TCJA Tax Provisions Expiring After 2025

The Tax Cuts and Jobs Act (TCJA), enacted in 2017, contained some of the most substantial tax legislation to be passed in over 30 years. However, many of these tax provisions, particularly those affecting individuals and families, are scheduled to expire at the end of 2025.

Individual Tax Provisions

Standard deduction

The TCJA increased the standard deduction and eliminated personal exemptions. Starting in 2026, the standard deduction is scheduled to be cut by almost half.

Individual income tax rates

The TCJA lowered marginal income tax rates. For example, the TCJA cut the top marginal tax rate from 39.6% to 37%. These rates will increase to pre-2017 levels if the TCJA expires.

State and local tax (SALT) deduction

The TCJA imposed a $10,000 cap on the deductibility of state and local taxes (SALT). If this provision of the TCJA expires, all state and local property taxes and income taxes (or sales taxes in states without income taxes) will be deductible, primarily benefiting high-income taxpayers in high-tax states.

Mortgage Interest Deduction

For tax years beginning on or after January 1, 2026, the $750,000 debt limitation for the home mortgage interest deduction increases to $1 million.

Miscellaneous Itemized Deductions

For tax years beginning on or after January 1, 2026, taxpayers may claim certain miscellaneous itemized deductions subject to the 2% floor. Such deductions may include investment fees, tax preparation fees, certain repayments of income, safe deposit box rental fees, and certain unreimbursed employee business expenses.

Child Tax Credit

TCJA increased the tax credit for each child under 17 from $1,000 to $2,000, and that is not adjusted for inflation. The maximum credit that can be refunded increased from $1,000 to $1,400 per child in 2018; that is adjusted for inflation and is set at $1,700 in 2024. The TCJA also increased the income thresholds at which the credit phases out. The child tax credit will fall back to $1,000 if the TCJA expires, which would make the real value of the credit about 25% lower than it was in 2017.

Alternative minimum tax (AMT)

The TCJA increased the AMT exemption amounts and raised the income levels at which the exemptions phase out, resulting in fewer taxpayers liable for the AMT. If this provision of the TCJA expires, the 2026 AMT exemption for married couples filing jointly will be about $110,075, compared to about $140,300 if the provision is extended.

Business Tax Provision

Qualified business income (QBI) 20% deduction (Sec. 199A)

Owners of passthrough businesses, such as partnerships and S corporations, as well as sole proprietorships, may currently claim a deduction of up to 20% of QBI. Beginning in 2026, the Sec. 199A QBI deduction no longer will be available.

Estate and Gift Tax

The TCJA doubled the estate and gift tax exemption of $5 million, which is adjusted for inflation to over $13 million for single filers and $27million for married couples for 2024.  However, in 2026 the estate and gift exemption will revert to pre-TCJA levels, effectively reduced by half, and is expected to be in the ballpark of $6.8 million per individual and close to $14 million for a married couple.

Tax Bills 2026

The expiring provisions will affect many taxpayers’ tax bills in 2026, and it’s important to know what might change and what tax-planning moves you can make if the law does change. We’ll keep you updated with any changes in these tax provisions.

Questions?

As always, should you have questions on this or other matters affecting you or your business, please call or email us to speak with a CPA today.

DISCLAIMER: The WM Update, WM Wednesday Wisdom, WM Daily Update, and other related communications are intended to provide general information, as of the date of this communication, and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.