Passed in late 2017, the Tax Cuts and Jobs Act (TCJA) marked one of the most significant overhauls of the U.S. tax code in decades. It introduced lower tax rates for individuals and corporations, nearly doubled the standard deduction, and imposed new limits on itemized deductions. While many of the corporate tax changes were made permanent, several provisions affecting individuals and small business owners were intentionally temporary. These time-limited provisions are scheduled to expire at the end of 2025 unless Congress acts. If they do lapse, taxpayers could see higher tax bills, more complex returns, and fewer planning opportunities. As this deadline approaches, it’s essential for both individuals and business owners to understand which changes are here to stay and which may soon disappear. Being informed now provides the best chance to prepare, adapt strategies, and potentially avoid negative surprises down the road.
What Stays: Permanent Corporate Tax Changes
One of the most enduring outcomes of the Tax Cuts and Jobs Act (TCJA) was the reduction in the top corporate tax rate from 35% to 21%. Unlike many of the individual tax changes, this rate cut was made permanent. The shift has had a long-term impact on how corporations allocate capital, structure compensation, and forecast growth. For large and mid-sized businesses, the lower tax rate improves cash flow, increases after-tax profits, and can enhance competitiveness both domestically and globally. It also simplifies future financial planning, as there is no current expiration date that might force major changes. This permanence has given companies the confidence to reinvest in operations, expand hiring, and scale infrastructure. While other provisions of the TCJA face an uncertain future, corporate America can count on this foundational change to remain in place – barring a major shift in tax policy through new legislation.
What May Expire in 2025
For individuals and small business owners, many provisions are set to expire on December 31, 2025. These include:
- Lower individual tax brackets
- Increased standard deduction
- Enhanced child tax credit
- 20% qualified business income deduction for pass-through entities
- $10,000 SALT deduction cap
- Doubled estate and gift tax exemptions
If these provisions are not extended, many taxpayers will face higher effective tax rates and more complex filing requirements.
Planning Around the SALT Cap and Estate Taxes
The cap on the state and local tax (SALT) deduction has been one of the more contentious pieces of the TCJA. Capped at $10,000, the deduction limits the amount taxpayers can claim for property, income, and sales taxes paid to state and local governments. This disproportionately affects residents of high-tax states like New York, California, and New Jersey. Although the cap is scheduled to expire at the end of 2025, its future remains politically charged. Some lawmakers want to repeal it entirely, while others argue the cap should be extended or even made permanent to limit tax breaks for the wealthy.
Equally important is the future of the estate and gift tax exemption, which was doubled under the TCJA to over $12 million per individual. If no action is taken, that exemption will drop by about half in 2026. High-net-worth families should consider making substantial gifts before the sunset date to take full advantage of the current limits. Waiting too long could mean losing the opportunity to transfer wealth tax efficiently. These are not abstract risks – they represent real, time-sensitive decisions for families with significant assets.
What Small Business Owners Should Know
The qualified business income (QBI) deduction has been a powerful tool for small business owners. Introduced under Section 199A of the tax code, this deduction allows eligible pass-through entities, like sole proprietorships, partnerships, and S-corporations, to deduct up to 20% of their qualified business income. This effectively lowers their marginal tax rates and helps offset the TCJA’s broader limitation on itemized deductions.
However, this deduction is set to expire at the end of 2025. Its loss could raise the effective tax burden for a large portion of the small business community. Business owners should not assume this benefit will be extended. Instead, they should meet with their tax advisors to assess how the potential sunset will affect their earnings and take proactive steps now. This might include shifting income into earlier tax years, reconsidering their business structure, or planning distributions differently. Acting now can protect profitability later.
Why It Pays to Act Now
Many of the TCJA’s most favorable provisions are running out of time. Once they expire, taxpayers won’t have the same tools available to lower their liability or simplify their returns. Acting early gives you options. Waiting until late 2025 may limit what can be done or force you into rushed decisions that don’t align with your broader financial goals. That’s why many financial advisors and tax professionals are already working with clients to explore tactics such as income acceleration, Roth conversions, charitable giving, and lifetime gifting.
The IRS won’t wait for you to catch up. When provisions expire, the change is immediate and enforceable. Those who plan ahead gain a strategic advantage, whether by reducing taxes, improving cash flow, or avoiding penalties. Time is a nonrenewable resource in tax planning. The more of it you use wisely, the more control you maintain over the outcome. If your current financial strategy hasn’t been updated since the TCJA was passed, now is the time to fix that.
Congressional Uncertainty Means You Need a Plan
The future of the TCJA is highly political. Some lawmakers want to extend the individual tax cuts, while others support allowing them to expire as scheduled. There is no guarantee that even the most popular provisions will survive. Without new legislation, the tax code will revert to pre-2018 rules in 2026 – a shift that would raise taxes and increase complexity for millions of Americans.
This uncertainty doesn’t mean you should wait. On the contrary, it’s a call to action. Building a flexible tax strategy now means you’ll be prepared either way. That might involve stress-testing your financial plan under both current and future tax rates, rebalancing your investment portfolio, or adjusting your retirement contributions. The goal is to avoid surprises and put yourself in a position of strength, regardless of what Congress decides.
For Further Reading: Insights from Fragasso Financial Advisors
If you want a deeper dive into what’s changing and what’s not, Fragasso Financial Advisors, an independent wealth management firm based in Pittsburgh, has published a detailed blog post on this topic. Their article outlines the permanent aspects of the TCJA, highlights provisions scheduled to expire in 2025 and discusses planning considerations for both individuals and business owners. It’s a helpful resource for those looking to make informed financial decisions ahead of upcoming tax changes. You can read their post here: The Tax Cuts and Jobs Act (TCJA): Key Changes and Expiring Provisions.
The sunsetting of key TCJA provisions is not a distant concern – it’s a fast-approaching reality. For taxpayers, the difference between proactive planning and passive waiting could mean thousands of dollars in taxes and missed opportunities. The complexity of these changes can feel overwhelming but taking even small steps now, like revisiting your tax strategy or consulting with a qualified advisor and tax professional, can lead to meaningful results. Time creates leverage. The sooner you act, the more options you’ll have. Whether you’re navigating personal deductions or preparing a business for possible tax shifts, awareness is your best asset. Waiting until late 2025 may leave you reacting instead of deciding. By staying informed and planning today, you can maintain control over your financial outcomes tomorrow. The decisions you make now don’t just impact the next tax return – they shape your financial future.
Investment advice offered by investment advisor representatives through Fragasso Financial Advisors, a registered investment advisor.
