The Tax Cuts and Jobs Act contained many provisions that expire at the end of 2025. The individual income-tax rates, the increase in the standard deduction, the expanded child tax credit, and more will revert to their pre-2017 levels if Congress does not extend them past the end of next year.
That is not true of the law’s reduction in the corporate-tax rate. The TCJA lowered the rate from 35 percent to 21 percent. Under current law, it will remain 21 percent whether Congress does or does not extend the other provisions.
Somebody should tell the press. I have noticed news reports suggesting that the corporate-rate cut needs to be extended.
The Financial Times, for example, on Monday reported (emphasis added):
Treasuries sold off as traders weighed higher odds of Donald Trump being elected as US president later this year. The yield on the 10-year bond jumped 0.14 percentage points to 4.48 per cent, its highest level in a month.
“There are several investment implications of Trump back in the White House,” said Jack Ablin, chief investment officer at Cresset Capital. “[Most notable would be] a higher-for-longer Fed, as monetary policymakers increase the likelihood that the corporate tax cuts will be extended next year.”
That may be true about Treasuries, but the corporate-tax cuts do not need to be extended next year. The corporate-tax rate will be 21 percent this year and next year and every year after that.
Semafor, on Wednesday, reported:
Trump’s 2017 tax cuts lowered the corporate tax rate from 35% to 21%, a move hailed by businesses. But that levy, along with a host of other lower rates, is set to expire at the end of 2025 and some Republicans are balking at the $4.5 trillion price tag of extending them, setting up a major policy fight for the next president.
The reduction to 21 percent is not set to expire at the end of 2025. Under current law, the U.S. corporate-tax rate remains at 21 percent.
Of course, Congress can raise the corporate-tax rate. But that would require voting to raise it. If Congress does nothing on the corporate-tax rate next year, it will remain at 21 percent.