Lacking either a bipartisan agreement or a Supermajority (60 or more in one political party), U.S. Senators are required to fabricate new and unusual ideas to justify passing a budget. Since neither of those possibilities currently exist, current budgeting discussions are messy and contentious. Rhetoric from Capitol Hill is frequently confusing for taxpayers and financial professionals, who wind up in a state of flux when trying to plan ahead for personal and corporate taxation.

Under the leadership of President Trump 45, TCJA (Tax Cut and Jobs Act of 2017) was implemented, effective for tax years beginning on or after January 1, 2018. This true tax cut left nearly every taxpayer with substantial tax reductions on their 1040 Individual Income Tax Returns (some high-income people in high-tax states lost out). TCJA Income Tax Rates are slated to expire and then increase back to 2017 levels at the end of Tax Year 2025.

Should the TCJA expiration date (12/31/2025) not be pushed forward or eliminated, Income Tax Rates will revert to the higher 2017 levels. Most Americans would suffer a large increase in their 2026 Federal Income Taxes. Recent studies by tax analysts estimate a resulting average 22% increase in Americans’ income taxes. Comprehending the political oratory on both sides is challenging to American taxpayers, and can be confusing.

Here lies the rub. Conservatives are stressing that current income tax rates should remain the same into 2026, and preferably be made permanent. In this scenario, taxpayers would incur no tax changes in 2026 or beyond, unless calls for further changes get passed by Congress later.

Too many elected officials start with the assumption that 100% of our income is their money. What they allow us to keep is called a “tax expenditure.” Absurd? Sure, but factual, nonetheless. We need to get truth in labeling into government.

Senate Democrats have adopted the assumption that potentially higher tax rates in 2026, due to the scheduled expiration of TCJA, are already the law of the land. According to them, letting TCJA Income Tax Rates expire would increase revenues to the Treasury by more than $4.6 Trillion over 10 years.

The Democrat party line says that any foregone revenue must be offset by other taxes or spending cuts, and they detest reductions in spending. Therefore, if any other scenario is implemented, such as an extension of TCJA, it would represent, to them, an unacceptable tax expenditure for the Government. This is ludicrous, as their revenue going forward would not change from 2025.

Simply stated, TCJA needs to be made permanent. Otherwise, we will all receive a large tax increase. End of discussion.