Tax Cuts and Jobs Act (TCJA)

At the end of 2025, several key provisions of the Tax Cuts and Jobs Act (TCJA) are set to expire. This landmark legislation, enacted in 2017, brought significant changes to the tax code, many of which were designed to be temporary. Here’s a brief overview of some of the most impactful provisions that will sunset:

1. Standard Deduction

The TCJA significantly increased the standard deduction while eliminating personal exemptions. If the TCJA expires, the standard deduction for a married couple will drop from approximately $30,725 to about $16,525, and personal exemptions will return

2. Individual Income Tax Rates

The TCJA lowered marginal income tax rates across much of the income distribution. For instance, the top marginal tax rate was reduced from 39.6% to 37%. These rates will revert to pre-2017 levels if the TCJA expires

3. State and Local Tax (SALT) Deduction

The TCJA imposed a $10,000 cap on the deductibility of state and local taxes. If this provision expires, all state and local property taxes and income taxes will be deductible again, primarily benefiting high-income taxpayers in high-tax states

5. 199A 20% Pass-through Entity Deduction

The TCJA provided a 20% deduction for qualified pass-through income for sole proprietorships, partnerships, and S-corporations. This deduction will no longer be available if the TCJA expires

6. 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. These changes will revert if the TCJA expires

As the expiration of several TCJA provisions looms, it is important to understand other available strategies that offer significant tax benefits. The Research and Development (R&D) Tax Credit continues to be a vital mechanism for businesses engaged in innovation. This credit permits the deduction of qualifying expenses associated with the development of new products, processes, or software, thereby reducing overall tax liability. Furthermore, Section 179D facilitates deductions for energy-efficient improvements in commercial buildings, which can be strategically paired with cost segregation studies. These studies enable the reclassification of assets into shorter depreciation periods, thus accelerating depreciation deductions and optimizing cash flow and investment returns.

Information Provided By David Ternes and Dana Houston, CliftonLarsonAllen LLP