Home » Tax Cuts & Jobs Act of 2017 – Assessing The Impact Of The 2025 Sunsetting Provisions

Tax Cuts & Jobs Act of 2017 – Assessing The Impact Of The 2025 Sunsetting Provisions

by Guirguis & Gibbs Inc.

In December 2017, the Tax Cuts and Jobs Act (also known as the “TCJA”) was enacted by President Trump with the goal of reshaping the tax landscape and stimulating growth in the economy.

However, as we move closer to 2025, attention will turn towards to the sunsetting provisions within the TCJA, raising serious questions about the future impact for individuals, businesses and the overall well being of the economy. 

The TCJA proved to be an overhaul of the US tax code, which resulted in stimulating economic growth, the creation of jobs and providing tax relief for both individuals and businesses. To make the United States globally competitive, changes to the individual and corporate tax rates and deductions were made to put more money into the pockets of hardworking Americans.

The post TCJA economic environment brought about the changes that it intended to create: businesses enjoying an increase in profits that allow them to expand their workforce while individuals see a noticeable reduction in their tax liability which increases their disposable income.

As we approach the end of 2023, the uncertain future of the TCJA draws closer, potentially reverting some of the provisions back to their previous levels, in this case December 31, 2025.Several key provisions that are scheduled to sunset include:

  1. Individual Tax Rates and Brackets: The tax brackets were lowered, with the top marginal rate dropping down from 39.6% to 37%.
  2. Standard Deduction Increase: The standard deduction was nearly doubled under the TCJA, which provided additional tax relief for individuals and families. Most recently for the 2022 calendar year, the standard deduction for a single taxpayer was $12,950 while those that filed as a married couple could receive $25,900.
  3. State and Local Tax Deduction (SALT): For those who have larger withholding for state income taxes or pay more in property taxes, the expiry of the TCJA would allow for a larger deduction for those taxpayers. Currently, the cap on this deduction was $10,000.
  4. Child Tax Credit Increase: The child tax credit enhancement was made available to more families while increasing the amount that could be claimed. This credit doubled, going from $1,000 to $2,000, per child under 17 years of age.
  5. Estate and Gift Tax Exemption: The TCJA pushed the estate and gift tax exemption to a historically high level by doubling the amount from $5.6 million to $11.18 million.

It is important to note that the future of the above-mentioned provisions will depend on the decisions of our policy makers. It is ultimately their choice whether to extend or allow these provisions to expire. Allowing them to expire will be detrimental to the American taxpayer by increasing their taxes, decreasing their disposable income and stunting the growth of the economy.

For the time being, it is important to be proactive and properly tax plan with your accountant on how to best take advantage of these provisions while they are still available to us.

If you do not have a tax plan in place, it is never to late to do so. Feel free to contact us and let us help you put your worries to rest. 

Guirguis & Gibbs Inc. is located at 27819 Smyth Drive Floor 2. Valencia, CA 91355. Give us a call at (661) 209-3287.

*Mark Guirguis is a Registered Representative of Cetera Financial Specialists LLC, member FINRA/SIPC. Cetera is under separate ownership from any other named entity. For a comprehensive review of your personal situation, always consult your tax and/or legal advisor. Neither Cetera Financial Specialists LLC nor any of its affiliates offer tax or legal services.

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