What You Must Know About The Tax Cut Job Act And What Happens After December 31st, 2025 Reversions

Tax Reform of 2017

This article is not going to explain what provisions are in the TCJA. Please see Your 2019 Taxes: What You Need to Know About the Tax Reform Bill for information on specific reforms.

Overview of Expiring Federal Tax Provisions

This article is intended to cover reversions and changes that will come in 2026 and before when the TCJA provisions start to expire.

In December of 2017 president Trump signed into law the TCJA or Tax Cut Job Act. This was the biggest reform to the our tax system in nearly 30 years. Some of the changes helped (higher standard deduction, and lower overall tax rate brackets) while changes in other deductions (SALT) may have ended up costing Americans more in tax.

First Filing Year With TCJA In Effect

2018 was the first year that Americans filed under the new provisions. In this case you should already have a grasp on what your tax burden is now after the TCJA reforms.

If you are unhappy with your tax situation after the reform I would strongly advise finding a trusted CPA to work with.

What Are The Reversions Of the TCJA Coming 2019-2025?

By The End of 2019

• Expiration of fees applied to Specified Health Insurance Polices and Self-Insured Health Plan.

• New Markets Tax Credit, Work Opportunity Tax Credit, and Employer Credit for Paid Family and Medical Leave will expire.

• December, 31st 2019 - Last possible date to begin construction on wind renewable power facilities eligible for electricity production credit.

• "Look-through treatment of payments between related controlled foreign corporations under the foreign personal holding company rules" This required corporations to file assets and income of subsidiaries on there own.

• Lastly, removal of provisions that originally lowered the alcohol tax rate.

2020-2024

• December 31st, 2020 - "Placed-in-service date for eligibility for the credit for production from certified advanced nuclear power facilities."

• December 31st, 2021 - "Credit for individuals for residential solar property" and "beginning-of-construction date for increased credit for business solar energy property."

• September 30th, 2022/2023 - Changes in "Highway Trust Fund excise tax rates" and "Leaking Underground Storage Tank Trust Fund financing rate."

• Nothing scheduled to expire in 2024.

By The End of 2025

• December 31st, 2025 - 23 Provisions relating to Income Taxes Expire. Currently it is planned that the expiring provisions revert to what they were before the TCJA. This means higher income tax rates, lowering to previous standard deductions (2017 Tax Information), bringing back personal exemptions, bringing back overall limitation on itemized deductions, return to uncapped SALT deductions, and finally many other miscellaneous itemized deductions will return. To sum it up, most tax payers will see an increase in there taxes, unless provisions are extended or innovated.

• Suspension of exclusion for reimbursement of bicycle commuting, suspension of exclusion for moving expense reimbursement, and the deduction for moving expenses.

• Changes to ABLE accounts

• Finally reverting the increase in estate and gift tax exemption from $11,400,000 (2019) currently back down to $5,000,000 as of December, 31st 2025. See Treasury, IRS: Making large gifts now won’t harm estates after 2025

Be Prepared For Changes To Come

I hope this article helps to provide a quick rundown of changes happening that may affect your planning needs.

Although some of these dates are far out, it may very advantageous to plan accordingly now due to higher estate exemptions and lower overall tax rates.

Than you for your time

Related: Retirement Changes Are Coming And You Need To Know What's Actually Included - SECURE Act of 2019

Related: An Employer's Guide to TCJA