Tax Cuts and Jobs Act Expiration: What the Election Results Mean for Your Income Taxes

No matter what your thoughts are on the election, it’s time to focus on what it means for the country (and your wallet) moving forward – and a very large part of that concerns the Tax Cuts and Jobs Act expiration in 2025.

The 2024 US election cycle was filled with twists and turns, and now many are uncertain about how the results will affect their wealth in the future. One of our core values is education. We believe in partnering with you and educating you, because knowledge is power. When you have a CPA who will give you all the information and work with you to make decisions about your finances – together – you can run your business with the confidence that you’re making smart decisions that will build wealth that lasts.

No matter the political climate, we will always be here to partner with you and educate you. And that starts with letting you know how the election results will affect your wallet. Let’s talk about the Tax Cuts and Jobs Act of 2018, and how the Tax Cuts and Jobs Act expiration coming up in the new year will change things for you.

And of course, I won’t leave you hanging. I’ll give you some practical advice on where to go from here!

Tax Cuts and Jobs Act Expiration in 2025: What You Need to Know

The Tax Cuts and Jobs Act of 2018 (TCJA) is due to sunset at the end of 2025. This is just a basic way of saying that the policy will expire and the tax rates will go back to those of 2017. President-elect Donald Trump has expressed support for extending the income tax provisions that are part of the TCJA, and has made certain additional proposals to the TCJA while on the campaign trail.

I think these extensions will perhaps be on a short-term basis as Congress debates a larger tax-reform package, but thatmeans federal tax brackets would stay where they are today (with a top marginal rate of 37%). The State and Local Tax (SALT) deduction cap and elimination of personal exemptions might also be reconsidered (meaning increased) as part of congressional negotiations.

The TCJA lowered taxes on long-term capital gains by setting up separate tax brackets for assets held longer than 1 year and for qualifying dividends, though the rates remained the same at 0%, 15%, and 20%. The TCJA also retained the 3.8% net investment income tax (NIIT) for higher-income earners. There has been some discussion among Republican tax policy experts about making the top rate 15% and eliminating the NIIT.

Child Tax Credit

Vice President-elect JD Vance has expressedsupport for increasing the child tax credit to $5,000 per child. I assume this will still apply to under age 13, but no ages have been released. Trump has also proposed a new tax credit for family caregivers taking care of a parent or loved one.

Estate Tax Exemption

Trump has expressedsupport for extending and making permanent the 2017 TCJA changes to the estate tax exemption,which doubled to their existing levels of $13.61 million for single people and $27.22 million for couples compared to 2016. Without an extension, the estate tax would return to its pre-2017 levels of $5.5 million for single people, and $11.1 for married couples.This extension would continue to offer fantastic planning opportunities.

Taxes on Social Security Benefits

Trump has proposed eliminating all taxes on Social Security (SSA) benefits. Currently up to 85% of SSA benefits is taxed for a single filer with income above $34,000 or a married filing jointly couple with combined income of $44,000. (Below these income thresholds, a smaller percentage of benefits is taxed or not taxed at all.)

Corporate Taxes

Finally, Trump has expressed support for lowering corporate taxes to 15% from their current 21% rate. Remember, this is for entities that file a Form 1120 Corporation return (C Corps).

Tax Cuts and Jobs Act Expiration: What Should You Do Now?

Obviously none of these proposals are even close to policy yet. There’s no way we can know for sure right now what will happen.What I can tell you, though, that with the Tax Cuts and Jobs Act expiration looming, we are monitoring these changes for our clients and coming up with multiple strategies and plans to protect them and their money along the way!

Your CPA should be ready to do the same. If you want to find a CPA who’s up for the task (or vet the one you already have), take our free quick training to learn if you CPA is helping or hurting your business.

Disclaimer: This article is not meant to be tax advice. This is not an all-inclusive list of business advice. Different rules may apply to each individual taxpayer’s specific situation. Please consult with your accountant. May contain affiliate links.