TCJA Tax Benefits Phasing Out: What You Need to Know

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When the Tax Cuts and Jobs Act (TCJA) was signed into law in 2017, the law made significant changes to the U.S. tax code, including lowering individual and corporate tax rates, increasing the standard deduction, and changing how businesses are taxed.

However, those changes were always meant to be temporary. While some of those provisions have already expired, others will continue to phase out until 2027.

TCJA Key Provisions and Their Expiration Dates

For Individuals

Individual Income Tax Rates

The TCJA reduced individual income tax rates by up to 2%. These lower rates are scheduled to expire at the end of 2025.

Standard Deduction

The TCJA doubled the standard deduction for both single and married taxpayers. This increase is scheduled to expire at the end of 2025. However, stay tuned for updates here on this topic.

Child Tax Credit

The TCJA increased the child tax credit from $1,000 to $2,000 per child. This increase is scheduled to expire at the end of 2025. However, stay tuned for updates here on this topic.

For Businesses

Pass-Through Deduction

The TCJA created a new deduction for pass-through businesses, which are businesses that pass their income through to their owners. This deduction is scheduled to expire at the end of 2025.

100% Bonus Depreciation

The TCJA allowed businesses to deduct the total cost of new investments in the year they were made. This provision is scheduled to phase out over a period of four years, beginning this year. Currently, the bonus percentage will decrease by 20 points each year until it eventually phases out entirely in 2027. For more information on this topic, read our in-depth article here.

Impact on Taxes

The phasing out of the TCJA could have a significant impact on taxes since, with the phasing out of these tax provisions, taxes may increase. To minimize the effect on your taxes, you should start tax planning now for the phasing out of the TCJA.

Have questions about tax planning for the phasing out of TJCA? Contact our team of tax planning experts to help.