The strategy is an old one for Republicans: Cut taxes for a few years, avoiding the need to account for their cost over the long term, and bet that the reductions become popular enough that Congress will later vote to continue them.
The tax bill that Republicans are now putting together on Capitol Hill takes the gambit to a whole new level.
Almost all of the new tax cuts that Republicans have included in the bill, which could evolve over the coming weeks, will last only until the end of 2028, just days before President Trump is set to leave office. That includes a $500 increase to the child tax credit and a $1,000 bonus to the standard deduction, as well as Mr. Trump’s pledges to not tax tips or overtime pay.
The effect would be to shower many Americans with hundreds of dollars per year, starting when they file taxes next year, a windfall that would dry up as Mr. Trump leaves office. Even babies could cash in, with children born during Mr. Trump’s term — but not before Jan. 1, 2025, or after Dec. 31, 2028 — each receiving a $1,000 deposit to new “MAGA accounts” created under the bill.
For a president who put his name on the stimulus checks the federal government sent during his first term, the appeal of putting cash into Americans’ pockets is clear. But some analysts and many Democrats warn that any gains from the tax cuts, already concentrated among the rich, could be overwhelmed by the cuts to health care and food assistance that Republicans also intend to include in the legislation. And economists expect that the temporary cuts would, at best, provide a short sugar high to the economy overall.
“We should expect close to no growth benefits from any of these changes,” said Adam Michel, the director of tax policy studies at the Cato Institute, a libertarian think tank. “They’re simply giveaways to targeted demographics that Trump singled out during the campaign. To the extent that they’re temporary, and they actually go away in four years, that’s better than having them being a permanent feature of the tax code.”
Not every provision in the Republican tax bill would be temporary. Much of the legislation is focused on preserving the architecture of the last Republican tax cut, passed during Mr. Trump’s first term. Lower individual income rates and a larger standard deduction, as well as a tax break for many business owners and a higher threshold for the estate tax, would continue indefinitely, with some tweaks.
Otherwise, many of the cuts will set Congress up for another debate in the next few years over whether to extend this new set of Trump tax cuts. The temporary cuts include tax breaks adored by many businesses, like the ability to immediately write off spending on research and development, as well as certain investments. A new deduction for building factories is also temporary, available only to projects that begin construction before Jan. 1, 2030.
The fleeting nature of those incentives will make them less meaningful for companies, whose expansion plans are already caught up in the uncertainty created by Mr. Trump’s whipsawing tariff plans. The Tax Foundation, a think tank that is generally bullish on tax cuts’ ability to spur economic growth, estimated this week that the bill would increase gross domestic product by 0.6 percent in the long term, a fraction of the 1.7 percent growth the group attributed to the original 2017 law.
And that modest growth would come at a cost. The tax bill includes new limits on qualifying for the child tax credit, including that a child whose parent lacks a Social Security number cannot receive the benefit. That would be a change from how the credit works now, when parents without Social Security numbers, a group that includes undocumented migrants, can claim the money as long as their child is a citizen. Tightening the rules would mean two million American children would lose the benefit under the House bill, the chief of staff of the Joint Committee on Taxation told lawmakers on Tuesday.
Republicans are plowing ahead with other spending cuts to defray the overall cost of the legislation. More than eight million low-income Americans could lose their health insurance as a result of the Medicaid cuts that the G.O.P. has drafted, for example. All while the biggest benefits of the tax cuts would flow to high-income Americans who owe the most in income tax, according to an analysis by the Center on Budget and Policy Priorities, a liberal think tank.
“‘Let’s get a loaf of bread to the peasant and a huge benefit to the wealthy’; that’s what they’re doing,” said Representative Donald S. Beyer Jr., a Virginia Democrat.
The exact fiscal cost of the legislation is still up in the air as Republicans haggle over the spending cuts. Just the tax provisions are, so far, expected to cost roughly $3.8 trillion. But that is most likely an undercount. Republicans have set the timeline for evaluating the cost of the legislation to end in 2034. With many of the tax changes taking effect in 2026, the $3.8 trillion represents only nine years of costs, instead of the customary 10 years.
And then there is the fact that many of the temporary tax cuts, if extended, would add far more to the deficit. The Committee for a Responsible Federal Budget, a nonpartisan group that calls for lower deficits, estimates that the tax measures would add $5.3 trillion to the deficit over the next 10 years, if the four-year cuts continued for that full period.
The actual fate of those tax cuts — including a $4,000 increase to the standard deduction for many seniors — is, of course, still unclear. Lawmakers’ plans to pass a policy now and hope it is extended later sometimes do not actually work out; Republicans acknowledge that they are lucky to be in power when many of their 2017 tax cuts expire.
By the time 2028 rolls around, Democrats could have control in Congress, and after that the next president may not be interested in reviving Mr. Trump’s promises from the 2024 presidential campaign. For Republicans who somewhat begrudgingly agreed to include Mr. Trump’s ideas in the bill — and who say they worry about the debt — the cuts’ expiration may not be the worst outcome.
“That will be up to whoever is around four years from now,” said Representative David Schweikert, an Arizona Republican and a member of the Ways and Means Committee.
