual income tax in the 2017 tax law (P.L. 115-97), commonly called the Tax Cuts and Jobs Act (TCJA), are scheduled to expire in 2025. These expiring provisions include tax rate reductions as well as changes to the standard deduction, child credit, personal exemptions, and itemised deductions; the deduction for pass-through businesses; the alternative minimum tax; and a number of smaller provisions. The increased exemption for the estate and gift tax under the TCJA is also scheduled to expire in 2025. Additionally, some business and corporate provisions are scheduled to expire or be phased out: expensing for equipment and structures with a recovery period no greater than 20 years, lower rates for certain international provisions, and a number of smaller provisions.

In addition to the expiring provisions of the TCJA, Congress might also consider reinstatement of expensing for research and development and reinstatement of a larger base for the 30% limit on interest deduction. The Tax Relief for American Families and Workers Act of 2024 (H.R. 7024) would reinstate these provisions for 2022 through 2025.

The Joint Committee on Taxation (JCT) estimates that extending the expiring individual income tax provisions would reduce federal tax collections by USD 3.3 trillion over the 10-year budget window, FY2025-FY2034. The committee estimates that extending the higher estate tax exemptions would cost USD 167 billion, and extending the business provisions would cost USD 551 billion.

Overall, JCT forecasts that extending these provisions would cost USD 4 trillion. In most years, the revenue loss would be between 1.2% and 1.4% of gross domestic product (GDP). More than half of the estimated cost is from the individual rate cuts. Another source estimated that reinstating expensing for research and development and switching back to earnings (income) before interest, taxes, depreciation, amortisation, or depletion (EBITDA) as the basis for the interest deduction limit would cost an additional USD 249 billion over 10 years.

Distributional analysis generally indicates the extensions would favor higher-income individuals relative to lower-income individuals, measured as the percentage change in after-tax income. A large part of this effect is from the individual rate cuts and the limitations on the individual alternative minimum tax.

Overall estimates of the economic effects of extending TCJA provisions vary across projections. The Budget Lab at Yale projects that GDP would rise initially, with a peak GDP increase of 0.4% in 2028, but would eventually fall relative to a current-policy baseline. The Penn Wharton Budget Model projects that GDP would increase by 0.3% before declining by 0.2% in 2034. The Tax Foundation projects a long-run steady-state effect of 1.1%. The latter two models do not account for the effects of crowding out of investment by increased deficits.

This report explains the TCJA provisions that are scheduled to expire and discusses how extending them might affect federal revenues, the distribution of after-tax income, and economic activity.