Expiring Provisions of Tax Cuts and Jobs Act of 2017

The Tax Cuts and Jobs Act (TCJA) of 2017 included numerous temporary provisions set to expire in 2025 unless Congress intervenes. Although several of these items were discussed on the campaign trail this year, the extension of these expiring provisions remains uncertain, as do the possibilities of additional changes to tax policy. Please note that the following items are only some of the most significant provisions that are expiring. These are highlights and do not include exhaustive details. As is typical with tax law, everything remains subject to change.

Individual Tax Provisions:

The individual TCJA provisions set to expire include changes to tax rates, deductions, credits, and exemptions, which will impact taxpayers differently depending on their filing status and income levels.

1. Individual Income Tax Rates: The marginal tax rates were reduced under the TCJA and will revert to pre-TCJA levels.
2. Standard Deduction: The standard deduction was increased under the TCJA and will revert to pre-TCJA levels.
3. Personal Exemptions: Personal exemptions were eliminated under the TCJA, but will be reinstated for each taxpayer and qualified dependent, with phase-outs at higher income levels.
4. State and Local Tax Deduction: The state and local tax deduction was capped at $10,000 under the TCJA and will expire, with phase-outs at higher income levels.
5. Mortgage Interest Deduction: The mortgage interest deduction limitation was reduced to $750,000 under the TCJA and will revert to the pre-TCJA limit of $1,000,000 on qualified debt.
6. Child Tax Credit: The child tax credit increased from $1,000 to $2,000 under the TCJA and will revert to $1,000.
7. Credit for Other Dependents: The TCJA introduced a $500 credit per other dependents, which will expire after 2025.
8. Alternative Minimum Tax (AMT) Exemption: AMT exemptions and phase-out thresholds were increased under the TCJA, reducing the number of individuals subject to AMT. These exemptions will revert to prior levels.

Business Tax Provisions:

The business TCJA provisions set to expire include reductions or eliminations of certain deductions and credits, which will impact business owners differently.

1. Qualified Business Income (QBI) Deduction: The TCJA introduced a 20% pass-through income deduction for qualified business income, which will expire after 2025. This provision was enacted in response to the corporate tax rate reduction from 35% to 21%.
2. Net Operating Loss (NOL) Deduction: The 80% limitation on NOL deductions will be repealed after 2025.
3. Full Expensing for Capital Investments: The immediate expensing of qualified business property (bonus depreciation) will gradually decrease by 20% annually until it is completely phased out after 2026.

Other Provisions:

In addition to the individual and business provisions mentioned above, the unified lifetime exclusion amount for gift and estate taxes is set to expire at the end of 2025. It is projected that the exclusion amount will be reduced by about half from the current $13,610,000 per individual.

Navigating tax planning becomes increasingly challenging amidst such uncertainties. Seeking guidance from your tax advisor or CPA is critical to consider the impact these expiring provisions may have on your specific tax situation.

Sammie Binning, CPA, MSA
Individual Tax Manager,
Mason + Rich
sbinning@masonrich.com