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Project 2025 would overhaul the U.S. tax system. Here’s how it could impact you.
Project 2025, a 900-page blueprint for the next Republican president, is gaining attention for its proposals to overhaul the federal government. Among those changes: a major restructuring of the U.S. tax code.
President Biden and Democrats have been citing Project 2025 in recent weeks as they seek to highlight what could be in store if former President Donald Trump wins at the polls in November and retakes the White House in January. Many of the blueprint’s proposals touch on economic matters that could impact millions of Americans, as well as social issues such as abortion and diversity, equity and inclusion, or DEI, topics.
Project 2025, overseen by the conservative Heritage Foundation, is spearheaded by two ex-Trump administration officials: project director Paul Dans, who was chief of staff at the Office of Personnel Management, and Spencer Chretien, former special assistant to Trump who is now the project’s associate director.
The tax proposals of Project 2025, if enacted, would likely affect every adult in the U.S. by tossing out the nation’s long-standing system of multiple tax brackets, which is designed to help lower-income Americans pay a smaller share of their income in federal taxes compared with middle- or high-income workers.
Currently, there are seven tax brackets — 10%, 12%, 22%, 24%, 32%, 35% and 37% — with each based on income thresholds. For instance, a married couple pays 10% in federal income tax on their first $23,200 of income, and then 12% on earnings from $23,201 to $94,300, and so on. Married couples need to earn over $487,450 this year to hit the top tax rate of 37%.
Project 2025 argues that the current tax system is too complicated and expensive for taxpayers to navigate. To remedy those problems, it proposes just two tax rates: a 15% flat tax for people earning up to about $168,000, and a 30% income tax for people earning above that, according to the document. It also proposes eliminating “most deductions, credits and exclusions,” although the blueprint doesn’t specify which ones would go and which would stay.
“The federal income tax system is progressive, and people who make more money pay a higher marginal tax rate than people who make less money,” Brendan Duke, senior director for economic policy at the left-leaning Center for American Progress, told CBS MoneyWatch. “Conservatives look at that, and they feel that that’s unfair to the wealthy to ask them to pay a greater share of their income in taxes than lower income families.”
The Project 2025 proposal “is a dramatic reform of how we fund our government, where we ask the wealthy to pitch in more than lower income families,” he said. “This shifts taxes from the wealthy to the middle class, full stop.”
The Heritage Foundation and Project 2025 didn’t immediately respond to a request for comment.
Project 2025’s tax rates
Millions of low- and middle-class households would likely face significantly higher taxes under the Project 2025’s proposals.
He estimated that a middle-class family with two children and an annual income of $100,000 would pay $2,600 in additional federal income tax if they faced a 15% flat tax on their income due to the loss of the 10% and 12% tax brackets. If the Child Tax Credit were also eliminated, they would pay an additional $6,600 compared with today’s tax system, Duke said.
By comparison, a married couple with two children and earnings of $5 million a year would enjoy a $325,000 tax cut, he estimated.
“That 15% bracket is a very big deal in terms of raising taxes on middle-class families,” Duke said.
Millions of U.S. households earning less than $168,000 would likely face higher taxes with a 15% rate. Currently, the bottom half of American taxpayers, who earn less than $46,000 a year, pay an effective tax rate of 3.3% — which reflects their income taxes after deductions, tax credits and other benefits.
Among other tax and economic changes proposed by Project 2025:
- Cutting the corporate tax rate to 18% from its current 21%, which was enacted in 2017’s Tax Cuts and Jobs Act. Prior to the TCJA, the corporate tax rate stood at 35%.
- Reducing the capital gains tax to 15%. Currently, high-income earners pay a tax of 20% on their capital gains.
- Eliminating credits for green energy projects created by the Inflation Reduction Act.
- Considering the introduction of a U.S. consumption tax, such as a national sales tax.
- Eliminating the Federal Reserve’s mandate to maintain full employment in the labor market.
To be sure, overhauling the tax system would require lawmakers to approve changes to the tax code, which could be difficult if either the House or Senate is controlled by the opposing party. For instance, Trump was able to get his Tax Cuts and Jobs Act passed by a Republican-led Congress, even though no Democrats voted in support of the measure.
What does Trump say about Project 2025?
Trump has distanced himself from Project 2025, with his campaign proposing its own plans through “Agenda 47.” While Trump hasn’t yet proposed any concrete tax plans, he has suggested his proposal to create a 10% tariff for all imports and a 60% tariff for Chinese imports that could raise enough money to eliminate the federal income tax.
But tax experts say the math doesn’t work out because money raised from new tariffs would fall far short of replacing the more than $2 trillion in individual income taxes collected by the IRS each year. Consumers are also likely to pay more in higher costs for imported consumer goods and services with tariffs tacked onto them, experts note.
“A tariff is a consumption tax, and there is a throughline between [Project 2025’s] tax reform and what Trump has talked about, getting rid of taxes in favor of a consumption tax,” Duke noted.
An Israeli attack on Iran damaged facilities at a secretive military base southeast of the Iranian capital that experts in the past have linked to Tehran’s onetime nuclear weapons program and at another base tied to its ballistic missile program, satellite photos analyzed Sunday by The Associated Press show.
