The Tax Cuts and Jobs Act (TCJA) of 2017 was enacted by the US Congress and signed into law by former President Donald Trump. It aimed to stimulate economic growth by overhauling the tax code, reducing tax rates for individuals and corporations, and simplifying tax filings. It represented the most significant tax reform since the Tax Reform Act of 1986. This legislation’s last day in effect is 12/31/2025, and starting in 2026, we will return to the previous tax laws unless Congress passes new legislation. Here are a few things to look out for if no action is taken.
| Tax Reform | TCJA Change | What Will Change Back |
| Individual Tax Rates | 10%, 12%, 22%, 24%, 32%, 35%, 37% | 10%, 15%, 25%, 28%, 33%, 35%, 39.6% |
| Standard Deduction | 2024 Single - $14,600 2024 Married - $29,200 |
20171 Single - $7,850 2017 Married - $15,750 |
| Child Tax Credit | $2,000 per child | $1,000 per child |
| State and Local Deductions | $10,000 Limit | Unlimited |
| Mortgage Interest Deduction | $750,000 Balance | $1,000,000 Balance |
| Trust Tax Rate | 10%, 24%, 35%, 37% | 15%, 25%, 28%, 33%, 39.6% |
| Estate Tax Exemption | $13,610,000 | $6,810,000 |
One of the most critical changes to look out for is the decrease in the estate tax exemption. The exemption limit has been so high that it has made estate planning easier to navigate. The decrease still leaves a couple with a large exemption amount, about $13.6 million. However, a potential decrease could open the door for certain estate planning strategies which need to be completed by the end of 2025.
The changes in tax rates and the standard deduction will also be significant for many Americans. According to Forbes, roughly 87% of taxpayers cannot itemize deductions today which means they use the standard deduction due to the substantial increase to it back in 2017. If the law reverts to previous deduction limits, tracking receipts for sales tax will become a higher priority if Americans choose to switch to itemizing. On the bright side, the State and Local Tax (SALT) deductions for itemizing would become unlimited, providing a benefit in determining how much one pays in sales tax and, especially for Texans, the ability to deduct our entire real estate tax amount. Additionally, investors may be able to itemize their investment expenses again as well. A big downside to the changes, though, is the increase in tax rates taxing more of a taxpayer's next dollar of income within their respective brackets.
Depending on the outcome of the next election, the TCJA may be extended. We will know a lot more in November. Regardless, you should understand how the changes impact your tax situation.
12017 Tax Numbers Inflated to 2024
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