The 3 Main Proposals From Trump’s New Tax Plan and What They Mean for You, According to Jaspreet Singh
Written by
Adam Palasciano
Edited by
Amber Barkley
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Taxes: Everyone has to pay them, but nobody likes them. President Donald Trump understands that, and he campaigned on a promise to lower taxes for Americans.
Since he took office, Trump has proposed the largest tax cut in American history. The “One Big, Beautiful Bill” promises permanent tax cuts — those earning between $30,000 and $80,000 per year would pay around 15% less in taxes overall — no taxes on tips or overtime, and tax relief to Social Security recipients. However, there remains some level of opposition to this new tax bill within the GOP.
The bill passed in the House of Representatives and will next be voted on by the Senate.
As implied by the name, the bill is long and complex — many of its provisions might seem confusing and overwhelming. But, in a recent YouTube video, financial guru Jaspreet Singh summed up the three main tax proposals and what they could mean for your wallet. Here’s what you need to know.
Extend Tax Cuts From the TCJA
“Number one, it is to cut taxes — income taxes — across the board, because at the end of 2025, the Tax Cuts and Jobs Act is going to expire,” explained Singh.
Signed into law during Trump’s first term, the 2017 Tax Cuts and Jobs Act (TCJA) lowered tax rates overall. However, the current legislation is slated to expire at the end of 2025 if Congress doesn’t act to extend the bill, which Trump, of course, wants to avoid.
If Congress is unable to pass this new tax bill or extend the current provisions of the TCJA beyond Dec. 31, 2025, the White House Council of Economic Advisers indicated that these things will happen, among other tax changes:
- Tax bracket rates for individuals will go up.
- The standard deduction will decrease by close to 50%.
- The current child tax credit will also decrease by 50%, from $2,000 to $1,000.
Keep Corporate Taxes Low
Singh explained that through this new tax proposal, Trump intends to maintain low corporate tax rates.
The intention behind low corporate taxes is generally to encourage business growth and economic competitiveness — as highlighted by the Council of Economic Advisers, one of the most consequential provisions of the TCJA was that it effectively cut the corporate income tax rate from 35% to 21% to incentivize companies to continue doing business in the U.S. and to attract other companies to come to the U.S.
If the current provisions of the TCJA do end up expiring later this year, expect corporate tax rates to rise and companies to potentially look to do their business elsewhere.
Tariff Revenue To Fund Tax Breaks
Singh also pointed out Trump’s plan to fund these tax breaks with income from tariffs.
Thomson Reuters reported that Treasury Secretary Scott Bessent “expressed optimism” that the incoming tariff revenue will help offset the cost of the proposed extension of TCJA provisions.
It’s part of the Trump administration’s plan to generate both long and short-term tariff revenue to lower taxes for Americans and bolster U.S. manufacturing while creating more jobs.
Higher Taxes on the Wealthy
Very surprisingly, Trump proposed raising taxes on the rich.
At the time Singh posted his video, a tax rate increase to 39.6% — from 37% — for those earning at least $2.5 million per year was on the table, a change that, Singh said, “may be necessary to continue funding essential programs like Medicaid and to pay for the tax cuts for middle and working-class Americans.”
However, that proposal seems to have been removed from the bill, leaving the tax rate on the wealthiest Americans at the same level.
What This Means for You
Singh compared the U.S. to a business printing its own money, spending more than it earns — through taxes and tariffs — and getting deeper into debt to keep spending on things like paying contractors and funding programs.
That means “more and more tax dollars are now being used just to pay interest expenses [on the debt] … as opposed to actually providing value to society,” Singh said.
As people expect government programs to continue, the government keeps taking on more debt, which leads to inflation — and inflation drives expenses up, meaning people need more help from the government, leading to a vicious cycle of spending and debt.
Singh may or may not be correct — the ultimate effects of these proposed policies on Americans remain to be seen. The bill has to pass the Senate and be signed into law for any of them to be put into practice.
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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