Upcoming Expiration of Tax Cuts to Impact Individual and Corporate Provisions

It’s hard to believe that the Tax Cuts and Jobs Act (TCJA) was enacted in late 2017 – almost seven years ago. During that time, individuals and business owners may have become accustomed to the various changes brought about by that legislation. However, key individual and business tax provisions from the TCJA are set to expire in 2025 – adding yet another highlight to the upcoming presidential election. Regardless of what happens in November, individuals, executives, and owners should be mindful of what’s at stake, in the event Congress takes no further action.

Potential Changes for Individual Taxpayers

For example, the maximum ordinary income tax rate for individual taxpayers would increase from 37% to 39.6%, while the 20% pass-through business income deduction would be eliminated, and the enhanced child tax credit cut in half (from $2,000 to $1,000). In addition, standard deductions for all individual taxpayers would be cut almost in half. Having said that, the $10,000 cap on state and local income taxes, and the current limit on mortgage interest deductions are set to expire.

Implications for Corporate Taxpayers

Corporate taxpayers face a number of increased tax rates as well (e.g., with respect to global intangible low-taxed income (GILTI), foreign-derived intangible income (FDII), and the base erosion and anti-abuse tax (BEAT)).

One thing is for certain: discussions around U.S. tax legislation and policy are sure to increase in the coming months. Stay tuned.

Tax provisions

What are the key tax provisions from the Tax Cuts and Jobs Act that are set to expire in 2025?

The key tax provisions from the Tax Cuts and Jobs Act set to expire in 2025 include the lower individual income tax rates, the increased standard deduction, the expanded child tax credit, and the reduced estate tax exemption. Businesses may also see the expiration of certain deductions and credits.

Can you explain how the expiration of key tax provisions in 2025 will impact individual and business taxpayers?

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