It’s late February, and I’m still knee-deep in tax season. I’ve spent hours collecting and organizing my family’s W-2s, our 1098 mortgage documents, our 1095-B health coverage forms, and an assortment of other tax documents labeled with seemingly random numbers and letters. Hopefully, I can get everything sorted out by early March and finally wrap up this annual chore.
But taxes aren’t just a once-a-year concern. They shape our economy, fund essential services, and influence policy decisions at every level of government. I believe taxes are a necessary evil, but they should be efficient, fair, and provide the best return on investment for those paying them. And like most Americans, I don’t want to pay a cent more than necessary.
Since January 20th, tax and spending policies have dominated Washington, sparking heated debates over how our money is allocated and whether it’s being used efficiently. At the same time, President Trump has renewed calls for sweeping tariffs on imported goods, a move that could significantly impact both businesses and consumers.
With these issues front and center, I wanted to take a closer look at how tax policy is shifting and what it means for everyday Americans like you and me.
Expiring Credits Could Increase Your Future Federal Tax Bill
For the 2025 tax year, there are no major federal tax law changes that will impact what you owe when you file next April. The tax rates and deductions established under the 2017 Tax Cuts and Jobs Act (TCJA) remain in place with only minor adjustments for inflation. This means that, for now, your tax liability should be similar to what you paid in 2024. However, this stability could be short-lived.
At the end of 2025, key provisions of the TCJA will expire, setting the stage for potentially significant tax increases in 2026 unless Congress takes action. One of the most notable changes will be the reduction of the Child Tax Credit. Under the TCJA, the credit was doubled from $1,000 per child to $2,000, providing much-needed relief for families with dependents. If Congress does not extend the law, the credit will revert to its pre-2017 level, effectively cutting it in half. This will disproportionately affect middle- and lower-income families, many of whom rely on the credit to cover essential expenses like childcare and groceries.
Another major shift will occur with the standard deduction, which nearly doubled under the TCJA. In 2025, inflation adjustments will raise the deduction to $14,600 for single filers and $29,200 for married couples filing jointly. However, if the TCJA expires, these deductions will shrink significantly in 2026, meaning more taxpayers will need to itemize their deductions to achieve the same level of tax relief. This could complicate tax filing and increase tax liability for millions of households, particularly for homeowners who heavily rely on mortgage interest deductions to offset costs.
Individual tax rates are also set to increase across the board. Under the TCJA, the top marginal tax rate was lowered from 39.6% to 37%, and other brackets saw reductions as well. If the law expires as scheduled, all tax brackets will rise. The highest earners will see the largest jump, but lower- and middle-income taxpayers will feel the impact through higher paycheck withholdings and reduced take-home pay.
For small business owners, the expiration of the Qualified Business Income (QBI) deduction could pose a significant challenge. This provision allowed pass-through businesses—such as sole proprietorships, partnerships, and S corporations, where profits are taxed as personal income rather than corporate earnings—to deduct up to 20% of their income. If Congress does not extend it, these businesses will face higher tax burdens, making it more expensive to invest in growth, hire employees, or expand operations. Small businesses that have relied on this deduction to stay competitive may feel the squeeze, especially in industries where margins are already tight.
Potential Tax Plans Floated By Republicans Could Increase Taxes And Lower Services
With the expiration of the TCJA looming, Republicans in Congress have outlined a series of tax and budget proposals that could shape the financial landscape for years to come. A memorandum circulated by the House Budget Committee in mid-January and reported on by outlets like Politico (source) lays out potential tax changes, spending cuts, and revenue-generating measures that could affect millions of Americans.
One of the most consequential proposals involves rolling back deductions that benefit homeowners. The mortgage interest deduction, which helps offset the cost of homeownership, has already been scaled back under the TCJA. Now, lawmakers are considering further reductions or even eliminating it entirely. If this happens, it could make buying a home more expensive, particularly for middle-class families who rely on the deduction to manage mortgage costs.
In addition to eliminating deductions, the proposals include taxing employer-provided benefits that are currently exempt from income tax. Workers who receive transit passes, employer-provided parking, free or subsidized meals, or access to on-site gyms could see these benefits counted as taxable income. This would directly increase the tax burden on employees while also making it more expensive for businesses to offer these perks, potentially leading to reductions in workplace benefits. As a result, both employers and employees could see increased costs.
