Centering Black Households in the 2025 Tax Debate

The policy brief, “Centering Black Households in the 2025 Tax Debate,” analyzes how the proposed extension of the 2017 Tax Cuts and Jobs Act (TCJA) would affect Black communities.

At the end of 2025, several provisions of the 2017 tax law (the Tax Cuts and Jobs Act or TCJA) will expire, prompting policy debates about whether and how to extend or modify certain provisions of the law and the US tax code more broadly. The 2017 tax law included several provisions affecting both individual and corporate taxes. Most of the corporate provisions, such as cutting the corporate tax rate from 35 percent to 21 percent, are permanent changes to the US tax code. The individual provisions, however, are largely temporary and will expire Dec. 31, 2025, if Congress does not extend them.

According to policy research, the 2017 tax law was costly, did not produce intended economic benefits, and its benefits were skewed away from the vast majority of Black households. Upon its enactment, the Joint Committee on Taxation estimated that the law would cost the US government a loss of $1.5 trillion in revenue over 10 years. Though many policymakers and economists estimated that the law would grow the economy, a Congressional Research Service literature review concluded that the law did not significantly affect it. The 2017 tax law also skewed benefits temporarily toward the highest income earners, and consequently, away from most Black households. The 2017 tax law disproportionately benefits households in the top 20 percent, a group in which Black households are significantly underrepresented. Though overall benefits were skewed toward wealthy and high-income households, which were primarily white, researchers found that the law did not have significant impacts on racial and ethnic disparities within similar income levels.

To craft effective policy, congressional policymakers should consider how tax reform will affect specific populations. The IRS does not collect data on the race of taxpayers. However, legal scholars have shown that Black households pay more in federal income taxes than white households with the same income levels. Research shows that the tax code affects Black households differently than white ones because of differences in family structures and structural economic circumstances. To ensure that the tax code does not unfairly disadvantage Black households or increase economic inequality, policymakers should consider the impact of specific tax proposals, alongside the overall impact on the economy, of implementing particular tax reforms.