2025 Tax Alert: How to Prepare for the End of the Tax Cuts and Jobs Act and Higher Taxes Ahead

As the Tax Cuts and Jobs Act (TCJA) of 2017 ends on December 31, 2025, Americans should prepare for higher taxes.

How to Prepare for the End of the Tax Cuts and Jobs Act

As the Tax Cuts and Jobs Act (TCJA) of 2017 is set to end on December 31, 2025, Americans will see many tax changes. The TCJA lowered tax rates and changed income tax brackets but these changes will expire leading to higher taxes for most people. Experts advise planning ahead by adjusting income or deductions to avoid surprises, according to the report of USA Today.

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(photo: The Hill)

How to Prepare for the TCJA’s Sunset

One big change is the standard deduction, which was doubled by the TCJA to make filing taxes easier. When the TCJA ends, this deduction will be smaller and personal exemptions will return, meaning more people will need to itemize deductions. This will require careful tracking of expenses like donations and mortgage interest. Also, the child tax credit will be cut in half affecting families with children.

Homeowners might see some relief with the deductible mortgage interest cap increasing from $750,000 to $1 million. Workers could also benefit from the return of deductions for job-related expenses that were cut by the TCJA. However, the overall higher tax rates and the return of the Alternative Minimum Tax for more people will make financial planning more challenging. As the expiration date nears it’s important to plan carefully to handle these tax changes.

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