The White House is raising alarms about a potential $4 trillion tax increase if the 2017 tax law signed by former President Donald Trump is allowed to expire at the end of 2025.
Officials are calling it “the biggest tax hike in history,” and say it could hit middle-class families and small businesses the hardest.
In a recent post published on the administration’s official website, the Biden administration outlined the financial impact of letting the Trump-era tax provisions lapse.
According to their estimates, the average taxpayer could face a 22% increase in taxes, and a typical family of four might end up paying $1,700 more per year.
The White House also warned that the expiration would cut the Child Tax Credit in half for around 40 million families and shrink the standard deduction, leading to higher taxable income for most filers. Additionally, nearly 26 million small businesses could face a heavier tax burden, according to the article.
These claims are based on a March 2025 report from the Council of Economic Advisers, which argues that extending the tax cuts would boost the economy in the short term.
The report says GDP could rise by up to 3.8%, real wages could grow by $3,300 per year, and median household take-home pay could increase by as much as $5,000 annually.
But Not Everyone Agrees
Despite the optimistic outlook from the White House, other groups are warning of long-term economic harm.
The Center for American Progress, a liberal think tank, released its analysis stating that extending and expanding these tax cuts could hurt the economy over time.
Citing data from the Congressional Budget Office (CBO), the center projected that real gross national product (GNP) per person would drop by $4,375 (in 2025 dollars) by the year 2055 due to growing debt and rising interest payments.
“The long-term earnings loss would more than cancel out any short-term benefit from a tax cut,” wrote Bobby Kogan, senior director of federal budget policy at the Center for American Progress.
The CBO also estimates that, under the proposed tax extension plan, interest rates on federal debt could climb sharply.
The national debt could rise to 220% of the GDP by 2055, 63 percentage points higher than current projections.
Congress Gears Up for Tax Battle
On Capitol Hill, the debate over the future of Trump’s tax cuts is heating up. The House of Representatives recently passed a budget resolution by a narrow margin of 216-214.
This move sets the stage for Republicans to try extending the tax cuts through reconciliation—a process that allows certain legislation to pass the Senate with a simple majority vote.
The GOP plan includes about $5 trillion in tax cuts over the next 10 years and is expected to add $5.7 trillion to the national debt, according to a Reuters report.
House Speaker Mike Johnson praised the budget resolution, calling it “one of the Greatest and Most Important Signings in the History of our Country” on social media. He argued that the plan would benefit job creators and investors.
However, Democrats strongly opposed the resolution. Rep. Angie Craig of Minnesota criticized the bill during floor debates, saying, “What they’re doing is giving billionaires the national credit card and telling them to go hog wild.”
House Democratic Leader Hakeem Jeffries also slammed the proposal, saying it would lead to “some of the most extreme cuts to health care, nutritional assistance, and the things that matter to everyday Americans in our nation’s 250-year history.”
What Were Trump’s Tax Cuts?
The 2017 Tax Cuts and Jobs Act, also known as the “Trump tax cuts,” brought major changes to both individual and business taxes.
While corporate tax cuts were made permanent, most individual tax benefits are set to expire by the end of 2025.
Key features of the law included:
- Lower tax rates across most income brackets
- A permanent cut in the corporate tax rate from 35% to 21%
- A nearly doubled standard deduction—from $6,350 to $12,000 for individuals and $12,700 to $24,000 for married couples filing jointly
- An increase in the Child Tax Credit from $1,000 to $2,000 per child
- A $10,000 cap on state and local tax (SALT) deductions
If Congress doesn’t act, many of these provisions will roll back. The standard deduction would shrink to about $8,350 for individuals and $16,700 for couples.
The Child Tax Credit would return to $1,000, with more restrictive income limits for eligibility.
While proponents say the 2017 law spurred economic growth and put more money in people’s pockets, critics argue it favored the wealthy.
The Urban-Brookings Tax Policy Center estimates that nearly 45% of the tax benefits went to households earning more than $450,000 a year.
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