Higher taxes in 2025? Let’s hope not.

If keeping up with tax code isn’t your bread and butter, you might not remember that the Tax Cuts and Jobs Act (TCJA) even exists—and why should you? It’s your job to make the cheddar, not to figure out how to slice it. 

(Bread, butter, cheddar? Guess we have grilled cheese on the brain.)

Enacted in 2017, the TCJA made significant changes to our tax code, impacting both individuals and businesses. It adjusted tax rates, deductions, credits, estate tax, and more, with the aim of lowering taxes, specifically at the corporate level, and encourage job growth across the board.(Cheese board?). 

In 2025, the TCJA is scheduled to expire. What happens if it isn’t extended?

Individual Tax Rates 

If the TCJA expires in 2025, individual tax rates would revert to pre-TCJA levels. This could result in higher tax liabilities for some taxpayers—particularly if you’re in a higher income bracket and benefited from reduced tax rates under the TCJA.

Child Tax Credit 

Deductions and credits that were expanded or modified by the TCJA, like the standard deduction and child tax credit, would also change if the TCJA isn’t extended. Specifically, the credit would be reduced from $2,000 per child back to $1,000.

Estate Tax 

The TCJA doubled the estate tax exemption, vastly reducing the number of estates that are subject to federal estate taxes. Essentially, this means that investors can transfer assets to their heirs—both during their lifetime or after their death—without paying estate or federal gift tax. For 2024, that exemption number is a whopping $13.61 million per individual. 

Should the TCJA expire, the exemption will drop back to the $6-7 million range, depending on inflation. 

Planning on gifting a significant amount of wealth? Ask us if you should do it before 2025.  

Corporate Tax Rates 

One of the most significant changes introduced by the TCJA was the reduction of the corporate tax rate from 35% to 21%. If the TCJA provisions expire, that corporate tax rate would increase back to its previous level. Additional provisions, related to business deductions and credits, would revert to the 2017 era, altering the tax landscape for businesses of all sizes.  

If the TCJA is allowed to expire, tax burdens for individuals and businesses would be increased.  

Don’t get caught off guard: Start planning now and reduce your pain. 

Looking for even more details? Here’s a side-by-side comparison from the IRS.