Bracing for Change

The potentially expiring provisions of the Tax Cuts and Jobs Act

BY KEVIN J. GOBEIL, CPA

THE TAX CUTS AND JOBS ACT (TCJA), enacted in 2017 under Donald Trump’s first presidential term, made sweeping changes to the U.S. tax code, affecting both individual and corporate taxes. However, many of these provisions were temporary and are set to expire at the end of 2025. With this date getting closer each day, you may wonder how your federal tax bill could be affected in 2026. Despite the results of November’s presidential and congressional elections, the fate of many expiring provisions is still unclear.

While not exhaustive, this list summarizes some key TCJA provisions set to expire in 2025 unless Congress acts to extend them:

Individual Income and Corporate Tax Rates: The TCJA lowered income tax rates for many individuals, reducing the top rate from 39.6% to 37%. If not extended, individual income tax rates would return to their higher pre-TCJA levels. The TCJA cut the maximum corporate tax rate from 35% to 21%. While the individual rate cuts expire in 2025, the law made the corporate tax cut “permanent.”

Increased Standard Deduction: On the individual side, the TCJA significantly increased the standard deduction, reducing the number of taxpayers who benefit from itemizing deductions for expenses such as charitable donations and medical costs. If not extended, the standard deduction available to taxpayers will reduce significantly.

State and Local Tax (SALT) Deduction: The TCJA imposed a $10,000 cap on the deductibility of state and local taxes for taxpayers who itemize their deductions. If the cap expires, it will be eliminated entirely, which could benefit taxpayers in high-tax states. However, its overall effect on taxpayers’ financial situations remains uncertain.

Deduction for Small Business Income: Section 199A provided a 20% deduction for qualified pass-through income from non-corporate pass-through entities, including S corporations and partnerships, as well as from sole proprietorships. This deduction would no longer be available if the provision is not extended.

Estate Tax Exemption: The lifetime gift and estate tax exemption, which was more than doubled by TCJA, would plummet to near2017 levels in 2026 unless Congress steps in. In 2025, the basic exclusion amount is $13.99 million, or double for married couples. If Congress does not act, the exclusion will drop to approximately $7 million, or double for married couples, in 2026.

The expiration of these provisions could have widespread consequences for taxpayers. Some provisions, such as the increased standard deduction and lowered individual tax rates, have been particularly beneficial to many taxpayers. Without legislative action, many taxpayers will face higher tax bills in 2026.

As the expiration date of the TCJA provisions draws closer, it is crucial for taxpayers to stay informed about potential changes and understand how these could affect their tax situation. With Republicans in control of the both the White House and Congress after November’s election, all signs point to many of the extenders being made permanent. However, this is still widely uncertain. As the TCJA provisions get closer to expiring, it’s important to know what might change and what tax strategies you can make if the provisions are not extended.

Kevin J. Gobeil, CPA is a principal at Santora CPA Group.