The 2017 Tax Cuts and Jobs Act (TCJA) made several significant changes to the U.S. tax code, some of which are set to expire or revert after 2025. Many families can expect more complex tax filing and a possible increase in their tax bracket. Proactive planning can make a world of difference.
Individual Tax Rates
The TCJA lowered individual income tax rates across all brackets, but these are temporary and set to expire after December 31, 2025. Remember the U.S. uses a marginal tax rate system — only a portion of your income is taxed at each level. For 2024 married-filing-jointly: the first $23,200 is taxed at 10%, $23,201–$94,300 at 12%, $94,301–$201,050 at 22%, and $201,051–$250,000 at 24%.
Increased Standard Deduction
The TCJA nearly doubled the standard deduction, but these amounts revert after 2025. Starting in 2026 they’re set to be roughly halved, which may mean more complicated filing if you choose to itemize.
Elimination of Personal Exemptions
Personal exemptions were eliminated in favor of the higher standard deduction, but are set to return in 2026, exempting a fixed amount of income per taxpayer or dependent.
SALT Deduction Cap
In 2026, 100% of eligible State and Local Tax payments will be deductible on Schedule A, rather than capped at $10,000. The mortgage interest cap rises to the first $1 million of debt (from $750,000) and home equity indebtedness deductibility is restored.
Child Tax Credit
The credit increased from $1,000 to $2,000 per qualifying child under TCJA; this expires after 2025, reducing the credit and lowering phase-out limits, though the impact is marginal.
Qualified Business Income Deduction
Eligible businesses can deduct up to 20% of qualified business income through 2025. As this phases out, small business owners should take advantage while they can and plan for 2026.
Action Items
- Be aware of how your individual tax bracket may change.
- Take advantage of the increased standard deduction while you can.
- Consider future tax planning opportunities — pre-tax contributions, bunching charitable gifts, additional credits.
- Business owners: take note of changes to the QBI deduction.
The WDW Financial team focuses on incorporating forward-thinking tax planning into all of our clients’ financial plans.