This strategy is old for Republicans. They cut taxes for several years, avoid the need to consider costs in the long term, and bet that the cuts will become more popular the more they vote to continue them later.
The tax bill Republicans are currently putting together on Capitol Hill is taking Gambit to a whole new level.
Almost all of the new tax cuts Republicans have included in the bill could evolve over the coming weeks, but will continue until the end of 2028 just days before President Trump takes office. This includes an increase in the $500 child tax credit, a $1,000 bonus on the standard credit, and Trump's tax tips and overtime pay pledges.
The effect is that many Americans get hundreds of dollars a year. It starts next year when they submit their taxes next year. Even babies could be cashed in with children born during Trump's term, but within January 1, 2025, or after December 31, 2028, each received a $1,000 deposit in a new “MAGA account” created under the bill.
The appeal of the president, who put their names on the stimulus, puts cash in Americans' pockets to check checks sent by the federal government during his first term. However, some analysts and many Democrats have warned that the benefits from tax cuts, which are already concentrated among the rich, could be overwhelmed by cuts in health care and food aid, which Republicans also intend to include in the law. Economists hope that temporary cuts will provide short sugar at best the entire economy.
“We should expect that we will rarely benefit from growth from any of these changes,” said Adam Michelle, director of tax policy research at the Cato Institute, a libertarian think tank. “They are simple giveaways for the targeted demographics Trump has selected during his campaign. As long as they are temporary, they actually disappear in four years.
Not all provisions in the Republican tax bill are temporary. Much of the law focuses on maintaining the architecture of the last Republican tax cuts passed during Trump's first term. Lower personal income rates and larger standard deductions, as well as higher thresholds for tax cuts and real estate taxes for many business owners, continue indefinitely with some tweaks.
Otherwise, many of the cuts will set up Congress for another debate over the next few years whether to extend this new Trump tax cut. Temporary cuts include tax credits that many companies worship. This includes the ability to quickly amortize spending on research and development and certain investments. The new deduction for the building's factory is also temporary and is available for projects that begin construction before January 1, 2030.
The fleeting nature of these incentives makes them less meaningful to businesses, and their expansion plans are already caught up in the uncertainty created by Trump's flagellated tariff plans. The Tax Foundation is a think tank that is generally bullish on the ability to drive economic growth of tax cuts, and this week estimated that the bill would increase gross domestic product by 0.6% in the long run.
And that modest growth comes at a cost. The tax bill includes new restrictions on eligibility for a child tax credit, including parents not being able to receive benefits for children with lack of Social Security numbers. It's a change from the current credit mechanism when parents without a Social Security number, including undocumented immigrants, can claim money as long as their children are citizens. Strictly controlling the rules would mean that 2 million American children will lose profits under the House bill, the Joint Tax Committee Chief of Staff told lawmakers Tuesday.
Republicans are ahead of other spending cuts to cover the overall costs of the law. For example, more than 8 million low-income Americans could lose their health insurance as a result of Medicaid cuts drafted by the GOP. Meanwhile, the biggest benefit from tax cuts flows to high-income Americans with the lowest income tax, according to an analysis of budget and policy priorities, a liberal think tank.
“We're a virginia Democrat,” said Rep. Donald S. Bayer Jr., who is currently a virginia Democrat.
As Republicans are overcoming spending cuts, the exact fiscal costs of legislation are still in the air. So far, the tax provisions are expected to cost around $3.8 trillion. But that's probably an undercount. Republicans set up a timeline in 2034 to assess the costs of the law. With many of the tax changes in effect in 2026, $3.8 trillion accounts for nine years of expenses rather than the conventional decade.
And there is the fact that if many of the temporary tax cuts are extended, they will add much more deficits. The Responsible Federal Budget Committee is a nonpartisan group seeking a lower deficit, and tax measures estimate that if the four-year reduction continues for the entire period, it will add $5.3 trillion to the deficit over the next decade.
The actual fate of these tax cuts, including a $4,000 increase over the standard deduction for many seniors, is of course still unknown. Lawmakers are now planning on passing the policy and hopefully expands it later. Republicans have admitted they are lucky to have power when many of the 2017 tax cuts expire.
By the time 2028 rolls, Democrats will have control in Congress, and then the next president may not be interested in reviving Trump's promises from the 2024 presidential election. For Republicans who are somewhat unhappy about including Trump's ideas in the bill, and for Republicans who say they are worried about debt, the expiration of cuts may not be the worst.
“It's up to someone about four years from now,” said David Schweicart, an Arizona Republican and a member of the Ways and Means Committee.
