A key economic priority for President Trump this year is expanding provisions in his Signature Tax Cuts and Jobs Act, a 2017 law that lowered tax rates for most Americans before they expire at the end of 2025. 50-page laundry list of ideas to pay for those planned cuts.
Congressional Republicans’ plan, previously published by the New York Times, was confirmed by a person familiar with the document, who noted that it represents a menu of policy options for lawmakers to consider. The document also cites several new tax breaks proposed by Mr. Trump on the campaign trail over water supplies, such as eliminating taxes on overtime And Tips.
But extending the TCJA’s provisions alone could prove costly, with the Congressional Budget Office predicting a cost of $4.6 trillion over 10 years. Adding new tax breaks, such as Mr. Trump’s promise to dump overtime taxes, could push the bill even higher at a time when the nation’s debt has topped $36 trillion.
According to the document, some ideas for financing those tax breaks include eliminating the mortgage deduction, a popular break for homeowners and the deductibility of student loan interest. Other methods of taking in more money include an across-the-board 10% import tariff—essentially a universal tax on U.S. imports that would be paid by consumers.
The plan also outlines ideas for reducing federal spending, mainly by trimming spending on social safety net programs such as Medicaid and food stamps. Overall, the document points to a potential tax overhaul that could put more money in the pockets of wealthier Americans while cutting lower and middle-class taxpayers’ taxes, experts say.
“If you expand tax cuts and tariffs and cut Medicaid, that will create more benefits for higher-income households, and more costs will be born by lower-income households,” Joseph Rosenberg, a senior fellow at the Urban-Brookings Tax Policy Center, a tax-focused think tank, told CBS MoneyWatch.
Adding a 10% cap could raise $1.9 trillion over the next decade, according to the document shared with Republican lawmakers. But rates are largely paid by consumers Because companies tend to increase their prices to cover the additional import duties. Mr. Trump’s tariffs could add $2,600 a year in costs for the typical American family, according to an August analysis from the Peterson Institute for International Economics, a nonpartisan think tank focused on economic issues.
Trump administration officials did not immediately respond to a request for comment.
Tax benefits that could disappear
According to the document, some long-standing tax benefits could be eliminated:
- Mortgage interest deduction: This could be completely reduced or reduced to a cap of $500,000, with the previous idea saving $1 trillion over ten years and the latter saving $50 billion over the same period.
- “Head of Household” tax filing status: This filing status provides a larger standard deduction for unmarried adults with children. Eliminating it could save $192 billion over 10 years.
- American Opportunity Credit: This $2,500 tax credit is given for education expenses collected in an individual’s first four years of higher education. Repeal would save $59 billion over ten years.
- Child and Dependent Care Tax Credit: This credit helps families with young children pay for up to $2,100 in annual child care costs. Forgoing it would save $55 billion over ten years.
- Student loan interest deduction: Eliminating this deduction, used by people with student loan debt, could save $50 billion over 10 years.
- Lifetime Learning Credit: This non-refundable tax credit is equal to 20% of qualified tuition and related fees under $10,000. Repeal would save $26 billion over 10 years.
New tax benefits under consideration
The document also outlines several ideas for reducing taxes, in addition to eliminating taxes on overtime and tips. They include:
- Eliminating the wealth tax: This proposal would benefit ultra-wealthy families the most, as the wealth tax would hit people with assets of nearly $14 million. Removing this tax would cost US$370 billion over 10 years.
- To increase or eliminate the salt deduction cap: Mr. Trump’s TCJA introduced a controversial one $10,000 cap on state and local tax deductionsor salt. Under the latest Republican proposals, the limit could be eliminated or increased to higher thresholds, such as $20,000 for married couples. The cost could range from $100 billion to up to $1 trillion, depending on the size of the change.
- Make car loan interest charges deductible: This idea, that was floating By Mr Trump during the 2024 presidential campaign could cost $61 billion over ten years.
While campaigning last year, Mr. Trump proposed eliminating the $10,000 cap on the Salt deduction, which he introduced in his 2017 tax bill. The issue has become increasingly unpopular with both Republicans and Democrats, as rising home values and property taxes across the country mean more homeowners are feeling the pinch of the deduction limit.
“The salt cap was effectively one of the biggest spending mistakes in the 2017 legislation, and raising it is expensive,” said Rosenberg of the Tax Policy Center. “The president recently again indicated that the most likely direction is for the salt cap to be increased rather than eliminated.”