by dmaadmin | Nov 21, 2024 | General Tax and Accounting Information, Tax Planning
What Happens If the TCJA Expires in 2025? With the recent US election and administration change on the way, many people are asking, “how might this impact our taxes?” Specifically, what might happen when the TCJA expires in 2025. What is the TCJA? The Tax Cuts and Jobs Act (TCJA) is a comprehensive tax reform law passed by the U.S. Congress in December 2017 and signed into law by President Donald Trump. The TCJA introduced sweeping changes to the U.S. tax system that affected individuals, businesses, and corporations starting in 2018. The TCJA is currently in effect through the 2025 tax year for most individual provisions. These provisions, including the lowered tax brackets, the increased standard deduction, and changes to itemized deductions, are set to expire after 2025 unless Congress takes action to extend them. Starting in 2026, the tax laws are scheduled to revert to their pre-2018 levels, which has many taxpayers understandably concerned about how this could impact their finances. Here’s what you need to know about potential updates and how they might affect you: A Look at Key Provisions Likely to Change Individual Income Tax Rates: The TCJA temporarily lowered tax rates for individuals, reducing the percentage of income taxed across all income levels. Without action, these rates are set to return to higher, pre-2018 levels in 2026. Incoming President Trump and House/Senate Republicans are expected to advocate for making these lower rates permanent, but the final decision will depend on Congressional negotiations. More updates are likely in 2025. The Standard Deduction and Itemized Deductions One of the most impactful changes introduced by the TCJA was...
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