The Tax Cuts and Jobs Act (TCJA) of 2017 marked one of the most significant changes to the U.S. tax code in decades. It lowered taxes for individuals and corporations, increased the standard deduction, raised the child tax credit, and introduced several provisions that benefitted small businesses, such as bonus depreciation and the Qualified Business Income (QBI) deduction.
But from the start, it came with a catch: many of its provisions were temporary.
The 2026 Sunset
Most of the TCJA is set to expire at the end of 2025. That’s because it was passed with a built-in “sunset clause,” meaning many of the tax cuts and rule changes will automatically revert to pre-2017 levels unless Congress takes action to extend them. One notable exception is the corporate tax rate, which was permanently reduced to 21%.
With the deadline approaching, lawmakers are beginning to discuss what an extension—or a replacement—might look like. But extending the TCJA in full would come at a cost: a significant increase in the federal deficit unless it’s offset by either spending cuts or new sources of revenue.
What Might Change?
The House Ways and Means Committee released a document outlining potential policy options to help pay for a possible extension. While nothing in it is law yet, it provides a window into the kinds of ideas that are on the table.
Health Care and Hospital Funding
One major proposal involves removing nonprofit (501(c)(3)) status from hospitals, making them subject to corporate taxes. This could bring in an estimated $260 billion over 10 years.
Another proposal would eliminate tax deductions for donations to health organizations, raising an additional $83 billion. The document also outlines potential cuts to Medicare, including reductions in funding for hospitals that provide care to low-income patients, and possible cuts to graduate medical education programs.
There’s also talk of replacing Health Savings Accounts (HSAs) with Universal Savings Accounts (USAs). Unlike HSAs, which offer tax benefits for medical expenses, USAs (which don’t currently exist) would be more flexible but offer fewer incentives for saving specifically for health care. This could discourage preventive care and reduce tax savings for people with high-deductible insurance plans.
Education: Fewer Tax Benefits for Students
The American Opportunity Credit and Lifetime Learning Credit, which help families offset the cost of college, may be eliminated. Ending these programs could save the federal government around $85 billion over 10 years.
In addition, scholarships and fellowships—currently tax-exempt when used for tuition and educational expenses—could become fully taxable, adding another $54 billion in potential revenue. Critics warn this could make college even less affordable, especially as universities face declining enrollment.
Green Energy Incentives on the Chopping Block
To offset the cost of extending the TCJA, lawmakers are considering repealing many clean energy tax credits established by the Inflation Reduction Act. These credits cover electric vehicles, energy-efficient homes, and renewable energy technology. Eliminating them could save an estimated $796 billion over a decade, but would likely make electric vehicles and home energy upgrades less accessible to the average consumer.
Big-Ticket Deductions May Disappear
The mortgage interest deduction, long considered a cornerstone of middle-class tax policy, may also be repealed. This would remove a significant incentive for homeownership and could save another $1 trillion over a decade.
The head of household filing status, which provides tax relief to unmarried individuals supporting dependents, is also being considered for elimination. That change alone would raise an estimated $192 billion.
What Happens Next?
At this point, none of these proposals are official policy. No bill has been introduced, and no votes have been scheduled. These are options being studied—not decisions that have been made.
However, the decisions Congress makes in the next year will shape the future of the U.S. tax system for years to come. If you care about these issues, now is the time to speak up. Contact your elected representatives and let them know which tax policies you support or oppose.
