With the Tax Cuts and Jobs Act (TCJA) from 2018 set to expire at the end of 2025, significant tax changes are on the horizon. Here’s what you need to know and plan for:
Expect higher tax rates, with the top rate increasing from 37% to 39.5%. Income brackets will also shift, potentially placing more of your income in higher tax categories.
Standard deductions may decrease, and phaseouts for itemized deductions could affect more taxpayers. The $10,000 cap on state and local tax deductions will be removed, and some previously excluded deductions may return.
More taxpayers will face the AMT, a secondary tax calculation that applies if it results in a higher tax than the regular calculation.
This credit will be reduced, and the income thresholds for qualifying will be lower, increasing the tax burden for many families with children.
Changes in capital gains tax rules will make strategic planning for asset sales more critical.
Personal exemptions will be reintroduced, potentially offsetting some negative impacts from other changes.
The 20% Qualified Business Income (QBI) deduction for small businesses will expire, though new incentives may be introduced to maintain competitive fairness internationally.
Contact us today for a consultation to take advantage of current tax laws before they change.
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