Five observations on the expiration of the Tax Cuts and Jobs Act (TCJA)

The upcoming expiration of the Tax Cuts and Jobs Act (TCJA) in 2025 presents a significant challenge for taxpayers amid uncertainty from the presidential election. Effective planning strategies are essential, with increased interest in Roth IRA conversions and Spousal Lifetime Access Trusts to mitigate potential tax increases.

Notably, scheduled income tax changes will see the top rate rise from 37% to 39.6%, alongside other bracket adjustments. Additionally, while some deductions will become available again if the TCJA expires, the standard deduction will be halved, potentially increasing the number of itemizers.

Higher-wealth households must assess strategies carefully, especially with the impending reduction of the estate tax exclusion. The alternative minimum tax (AMT) could sharply increase its impact, affecting millions more taxpayers.

Business owners, particularly those operating as pass-through entities, may experience substantial tax hikes with the expiration of the 20% qualified business income deduction. Overall, individuals and families should seek professional guidance to navigate this uncertain tax landscape.