The Tax Cuts and Jobs Act (TCJA) of 2018 introduced several provisions that are set to expire, or “sunset,” at the end of 2025. Some key provisions include:
Individual tax rate reductions
The act reduced tax rates across all individual tax brackets, but these reductions are set to expire after 2025, meaning tax rates will revert to pre-TCJA levels unless extended by new legislation.
| empty table header | Pre TCJA (Before Tax Act Enacted) |
Post TCJA (After Tax Act Enacted) |
||
|---|---|---|---|---|
| empty table header | Tax Rate | Single Filer | Tax Rate | Single Filer |
| Reduced Individual Tax Rates (pre- and post- TCJA single filer rate scheduler for 2018) |
||||
| 10% | $0 | 10% | $0 | |
| 15% | $9,525 | 12% | $9,525 | |
| 25% | $38,700 | 22% | $38,700 | |
| 28% | $93,700 | 24% | $82,500 | |
| 33% | $195,450 | 32% | $157,500 | |
| 35% | $424,950 | 35% | $200,000 | |
| 39.6% | $426,700 | 37% | $500,000 | |
Tax simplification and base-broadening
The standard deduction nearly doubled in years 2018-2025, increasing the standard deduction to $12,400 for single filers in 2018 and eliminated personal exemptions. In addition, the State and Local Tax (SALT) deduction and mortgage interest deduction, along with other miscellaneous deductions, were reduced. (Taxpayers who itemize may deduct up to $10,000 of state or local property, sales, or income taxes.)
Family tax relief
The Child Tax Credit was increased from $1,000 to $2,000 per qualifying child. Also, the maximum refundable amount of the Additional Child Tax Credit increased to $1,700 currently, and eligibility for single taxpayers’ gross income increased up to $200,000 ($400,000 for married filing jointly).
Pass-through business tax changes
Tax reform allowed non-corporate taxpayers to deduct up to 20% of their qualified business income (QBI), plus up to 20% of qualified real estate investment trust (REIT) dividends and qualified publicly traded partnership (PTP) income.
Estate tax relief
The tax reform law doubled the basic exclusion amount for tax years 2018 through 2025. Since this is adjusted annually for inflation, the amount for 2024 is $13.61 million. Thus, in 2026, the basic exclusion amount is due to revert to its pre-2018 level of $5 million, adjusted for inflation.
These provisions collectively reduced the tax burden on many individuals and families, but their expiration may result in a higher tax burden unless further legislative action is taken.