TCJA: Tax Provisions Are Scheduled to Expire

Buckle up, America—major tax changes are on the horizon. Upcoming elections and the peculiarities of tax law are setting the stage for significant shifts. Small business owners and taxpayers alike need to be prepared for what might come next.

Our Current Situation

The Tax Cuts and Jobs Act (TCJA), which generally took effect in 2018, made sweeping changes to the tax landscape. However, many of its provisions are set to expire on December 31, 2025. With this date looming, you may wonder how your federal tax bill will be affected in 2026. The answer isn’t clear because the outcome of this November’s presidential and congressional elections is expected to affect the fate of many expiring provisions. A new political landscape in Washington could also mean other tax law changes.

Corporate vs. Individual Taxes

The TCJA cut the maximum corporate tax rate from 35% to 21%. It also lowered rates for individual taxpayers, with the highest tax rate reduced from 39.6% to 37%. While the corporate tax cut is “permanent,” meaning there’s no scheduled expiration date, individual rate cuts are set to expire in 2025. However, tax legislation could still change the corporate tax rate.

On the individual side, standard deductions were increased, significantly reducing the number of taxpayers who benefit from itemizing deductions for certain expenses, such as charitable donations and medical costs. (You benefit from itemizing on your federal income tax return only if your total allowable itemized write-offs for the year exceed your standard deduction.)

Additionally, through 2025, certain itemized deductions are eliminated or more limited, including those for home mortgage interest and state and local tax (SALT).

For small business owners, one of the most significant changes is the potential expiration of the Section 199A qualified business income (QBI) deduction. This is the write-off for up to 20% of QBI from noncorporate pass-through entities, including S corporations and partnerships, as well as sole proprietorships.

The expiring provisions will affect many taxpayers’ tax bills in 2026, unless legislation extending them is signed into law.

Possible Scenarios

The outcome of the presidential election in less than five months, as well as the balance of power in Congress, will determine the TCJA’s future. Here are four possible scenarios:

1. All of the TCJA provisions scheduled to expire will actually expire at the end of 2025.
2. All of the TCJA provisions scheduled to expire will be extended past 2025 (or made permanent).
3. Some TCJA provisions will be allowed to expire, while others will be extended (or made permanent).
4. Some or all of the temporary TCJA provisions will expire — and new laws will be enacted that provide different tax breaks and/or different tax rates.

How your tax bill will be affected in 2026 will partially depend on which one of these scenarios becomes reality and whether your tax bill went down or up when the TCJA became effective back in 2018. That was based on a number of factors including your income, your filing status, where you live (the SALT limitation negatively affects more taxpayers in certain states), and whether you have children or other dependents.

The Tax Horizon

As the TCJA provisions get closer to expiring, it’s important to know what might change and what tax-wise moves you can make if the law does change. We’ll keep you informed about what’s ahead. We’re here to answer any questions you may have.

What to Do Next

1. Stay Informed – Keep an eye on legislative updates and how they could impact your taxes.
2. Consult a Professional – Work with a tax advisor who understands the intricacies of the TCJA and how upcoming changes may affect you.
3. Plan Ahead – Consider potential tax strategies now to minimize your tax burden in the future.

At SD Mayer & Associates, we’re not just accountants; we’re problem-solvers, strategists, and partners in your success. We’ll help you cut through the noise and understand how these changes might impact your business.

Call to Action

Ready to stay ahead of the curve? Let’s get started on securing your financial future today. Contact us to book a consultation with one of our expert advisors.

Stay Tuned

In the coming months, we will continue to provide updates and insights into how these potential changes may unfold. Our goal is to help you make informed decisions and take calculated risks to optimize your finances.

Let’s thrive together in this evolving landscape. What are you waiting for? Let’s get started on your path to financial freedom today.