Are Big Changes on the Way?

2025 is the final year of the Tax Cut and Jobs Act (TCJA).

Unless Congress passes new tax legislation, tax rules will revert back to 10 years ago.

Some thoughts on what will happen if the TCJA expires and there is no new tax bill:

As a Business Owner

• The QBI deduction expires at the end of 2025, which is up to a 20% deduction of your business income. This will mean an increase in taxable income in 2026 and the need for increased withholding or quarterly payments to avoid additional IRS penalties for under withholding.
• There may be good news for deductions. Items such as entertainment and meals expenses were allowed under the tax rules prior to TCJA.

As an Individual

• Itemized deductions would be more likely again including the opportunity to expense a home office, if you are a work-from-home employee, and full deduction of state and local taxes.
• The standard deduction will be significantly lower.
• The tax rate will increase 3% on average.

One thing is fairly certain, changes are coming! You can be assured there will be opportunities to minimize taxes as well as changes that could lead to increased taxes for some. It is more important than ever to stay in touch with your tax professional and work together to position yourself for the changes and opportunities that lay ahead.

June/July is a great time to connect with your tax professional and assess any potential changes required to optimize your tax situation.