The Tax Cuts and Jobs Act (TCJA) of 2017 introduced several tax reforms, many of which are scheduled to expire at the end of 2025

The Tax Cuts and Jobs Act (TCJA) of 2017 introduced several tax reforms, many of which are scheduled to expire at the end of 2025. Key provisions set to sunset include:

  • Individual Income Tax Rates: The TCJA reduced marginal tax rates across income brackets. Without legislative action, these rates will revert to their pre-2018 levels, resulting in higher taxes for many individuals.

  • Standard Deduction and Personal Exemptions: The act nearly doubled the standard deduction and eliminated personal exemptions. Post-2025, the standard deduction is expected to decrease, and personal exemptions may be reinstated.

  • Child Tax Credit: The credit was increased from $1,000 to $2,000 per child under the TCJA. After 2025, it is slated to revert to $1,000, with lower income thresholds for phase-out.

  • State and Local Tax (SALT) Deduction Cap: The TCJA capped the SALT deduction at $10,000. This cap is set to expire, potentially restoring the full deduction for state and local taxes.

  • Estate and Gift Tax Exemption: The exemption amount was significantly increased under the TCJA. Absent new legislation, it will decrease to pre-2018 levels, affecting estate planning strategies.

  • Alternative Minimum Tax (AMT) Exemptions: The act raised AMT exemption amounts, reducing its applicability. These higher exemptions are scheduled to expire, potentially subjecting more taxpayers to the AMT.

  • Qualified Business Income Deduction (Section 199A): A 20% deduction for pass-through business income was introduced. This provision is set to expire, impacting small business owners and self-employed individuals.

These expirations could lead to significant tax increases and changes in tax planning strategies for individuals and businesses. If this is a subject you would want to know more about give us a call at 718.825.1623 to discuss the potential impacts and explore planning opportunities before the provisions sunset.


Ahmed Hussein, CPA
Tax Manger
Signature Assets Tax
718.825.1623
SignatureAssets.com
ahmed@signatureassets.com

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