Santora CPA Group
Call us 302-737-6200 | Pay My Bill
Business man reads articles on tablet re. real estate, identity theft and business valuation

Bracing for Change – The Potentially Expiring Provisions of the Tax Cuts and Jobs Act

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.

Key Provisions Expiring in 2025

While not exhaustive (TCJA introduced several dozen provisions to the U.S. tax code), this list summarizes some key provisions expiring in 2025 if action by Congress to extend them is not taken.

  1. Individual Income and Corporate Tax Rates: The TCJA lowered income tax rates for many individuals. For instance, the top tax rate was reduced 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.”
  2. Increased Standard Deduction: On the individual side, standard deductions were increased, significantly reducing the number of taxpayers who benefit from itemizing deductions for certain expenses, such as charitable donations and medical costs. If not extended, the standard deduction available to taxpayers would be reduced significantly.
  3. 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 not extended, the $10,000 SALT cap would be eliminated. (On the other hand, this would please many taxpayers in high tax states, however, it may be unclear what effect this provision alone has on those taxpayers’ overall tax situations.)
  4. 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 would be eliminated if not extended.
  5. Estate Tax Exemption: The lifetime gift and estate tax exemption, which was more than doubled by TCJA, would plummet to near-2017 levels in 2026 unless Congress steps in. Estates of decedents who die during 2025 have a basic exclusion amount of $13.99 million (double for married couples). If not extended, the basic exclusion amount would decrease to approximately $7 million (double for married couples) in 2026.

Implications

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. The expiring provisions will affect many taxpayers’ tax bills in 2026 unless legislation extending them is signed into law.

Conclusion

As the expiration date of the TCJA provisions draws closer, it’s crucial for taxpayers to stay informed and understand how these changes may impact their tax situation. With Republicans in control of the White House and Congress because of 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 moves you can make if the law does change.

Kevin Gobeil, CPA is a Principal with Santora CPA Group.

Published in the March/April issue of Delaware Business.

Santora CPA Group
Call us 302-737-6200