President Trump's Proposed Tax Law Changes Explained

While it may be challenging to keep up with President Trump’s slew of statements, ideas, and new laws, changes to the U.S. tax code have been on Trump’s agenda since he kicked off his 2024 presidential campaign. Against the backdrop of the newly announced tariffs on China, Mexico, and Canada, expected changes to the tax code include reductions in income tax rates and increases in income tax credits. Despite these changes appearing promising at first glance, increases in tariffs (and thus, likely increases in consumer prices) may offset moderate reductions in individual income taxes.

Any changes to tax legislation will proceed through the legislative process called “reconciliation.” On January 17, 2025, a House Ways and Means Committee prepared and circulated a long list of proposed tax law changes.

While writing (and, to be fair, reading) about taxes is arguably the most boring way to pass the time, let’s quickly walk through the key proposed changes to the United States tax code and their expected impact on the U.S. economy. We’ll begin with the Tax Cuts and Jobs Act, which is the most important part of the proposal.

Extension of the 2017 Tax Cuts and Jobs Act (“TCJA”)