Since the passage of the Tax Cuts and Jobs Act of 2017, millions of Americans have gotten used to paying lower taxes. The lower tax rates are due to expire at the end of the year, and Republicans in Congress are working to extend them before the clock runs out.
In addition, Republicans and President Donald Trump are talking up some new tax cuts that might be included in whatever tax legislation emerges.
Recently, Politico got its hands on an informal document making the rounds among Republicans in Congress that lists changes that could potentially find their way into a new tax bill.
Many of the changes outlined in the document would end key tax breaks that Americans currently enjoy. We explain those changes in “7 Tax Breaks That Might Be on Republicans’ Chopping Block.”
But the document also contains some proposals for new breaks.
Here’s a look at some of those tax breaks that could put more money in your pocket — along with how much they would cost the federal government in lost revenue. However, it’s important to note that the document Politico obtained is just a working document and not a final proposal.
1. Eliminate the estate tax
The idea: “This option would eliminate the federal estate tax.”
The cost: An estimated $370 billion over 10 years
The federal estate tax — often referred to as the “death tax” — is essentially a government fee that is taken out of your estate at your death. This leaves your heirs with less money than they otherwise would receive.
Currently, the federal estate tax applies only to estates worth more than $13.99 million, as we reported in “IRS to Increase Tax Breaks for Investment Gains, Gifts and Estates in 2026.” Amounts above that threshold are subject to a tax of up to 40%.
Now, Republicans are considering eliminating the estate tax altogether.
2. Eliminate taxes on tips
The idea: “Tips received by employees are subject to income and payroll taxes. This option would eliminate the income tax on tips.”
The cost: An estimated $106 billion over 10 years
During the presidential election campaign, Trump made the surprise announcement that he planned to “eliminate Taxes on Tips for millions of Restaurant and Hospitality Workers.” His opponent — Kamala Harris — quickly announced that she would do the same if she won.
Now, Republicans in Congress are considering making good on Trump’s promise.
3. Eliminate taxes on overtime pay
The idea: “This blanket exemption would prevent overtime earnings from being taxed.”
The cost: An estimated $750 billion over 10 years
During a campaign rally in Arizona, Trump pledged to “end all taxes on overtime.”
The announcement sparked controversy, as some critics contended it would have a significant negative impact on federal revenue and could potentially weaken the nation’s Social Security and Medicare programs, as we detailed in “8 Groups Who Can Expect New Tax Breaks Under Trump.”
4. Make car loan interest deductible
The idea: “This would allow Americans to deduct their auto loan interest payments from their taxes. The specifics are unclear at the moment.”
The cost: An estimated $61 billion over 10 years
Less than a month before the election, Trump promised to make car loan interest “fully deductible.” However, he did not explain whether taxpayers would need to itemize their tax deductions, rather than claiming the flat-amount standard deduction, in order to access the tax break.
That is a big detail because only around 12% of taxpayers itemize. So, if Republicans in Congress make car loan interest deductible only for people who itemize, most taxpayers would be unable to take advantage of the deduction.
Add a Comment