TCJA on the Brink: What Expiring Provisions Mean for You in 2025

It’s March 2025, and with President Trump back in the White House and Republicans holding a slim majority in both chambers of Congress, the tax world is buzzing about a massive reconciliation bill that could extend—or even expand—many of the individual and business-friendly tax breaks introduced by the Tax Cuts and Jobs Act (TCJA) of 2017. Senate Finance Committee Chair Mike Crapo (R-Idaho) recently signaled the legislation is shaping up to be “bigger and broader” than initially expected, potentially incorporating both a long-term TCJA extension and President Trump’s campaign proposals like eliminating taxes on tips, overtime, and Social Security.

Below is a look at key TCJA provisions set to expire December 31, 2025, along with insights on how current lawmakers plan to address them in the new bill—and what you can do now to stay ahead.

Individual Tax Rate Reductions

• Current Status: The TCJA temporarily lowered marginal tax rates for individuals, including reducing the top rate to 37%.
• What’s Next?: Under current law, these brackets revert to pre-TCJA levels (with a top rate of 39.6%) in 2026 unless Congress acts. Republican lawmakers have indicated they intend to extend the reduced rates, but cost and deficit concerns could force negotiations (especially in the Senate).
• Planning Tip: If rates do rise, it may be prudent to realize certain types of income or complete major financial transactions (e.g., sales of highly appreciated assets) before 2026.

Standard Deduction and Itemized Deductions

• Current Status: The TCJA nearly doubled the standard deduction and capped state and local tax (SALT) deductions at $10,000, among other changes.
• What’s Next?: Should the TCJA expire, the standard deduction shrinks again, and the SALT cap vanishes—though Republicans have proposed raising the cap instead of removing it outright. House leaders from high-tax states favor increasing the SALT deduction limit, and it’s widely expected to be part of any final package.
• Planning Tip: If the standard deduction drops, more taxpayers may find itemizing beneficial in 2026. Monitor how lawmakers address SALT, especially if you’re in a high-tax jurisdiction and plan to either pre-pay or defer certain deductible expenses accordingly.

Section 199A Pass-Through Deduction

• Current Status: Owners of pass-through entities (sole proprietorships, partnerships, S corporations) can deduct up to 20% of qualified business income.
• What’s Next?: Lawmakers who support small business are pushing for a permanent extension, but the deduction’s significant revenue impact puts it under close scrutiny. Sen. Crapo has listed it as one of the “must-have” items in the reconciliation bill.
• Planning Tip: If you’re a pass-through business owner, evaluate whether a change in entity structure might become advantageous if this deduction is reduced or phased out—but keep an eye on the final legislation before making any moves.

Bonus Depreciation and R&D Expensing

• Current Status: The TCJA allowed 100% first-year bonus depreciation on qualified property, a provision that phases down beginning this year and fully disappears in 2027. The law also required businesses to amortize R&D expenses starting in 2022.
• What’s Next?: Senate Republicans want to restore full immediate expensing for R&D and extend 100% bonus depreciation. Early estimates suggest this could cost around $500 billion. President Trump’s agenda also includes favorable treatment for manufacturers making goods in the U.S. These provisions are top priorities in the new bill but may face offset requirements.
• Planning Tip: If you’re considering large capital expenditures or investing heavily in R&D, timing your spending around a potential extension (or securing immediate expensing) is crucial. Staying flexible until the legislation is finalized could lead to more lucrative tax breaks.

Child Tax Credit (CTC) and Family Provisions

• Current Status: The TCJA increased the Child Tax Credit to $2,000 per qualifying child, with a higher phaseout threshold.
• What’s Next?: Sen. Crapo noted there would likely be “an additional boost” to the CTC for households under $400,000. Lawmakers seem set on at least maintaining the current $2,000 level, if not expanding it further, but the final figure and phaseout thresholds remain uncertain.
• Planning Tip: Family tax planning often hinges on credits like the CTC. If you expect changes in household income or family size, consider how an expansion—or reversion—of the CTC would impact your overall tax liability.

Estate and Gift Tax Exemptions

• Current Status: Under the TCJA, the lifetime estate and gift tax exemption nearly doubled, sitting around $13.99 million for individuals (roughly $27.98 million for married couples) in 2025.
• What’s Next?: Without a legislative fix, these higher exemptions will revert to about half their current amount in 2026. Some prominent GOP senators are pushing for a reduction or full repeal of the estate tax, but the final outcome is unclear given the large revenue impact of eliminating it.
• Planning Tip: If your estate could surpass a lower exemption threshold post-2025, take advantage of the current high exemptions. Options range from outright gifts to irrevocable trusts that lock in the higher limit before it’s reduced.

Other Potential Changes

• No Tax on Tips, Overtime, or Social Security: President Trump pitched this during his campaign, and Sen. Crapo confirmed it’s “on the table.” The cost could run into the hundreds of billions, so negotiations will likely hinge on potential offsets or spending cuts (for example, via the Department of Government Efficiency, or DOGE).
• SALT Cap Adjustments: As noted, an increase to the $10,000 SALT cap has strong support from legislators in high-tax states.
• International Tax: A separate section in the bill may address how U.S. multinational firms reconcile existing TCJA provisions with global minimum tax rules (Pillar 2), plus potential changes to GILTI, FDII, or BEAT.

What’s Next: How to Prepare

With a single massive reconciliation bill now the favored approach, lawmakers aim to finalize both corporate and individual tax provisions in one fell swoop. While the exact contours are still in flux, businesses and individuals can begin planning by:

1. Reviewing Your 2025-2026 Strategy: Identify income or deductions you might want to accelerate or defer, depending on whether certain TCJA provisions are extended.
2. Staying Flexible on Big Purchases: From equipment upgrades to building improvements, keep an eye on bonus depreciation discussions.
3. Adjusting Estate Plans: If your net worth puts you near (or above) the current exemption limits, consider using them sooner rather than later.
4. Consulting Tax Professionals: Proactive planning with a CPA or tax attorney can help you navigate rapid changes in the legislative environment.

Final Thoughts

The coming months promise fast-moving developments on Capitol Hill, with Republicans pushing to make the TCJA’s key provisions permanent and incorporate new tax ideas from the Trump campaign. As negotiations evolve, understanding the expiring provisions—and how they might be extended or altered—will help you seize tax-saving opportunities and avoid unwelcome surprises.

Have questions or want personalized guidance? Contact us at info@strategictaxplanning.net or call us at (202) 455-6010 to discuss how to safeguard your finances amid the shifting tax landscape.