A Taxpayer’s Countdown to 2025 Tax Provisions
A Countdown to 2025: Key Tax Provisions Facing Expiration
By Mark Kassens, CPA
The year 2025 looms large for taxpayers, as numerous federal tax provisions are scheduled to expire. These provisions, outlined in the Joint Committee on Taxation’s (JCT) List of Expiring Federal Tax Provisions, could significantly impact individual and business tax liabilities if not renewed.
Individual Income Tax Rates and Credits
Perhaps the most anticipated expiration in 2025 is the modification of individual income tax rates. The current lower rates are set to revert to their pre-2018 levels, potentially increasing tax burdens for many taxpayers. Additionally, the increased Child Tax Credit, premium assistance credit enhancements, and work opportunity credit are also slated to expire. These changes could have a substantial impact on families and low-income individuals.
Estate and Gift Tax
One of the most significant changes on the horizon is the expiration of the increased estate and gift tax exemption. This temporary increase, which has allowed individuals to transfer a larger amount of wealth without incurring gift or estate taxes, is scheduled to revert to its pre-2018 level. This could have significant implications for high-net-worth individuals and their estate planning strategies.
Business Tax Provisions
Several business tax provisions are also facing expiration. The Qualified Business Income Deduction (QBID), which provides a 20% deduction for pass-through entities, is set to expire. This could increase tax liabilities for sole proprietors, partnerships, and S corporations. Additionally, the suspension of the limitation on itemized deductions and the increase in the standard deduction are also scheduled to expire.
“The expiration of these provisions could have a variety of consequences, including increased tax liabilities, reduced economic stimulus, and increased complexity.”
Other Notable Provisions
Other notable provisions expiring in 2025 include:
- Suspension of the deduction for personal exemptions and increase of the standard deduction.
- Limitation on deduction for State, local, etc., taxes.
- Exclusion from gross income of discharge of indebtedness on principal residence.
Potential Consequences of Expiration
The expiration of these provisions could have a variety of consequences, including:
- Increased tax liabilities: Taxpayers may face higher tax bills if these provisions are not renewed.
- Reduced economic stimulus: The expiration of certain tax breaks could dampen economic activity.
- Increased complexity: The tax code could become more complex and difficult to navigate.
What to Expect in 2025
As 2025 approaches, it is important for taxpayers to stay informed about the status of these expiring provisions. Congress may decide to extend or make permanent some or all of these provisions. However, if they are not renewed, taxpayers will need to adjust their tax planning accordingly.
It is advisable for individuals and businesses to consult with a tax professional to assess the potential impact of these expirations on their specific tax situation. By understanding the implications and planning ahead, taxpayers can minimize the negative consequences and maximize their tax benefits.
For a full list of the tax provisions scheduled to expire 2024 – 2034, view the Joint Committee on Taxation’s full list. These tax provision deadlines are subject to change.
Don’t get caught off guard by the impending tax changes!
Download our comprehensive guide to the 2025 expiring tax provisions and start planning your financial strategy today.
Questions?
Estate, Trust, and Succession Planning Services
Mark’s background in tax enables him to provide extensive services to the firm’s clients in the areas of estate and retirement planning, and business succession consulting.