Did You Know You’ve Been Paying More In Tax Because Of Inflation? GOP Plans To Stop It

Republican lawmakers are proposing inflation-indexed tax code revisions to protect family finances amid rising costs.

You’ve been paying more than you should for years – and now the GOP plans to stop it.

At a Glance

  • GOP lawmakers consider indexing major tax breaks to inflation
  • Child tax credit and SALT deductions currently not inflation-indexed
  • Proposals aim to boost child tax credit to reflect economic pressures
  • Republicans push for reconciliation legislation to lift SALT cap
  • Efforts part of broader policy to fortify 2017 Tax Cuts and Jobs Act

Republican Lawmakers Address Inflation’s Impact on Tax Breaks

In response to persistent inflation, Republican lawmakers are considering legislative actions to tether certain tax code provisions to inflation rates. This effort is crucial in preserving the utility of tax breaks against the backdrop of cost increases. Since the implementation of the 2017 Tax Cuts and Jobs Act, prices have risen significantly, effectively reducing the value of some tax breaks.

While some tax code features, such as the standard deduction and income tax brackets, are already indexed to inflation, others like the child tax credit and State and Local Tax (SALT) deductions remain static.

Rep. Nicole Malliotakis (R-NY) is advocating for indexing the SALT cap to inflation, stating, “I’ve made it very clear repeatedly that we should be indexing that cap because standard deduction is indexed and SALT should be indexed too.”

“He appreciates the concept of this is why it’s necessary, and President Trump is certainly open to that as well,” Rep. Nicole Malliotakis (R-NY) also said.

There is now growing interest within the Republican Party to boost the child tax credit to reflect inflation’s impact on family finances.

Sen. Josh Hawley (R-MO) supports tying the child tax credit to inflation, emphasizing, “Just look at what inflation has done in the last four years to the earning capacity of families.” The current $2,000 child tax credit would be approximately $2,500 today if it had been indexed to inflation since 2017.

Rep. Blake Moore (R-UT) has introduced the Family First Act, which aims to increase the child tax credit and create a tax credit for pregnant mothers. Freshman Rep. Riley Moore (R-WV) suggests expanding the child tax credit even further, indicating a broader push within the party to encourage family creation through tax policy.

Republicans in blue states are pushing for reconciliation legislation to lift the SALT cap. This effort is part of a larger initiative to address the impact of inflation on various tax code elements. Rep. Nick LaLota (R-NY) suggests indexing all tax code elements to inflation to ease the burden on Americans.

However, the reconciliation legislation is still in its early stages, with ongoing disagreements about including tax components alongside other priorities. As Republicans aim to extend the 2017 Trump tax cuts, inflation remains a significant consideration in their policy-making process.

If they can pull this off, Americans will soon be much better off than they were before.