Updated on November 15 at 4:13 p.m. ET
President Trump and congressional Republicans have repeatedly insisted that the top priority of their tax reform is delivering relief to the middle class. But under a significant change to the Senate’s plan announced late Tuesday night, that relief for most people will now only be temporary, and millions of middle-class families could actually see a tax increase in 2026 if Congress doesn’t act again.
As I recently reported, the competing Republican tax bills were both over-budget, forcing party leaders to scale them back if they hoped to pass legislation under Senate rules without Democratic votes. They essentially had two choices: They could slap an expiration date on the proposal’s large corporate tax cut—from 35 percent down to 20 percent—or they could sunset the provisions benefitting individuals.
For now, Republicans are siding with businesses, keeping the lower corporate rate permanent while setting nearly all of the individual tax cuts to expire in eight years, at the end of 2025. The decision is a nod to conservative economists who argue that permanence in business tax rates is key to producing desired growth in the GDP, because companies are more likely to plan expansion and investments years ahead of time. And it’s also a bet that future Congresses—whether under Democratic or Republican majorities—will extend the cuts for individuals to stave off a politically unpopular tax increase.