Another major focus of the proposals is cutting federal funding for Medicaid, which provides healthcare for millions of low-income Americans. One of the most aggressive proposals would restructure Medicaid into a per-capita cap system, limiting the amount of federal funding available per enrollee. This shift would place a greater financial burden on states, forcing them to reduce benefits, tighten eligibility requirements, or cut provider payments. Many low-income families, seniors, and individuals with disabilities could see reduced healthcare access as a result.
Additionally, lawmakers are pushing to eliminate enhanced Medicaid funding for states that expanded coverage under the Affordable Care Act (ACA). If this funding is removed, many states may be forced to roll back their Medicaid expansion programs, leaving millions of low-income adults uninsured. The proposal also calls for restricting how states fund their Medicaid programs by limiting the use of provider taxes, a move that would further strain state budgets and likely result in reduced coverage.
For higher education institutions, Republicans are considering expanding taxes on university endowments. The TCJA introduced a 1.4% excise tax on the net investment income of certain private university endowments. The new proposal would increase this tax tenfold to 14%, significantly reducing the funds available for scholarships, research, and campus improvements. This could make college more expensive for students who rely on financial aid or attend institutions that depend on these funds.
Additionally, credit unions, which currently operate tax-free to provide low-interest loans and financial services to their members, could be subject to federal taxation under the proposed changes. This shift could lead to higher fees and fewer loan options for millions of Americans who rely on credit unions for affordable banking. Borrowers, particularly those with lower credit scores, may see fewer financing options as credit unions adjust to these new costs.
Another proposal gaining traction is the repeal of key green energy tax credits that were expanded under the Inflation Reduction Act. These tax breaks have encouraged investment in renewable energy, electric vehicles, and carbon capture technology. Eliminating them could slow the transition to clean energy, increase energy costs, and put jobs in the renewable sector at risk. Businesses that have invested in green infrastructure may also face financial setbacks, potentially passing costs down to consumers.
Tariffs Could Bring In Income But Will Tax Our Daily Lives
While much of the current tax debate focuses on federal revenue and deductions, another policy shift is set to affect American wallets: tariffs. The Trump administration is considering significant new tariffs on imports, including a 25% tariff on goods from Canada and Mexico (with a preferential 10% rate on Canadian fuel imports) and a 10% tariff on Chinese imports.
We’ve seen this play out before. The last time the U.S. imposed widespread tariffs during the 2018-2019 trade war with China, prices on steel, washing machines, and agricultural products shot up. Companies that relied on imported materials paid the tariffs and then increased their prices, meaning American consumers bore the brunt of the cost.
The same is likely to happen again in 2025 when businesses across multiple industries adjust prices to compensate for increased import costs. Electronics, automobiles, groceries, and household goods are all expected to see increased prices as they contain imported components or materials that will be taxed at higher rates.
Beyond raising prices, tariffs could also reduce product availability. If the cost of importing goods becomes too high, some companies may scale back imports, pull products from shelves, or switch to lower-quality alternatives. Certain imported items may even become harder to find altogether, leading to fewer choices and increased costs for the alternatives that remain.
Adding to the uncertainty, Canada, Mexico, and China have already signaled plans to retaliate with their own tariffs on U.S. goods. This could further disrupt supply chains, making it even more expensive for American companies to do business abroad while hurting domestic industries like agriculture and manufacturing that depend on exports.
While the administration argues that these tariffs will generate government revenue and protect American jobs, the reality is more complex. Tariffs function as a regressive tax, disproportionately impacting lower- and middle-income households that spend a larger share of their income on essentials like food, clothing, and household items. At the same time, many U.S. manufacturers rely on global supply chains, and higher import costs could lead to job losses in industries struggling to absorb the additional expenses.
Take Action Now
The tax landscape is shifting in ways that will directly impact you and millions of other Americans. Whether it’s the expiration of the TCJA, Republican tax proposals, or the return of tariffs, these changes could raise taxes, increase costs, and cut services that many rely on.
Now is the time to pay attention. Understand how these changes affect you, adjust your financial planning accordingly, and—most importantly—make your voice heard. Contact Representative Brian Jack at https://jack.house.gov/contact and share how these changes will impact you.
The choices made in Washington this year will shape the economy for years to come. If you care about how much you pay in taxes, the cost of your home, or the price of everyday goods, now is the time to get engaged.