Some of the buildings damaged sat in Iran’s Parchin military base, where the International Atomic Energy Agency suspects Iran in the past conducted tests of high explosives that could trigger a nuclear weapon. Iran long has insisted its nuclear program is peaceful, though the IAEA, Western intelligence agencies and others say Tehran had an active weapons program up until 2003.
The other damage could be seen at the nearby Khojir military base, which analysts believe hides an underground tunnel system and missile production sites.
Israel launched a series of strikes on Iranian military facilities in retaliation for the barrage of ballistic missiles the Islamic republic fired on Israel earlier this month.
Planet Labs PBC / AP
Iran’s military has not acknowledged damage at either Khojir or Parchin from Israel’s attack early Saturday, though it has said the assault killed four Iranian soldiers working in the country’s air defense systems.
Iran’s mission to the United Nations did not immediately respond to a request for comment, nor did the Israeli military.
However, Iranian Supreme Leader Ayatollah Ali Khamenei on Sunday told an audience that the Israeli attack “should not be exaggerated nor downplayed,” while stopping short of calling for an immediate retaliatory strike. Israeli Prime Minister Benjamin Netanyahu said Sunday that the strikes “severely harmed” Iran and achieved all of Israel’s goals.
“The air force struck throughout Iran. We severely harmed Iran’s defense capabilities and its ability to produce missiles that are aimed toward us,” Netanyahu said in his first public comments on the strikes.
It remains unclear how many sites in total were targeted in the Israeli attack. There have been no images of damage so far released by Iran’s military.
Planet Labs PBC / AP
Iranian officials have identified affected areas as being in Ilam, Khuzestan and Tehran provinces. Burned fields could be seen in satellite images from Planet Labs PBC around Iran’s Tange Bijar natural gas production site in Ilam province on Saturday, though it wasn’t immediately clear if it was related to the attack. Ilam province sits on the Iran-Iraq border in western Iran.
The most telling damage could be seen in Planet Labs images of Parchin, some 40 kilometers (25 miles) southeast of downtown Tehran near the Mamalu Dam. There, one structure appeared to be totally destroyed while others looked damaged in the attack.
At Khojir, some 20 kilometers (12 miles) away from downtown Tehran, damage could be seen on at least two structures in satellite images.
Analysts including Decker Eveleth at the Virginia-based think tank CNA, Joe Truzman at the Washington-based Foundation for Defense of Democracies and former United Nations weapon inspector David Albright, as well as other open-source experts, first identified the damage to the bases. The locations of the two bases correspond to videos obtained by the AP showing Iranian air defense systems firing in the vicinity early Saturday.
At Parchin, Albright’s Institute for Science and International Security identified the destroyed building against a mountainside as “Taleghan 2.” It said an archive of Iranian nuclear data earlier seized by Israel identified the building as housing “a smaller, elongated high explosive chamber and a flash X-ray system to examine small-scale high explosive tests.”
“Such tests may have included high explosives compressing a core of natural uranium, simulating the initiation of a nuclear explosive,” a 2018 report by the institute says.
Planet Labs PBC / AP
In a message posted to the social platform X early Sunday, the institute added: “It is not certain whether Iran used uranium at ‘Taleghan 2,’ but it is possible it studied the compression of natural uranium hemispheres, which would explain its hasty and secretive renovation efforts following the IAEA’s request to access Parchin in 2011.”
It’s unclear what, if any, equipment would have been inside of the “Taleghan 2” building early Saturday. There were no Israeli strikes on Iran’s oil industry, nor its nuclear enrichment sites or its nuclear power plant at Bushehr during the assault.
Rafael Mariano Grossi, who leads the IAEA, confirmed that on X, saying “Iran’s nuclear facilities have not been impacted.”
“Inspectors are safe and continue their vital work,” he added. “I call for prudence and restraint from actions that could jeopardize the safety & security of nuclear & other radioactive materials.”
Other buildings destroyed at Khojir and Parchin likely included a warehouse and other buildings where Iran used industrial mixers to create the solid fuel needed for its extensive ballistic missile arsenal, Eveleth said.
In a statement issued immediately after the attack Saturday, the Israeli military said it targeted “missile manufacturing facilities used to produce the missiles that Iran fired at the state of Israel over the last year.”
Destroying such sites could greatly disrupt Iran’s ability to manufacture new ballistic missiles to replenish its arsenal after the two attacks on Israel. Iran’s paramilitary Revolutionary Guard, which oversees the country’s ballistic missile program, has been silent since Saturday’s attack.
Iran’s overall ballistic missile arsenal, which includes shorter-range missiles unable to reach Israel, was estimated to be “over 3,000” by Gen. Kenneth McKenzie, then-commander of the U.S. military’s Central Command, in testimony to the U.S. Senate in 2022. In the time since, Iran has fired hundreds of missiles in a series of attacks.
There have been no videos or photos posted to social media of missile parts or damage in civilian neighborhoods following the recent attack – suggesting that the Israeli strikes were far more accurate than Iran’s ballistic missile barrages targeting Israel in April and October. Israel relied on aircraft-fired missiles during its attack.
However, one factory appeared to have been hit in Shamsabad Industrial City, just south of Tehran near Imam Khomeini International Airport, the country’s main gateway to the outside world. Online videos of the damaged building corresponded to an address for a firm known as TIECO, which advertises itself as building advanced machinery used in Iran’s oil and gas industry.
Officials at TIECO requested the AP write the company a letter before responding to questions. The firm did not immediately reply to a letter sent to it.
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