What to Know
The 2017 Tax Cuts and Jobs Act (TCJA) was a major overhaul of the tax code, roughly doubling the estate-tax exemption, lowering income tax rates in most brackets, capping state and local tax (SALT) deductions and more. But key provisions of the act will expire at the end of this year unless lawmakers in Washington, D.C. extend them. So what’s expected to happen?
The Election Results Could Prove Pivotal
With Donald Trump winning the presidency in 2024, and his fellow Republicans in control of the House of Representatives and Senate, the likelihood of extending the TCJA’s provisions has significantly increased, experts say. President Trump has signaled that he wants not only an extension of the legislation’s tax breaks but also additional tax cuts, including lowering the corporate tax rate for companies that make their products in the U.S. and exempting income from tips, overtime pay and Social Security. Trump has also called for eliminating or increasing the cap on SALT deductions, which under the TCJA were capped at $10,000.
But narrow Republican majorities in the House of Representatives and Senate as well as concern about the country’s ballooning debt combine to create uncertainty about the TCJA’s future.
One Scenario: The TCJA Lapses
Without action from Washington, the top individual income tax rate is set to rise to 39.6%.1 The highest rate is currently 37% and it applies to single taxpayers with incomes greater than $626,350. 2 The second-highest tax bracket, which currently applies to single taxpayers with income above $250,525, would remain at 35% should lawmakers fail to act. The standard deduction, which in 2025 is $15,000 for single filers2 would be reduced by about half. 1
How Estate Taxes Could Change
Perhaps most importantly for high-net-worth families, the lifetime estate and gift tax exemption would be cut approximately in half from the $13.99 million per person3 level for 2025. The potential reduction would greatly impact the amount ultra-high-net-worth families can transfer tax-free to heirs because assets above the exemption ceiling are taxed at 40%.
Other Potential Changes
Additional provisions of the TCJA that could have a significant impact on American households if not extended include the 20% qualified business income (QBI) deduction, which allows owners of pass-through entities like LLCs, partnerships, sole partnerships and S corporations to deduct a fifth of that income. 4
How TCJA Provisions Could be Extended
Republicans hope to use the budget reconciliation process, which they used to pass the TCJA in 2017, to extend the legislation. The process allows lawmakers to pass legislation with a simple majority in the Senate, bypassing any potential filibuster. However, challenges remain. Lawmakers will need to balance tax cuts with concerns about the growing federal debt, which as of February 2025 stood at more than $36 trillion. 5
The Committee for a Responsible Federal Budget has warned that extending all the TCJA’s provisions would add more than $5 trillion to the deficit over the next decade.6 Republican majorities of just a few seats in the House and Senate means there is little room for division within the party.
A Tricky Balancing Act
Complicating the Republicans’ task is the Byrd Rule, which prohibits legislation passed through the reconciliation process from raising the federal deficit beyond a 10-year budget window. The rule requires lawmakers to find offsetting revenue increases or spending cuts to make tax cuts permanent.
We’re on Top of It
While it’s considered likely that important provisions of the TCJA will be prolonged, there’s no way to be certain, and compromises are likely. Rest assured that your advisor will keep a close eye on the legislative process and advise their clients about any actions that may be in their best interests.
Sources:
1 “What to know about TCJA expiration”
2,3 “IRS releases tax inflation adjustments for tax year 2025”
4 “What to know about TCJA expiration”
6 “TCJA Extension Could Add $4 to $5 Trillion to Deficits”
This material is provided for informational and educational purposes only. It does not consider any individual or personal financial, legal, or tax circumstances. As such, the information contained herein is not intended and should not be construed as individualized advice or recommendation of any kind. Where specific advice is necessary or appropriate, individuals should contact their professional tax, legal, and investment advisors or other professionals regarding their circumstances and needs.
Any opinions expressed herein are subject to change without notice. The information is deemed reliable, but we do not guarantee accuracy, timeliness, or completeness. It is provided “as is” without any express or implied warranties. Forward looking statements are subject to numerous assumptions, risks, and uncertainties, which change over time. Actual results could differ materially.
AdvicePeriod is another business name and brand utilized by both Mariner, LLC and Mariner Platform Solutions, LLC, each of which is an SEC registered investment adviser. Registration of an investment adviser does not imply a certain level of skill or training. Each firm is in compliance with the current notice filing requirements imposed upon SEC registered investment advisers by those states in which each firm maintains clients. Each firm may only transact business in those states in which it is notice filed or qualifies for an exemption or exclusion from notice filing requirements. Any subsequent, direct communication by an advisor with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. For additional information about Mariner, LLC or Mariner Platform Solutions, LLC, including fees and services, please contact us utilizing the contact information provided herein or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov). Please read the disclosure statement carefully before you invest or send money.
For additional information as to which entity your adviser is registered as an investment adviser representative, please refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov) or the Form ADV 2B provided to you. Investment adviser representatives of Mariner, LLC dba Mariner Wealth Advisors and dba AdvicePeriod are generally employed by Mariner Wealth Advisors, LLC. Investment adviser representatives of Mariner Platform Solutions, LLC dba AdvicePeriod, are independent contractors.
