When discussing taxes and policies, questions about President Donald Trump’s approach often come to the forefront. Why did Trump push for tax cuts for the wealthy? And are American tax dollars funding his legal battles? These questions, while seemingly straightforward, touch on broader issues of taxation, governance, and fiscal responsibility.
In this article, we’ll address these questions head-on before diving into the details of the Tax Cuts and Jobs Act (TCJA) of 2017—commonly referred to as the "Trump Tax Cuts." We’ll explore the key components of his tax reforms, how they impacted individuals and businesses, and the potential implications for the future.
Why Does Trump Want to Cut Taxes for Billionaires?
This question is typically asked by people who don't understand money or taxes. The reality is that the Trump tax cuts lowered taxes for all tax payers across the full economic spectrum. For those who take advantage of the abundant opportunities to make more money, keeping more of what you earn is a good deal. For those who feel they are trapped as victims of class exploitation, no amount of income redistribution will ever give them more control over their own financial well being.
Are America's Tax Dollars Funding Trump's Trials and Indictments?
The ironic answer is both yes and no. The government officials investigating and bringing legal action against Trump are spending your tax dollars. Trump's defense lawyers are spending his money.
Trump Tax Plan: Tax Cuts and Jobs Act
Trumps' Tax Cuts and Jobs Act ("TCJA") of 2017 was one of the signature accomplishments of his administration. It is sometimes called the "Trump Tax Cuts". It reduced the individual tax burden in several key ways including:
- Tax Rates. Reduced tax rates at every level and rebalanced the threshold for several income tax brackets and lowered to top rate from 39.6% to 37%.
- Standard Deduction. Nearly doubled the standard deduction, which simplified tax filing for many by reducing the need to itemize.
- Personal Exemptions. Eliminated personal and dependent exemptions.
- Child Tax Credit. Increased from $1,000 to $2,000 per child, indexed it to inflation, and made it deductible to more tax payers.
- State and Local Tax (SALT) Deduction. Capped the deduction for state and local taxes at $10,000, which significantly affects taxpayers in high-tax states.
- Mortgage Interest Deduction. Limited to interest on the first $750,000 of mortgage debt for new loans (down from $1 million).
- Medical Expenses. Temporarily lowered the threshold for deducting medical expenses to 7.5% of adjusted gross income for a couple of years.
- Alimony. For divorces finalized after 2018, alimony is no longer deductible by the payer or taxable to the recipient.
- Alternative Minimum Tax ("AMT"). Increased exemption amounts, reducing the number of taxpayers subject to AMT.
- Estate Tax. Doubled the exemption amount, and indexed it to inflation - allowing more estates to avoid estate tax and reducing estate tax liability creep resulting from inflation.
Many of these tax individual reductions "sunset" automatically at the end of 2025. The big question addressed below is whether or not the Trump tax cuts will be extended beyond January 1, 2026. You can follow tax reform legislation here or at https://www.irs.gov/tax-reform.
The TCJA also reduced taxes for businesses. The IRS has published helpful information to decipher what the tax laws mean for business. Some of the major changes under the TCJA include:
- Corporate Tax Rate. Lowered from 35% to a flat 21%.
- Pass-Through Deduction. Introduced a 20% deduction on qualified business income for owners of pass-through entities (like sole proprietorships, partnerships, S corporations).
- Bonus Depreciation. Allowed for 100% first-year bonus depreciation on qualified property, phasing down after 2022.
- Interest Deduction. Limited the deduction for business interest expenses to 30% of adjusted taxable income.
- Net Operating Losses ("NOL"). Restricted NOL carrybacks but allowed indefinite carryforward with an 80% income offset limit.
It is estimated that if the TCJA tax cuts are made permanent, the average tax payer will save $1,900 in 2026/27. The top 1% of taxpayers by income will receive nearly a quarter of the total tax benefits in 2027. Of course, they also pay the most in taxes, so it only makes sense that they would realize a numerically larger tax savings. Math works. It's amazing.
Economists argue over whether the tax cuts will increase productivity (and therefore raise tax revenue) or add to the national debt by reducing tax revenue. The common sense approach is that people will do what they're paid to do, and avoid things that cost them more money. For those who actually pay attention to history, tax cuts universally boost productivity. People want to make more money (be more productive) as long as the fruits of their labor are not confiscated and hijacked by politicians.
According to the Tax Foundation’s Taxes and Growth Model, in 2017 the TCJA was projected to increase the long-run size of the U.S. economy by 3.5 percent, resulting in 2.7 percent higher wages, and 890,000 more full-time equivalent jobs. The outcome of the 2024 election indicates that voters see the realization of such predictions and want more of the same.
Given the perceived mandate from the 2024 election, and the Republican control of the White House and both houses of Congress, it is highly likely that the Trump Tax Cuts under the TCJA will be extended, and perhaps made permanent. In any event, it will be entertaining to watch the politicians go through the collective convulsions of making the decision.
Tax Planning vs. Tax Preparation
Without a plan, many of the benefits of the Trump Tax Cuts go unrealized. Whether the laws favor or penalize tax payers, a knowledgeable and experienced guide can help navigate the troubled waters of the tax code so that they end up paying only the necessary taxes and not the optional and avoidable taxes.
Tax preparation and tax planning are related, but separate exercises. Tax preparation is looking back and what happened. Tax planning is looking forward to map out the best way to proceed. There are several keys in selecting a tax preparer including credentials, experience, and fee rates.
Tax planning is a separate service from tax preparation, and consequently there will be a separate fee. The upside for the tax payer is that with advance planning, the resulting taxes will be lower, and the fees paid to plan will be worth it. The ROI for investing in tax planning makes it an attractive option to consider.
Trump Tax Plan Preview © 2025 by Rick Durfee is licensed under CC BY 4.0 
Trump Tax Plan Preview