Expiring TCJA Provisions: What US Taxpayers Need to Know

The Tax Cuts and Jobs Act (TCJA) of 2017 introduced significant changes to the US tax code, many of which are set to expire at the end of 2025. As the deadline approaches, taxpayers should be aware of the potential implications of these expiring provisions. This article explores the key changes and their impact on US taxpayers.

1. **Standard Deduction and Individual Tax Rates**: The TCJA nearly doubled the standard deduction and reduced individual tax rates. In 2026, these provisions will revert to their pre-TCJA levels. The standard deduction will decrease from $12,000 (single filers) and $24,000 (married filing jointly) to around $6,500 and $13,000, respectively. Individual tax rates will also increase, with the top rate rising from 37% to 39.6%. This change will impact taxpayers across income levels, with lower- and middle-income households potentially facing higher tax burdens.
2. **Child Tax Credit**: The TCJA expanded the child tax credit to $2,000 per qualifying child, with a phaseout threshold of $200,000 for unmarried taxpayers and $400,000 for married joint filers. In 2026, the credit will revert to its pre-TCJA structure of $1,000 per qualifying child, with phaseout thresholds dropping to $75,000 and $110,000, respectively. This change will disproportionately affect lower-income households, potentially pushing more families into poverty.
3. **State and Local Tax (SALT) Deduction Cap**: The TCJA capped the SALT deduction at $10,000 per year. Its expiration in 2025 will significantly impact taxpayers in high-tax states, potentially increasing their federal tax liability. According to the Tax Foundation, the top 1% of earners in high-tax states like California and New York will see an average tax increase of over $100,000.
4. **Estate and Gift Tax Exclusion**: The TCJA doubled the estate and gift tax exclusion, set to halve in 2026. This reduction, from $11.7 million to $5.85 million per decedent, affects high-net-worth individuals and families. Wealth management and estate planning strategies should be reviewed to mitigate potential tax liabilities.
As the TCJA's expiration date nears, taxpayers should be aware of the potential consequences of these changes and plan accordingly. Policymakers should consider targeted tax reforms that balance revenue needs with economic growth and fairness. By staying informed and adaptable, taxpayers can better navigate the evolving tax landscape and prepare for the future.