The Tax Foundation’s Center for Federal Tax Policy takes a quantitative approach to analyzing the economic, budgetary, and distributional impact of important campaign, legislative, and other popular tax proposals using our General Equilibrium Model, known as our Taxes and Growth (TAG) Model.
The mission of our economic and tax modeling program is to educate lawmakers and the public about the key trade-offs in tax policy, the real-world impact of those trade-offs on taxpayers and our economy, and the best options for achieving principled and pro-growth tax reform.
The Tax Foundation uses and maintains a General Equilibrium Model, known as our Taxes and Growth (TAG) Model to simulate the effects of government tax and spending policies on the economy and on government revenues and budgets.
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The Tax Foundation models tax policy using our proprietary Taxes and Growth model, illustrating the economic, revenue, and distributional impacts of different changes to the federal tax code. We’ve recently implemented improvements to the model that have been underway for the past several years, and we will be detailing them further in our forthcoming model methodology update.
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This tax reform plan would boost long-run GDP by 2.5%, grow wages by 1.4%, and add 1.3M jobs, all while collecting a similar amount of tax revenue as the current code and reducing the long-run debt burden.
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Policymakers should have two priorities in the upcoming economic policy debates: a larger economy and fiscal responsibility. Principled, pro-growth tax policy can help accomplish both.
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A robust collection of 70 potential US tax reform changes and US tax reform options for reforming the tax code. See the comprehensive tax reform guide.
Lawmakers should use the most comprehensive analytical tools available to them—like dynamic scoring—to make informed decisions about policy changes.
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The increased senior deduction with the phaseout would deliver a larger tax cut to lower-middle- and middle-income taxpayers compared to exempting all Social Security benefits from income taxation and would not weaken the trust funds as much. But given the temporary nature of the policy, it would increase the deficit-impact of the reconciliation bills without boosting long-run economic growth.
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Lawmakers are right to be concerned about deficits and economic growth. The best path to address those concerns is to ensure OBBB provides permanent full expensing of capital investment, avoids inefficient tax cuts, and offsets remaining revenue losses by closing tax loopholes and reducing spending.
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Our experts are providing the latest details and analysis of proposed federal tax policy changes.
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Our preliminary analysis of the Senate Finance tax plan finds the major tax provisions would increase long-run GDP by 1.1 percent and reduce federal tax revenue by $4.7 trillion over the next decade.
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Senate Republicans have advanced legislation to extend many provisions of the 2017 Tax Cuts and Jobs Act (TCJA) alongside dozens of new provisions, following broadly similar legislation put forward by House Republicans.
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Senator Ted Cruz’s (R-TX) CREATE JOBS Act prioritizes permanence for the most cost-effective tax reforms—expensing and Neutral Cost Recovery (NCRS)—to boost growth in a relatively fiscally responsible way.
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Our preliminary analysis finds the tax provisions increase long-run GDP by 0.8 percent and reduce federal tax revenue by $4.0 trillion from 2025 through 2034 on a conventional basis before added interest costs.
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Short FormWhen you hear about tax policy, you may think of the IRS, the agency responsible for collecting federal taxes. But who is responsible for drafting, reviewing, assessing, and passing tax legislation at the federal level?
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The tariffs amount to an average tax increase of nearly $1,200 per US household in 2025.
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Letting the SALT cap slip further upwards would undercut the TCJA’s long-term legacy, worsening the fiscal outlook of the tax package and providing an unneeded benefit to higher earners.
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While Congress works on the “One, Big, Beautiful Bill” to cut taxes, President Trump has imposed significantly higher taxes by placing tariffs on more than 70 percent of US imports.
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As lawmakers consider options for budgetary offsets, they should prioritize competitiveness and economic growth, as a heavier corporate tax burden will undermine the core purpose and achievement of the TCJA.
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As the current tax package stands, the House’s use of temporary policy is leaving most of the economic growth opportunities on the table.
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The Polish government is considering converting its traditional corporate income tax into a tax on distributed profits. We estimate that this reform would result in greater investment, a larger productive capital stock, and higher economic output in the long run.
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Pairing permanent TCJA individual tax cuts with new limits on business SALT deductions would shrink the economy, reduce American incomes, and increase the federal budget deficit, undermining the policy goals of TCJA permanence.
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Raising the top income tax rate would raise several hundred billion dollars but would offset most of the pro-growth effects of making the TCJA’s individual tax provisions permanent by reducing incentives to work and invest.
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Could tariffs, a form of government finance heavily relied upon in the 18th and 19th centuries, function as a major source of revenue for a modern, developed economy in the 21st century?
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Lawmakers should prioritize pro-growth tax policies and use the least economically damaging offsets to make the legislation fiscally responsible. If lawmakers choose to use C-SALT, they should carefully consider the economic trade-off with permanent, pro-growth tax cuts that support investment and innovation in the US.
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The Inflation Reduction Act (IRA) introduced a series of new targeted tax breaks, many of which seem to be much more expensive than originally forecasted. Understandably, repealing these subsidies is a key option for policymakers looking to pay to extend the expiring broader tax cuts passed in the Tax Cuts and Jobs Act (TCJA).
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Contrary to the president’s promises, the tariffs will cause short-term pain and long-term pain, no matter the ways people and businesses change their behavior.
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