Highlights:
Addressing the looming expiration of the Tax Cuts and Jobs Act (TCJA) in 2025 will be the most important legislative challenge in 2025. If Congress does not act, taxpayers will face significant tax increases, thanks to the temporary nature of many of the TCJA’s provisions. The Tax Foundation estimates that, should the TCJA expire, approximately 62 percent of households will see higher taxes. Some households will experience a larger hit than others. A single filer earning $75,000 could face an increase of over $1,700, while a family of four making $165,000 might pay an extra $2,450. For families with three children earning $200,000, the increase could soar to nearly $7,500.
Beyond reducing household tax liabilities, the TCJA also simplified taxes for millions of Americans. By nearly doubling the standard deduction, it substantially reduced the number of people who had to itemize deductions. Prior to the TCJA, around 30 percent of individual tax returns included itemized deductions. By 2018, that number dropped to just 11 percent, and it has remained around 10 percent since. This simplification was a win for many Americans, particularly those who had long been bogged down by the detailed and time-consuming record-keeping that itemization required.
Keeping taxes as simple as is practicable for working Americans is the best defense against poor customer service from the IRS. Even as tax filing has become easier for some, the IRS has struggled to keep up with demand. During the 2024 filing season, only about 32 percent of calls to the IRS’s toll-free lines were answered, according to the National Taxpayer Advocate, the federal watchdog for the IRS. This number drops even further when you look outside the filing season, during which wait times for getting an answer also increased. The delay doesn’t end there: correspondence processing has also been sluggish. While there has been some improvement – from an average of seven months in 2022 to three and a half months in 2024 – the pace is still far too slow to meet the demands of taxpayers.
Despite billions in new funding under the Biden administration, taxpayer service remains a challenge. The expiration of the TCJA would render that challenge intolerable for many taxpayers. While the TCJA succeeded in simplifying tax filings for many Americans, its expiration will introduce a significant burden in the form of tax increases. And, as the IRS continues to face challenges with customer service and modernizing its systems, taxpayers may not only face higher bills but also the frustration of navigating a complicated and inefficient tax system. So, on this Tax Day, while the chore of filing taxes can be onerous, it could be worse.