Planning for Next Tax Season…Already!

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Registering Your Business For Federal Taxes

Time to Get Ready for Next Tax Season

It’s the time of year that we begin reaching out to clients to start planning for the tax season and tax years ahead — and this year, more than any in recent memory, is a very tough time to plan.

Tax planning for 2025 starts with the potential end of provisions of the Tax Cuts and Jobs Act (TCJA) set to expire end of 2025. We also have looming uncertainty with the November elections that will usher in a new president and Congress. Either or both may cause major disruptions in tax.

Amid all the uncertainties, what is certain is that taking a multiyear approach and leveraging tools and resources to keep pace with tax law changes will be especially important.

Greatest Impact from TCJA

With the expiration of TCJA, we will see the greatest impact on these:

  • Individual tax rates. The TCJA lowered tax rates to 10%, 12%, 22%, 24%, 32%, 35% and 37%. The top rate, 37%, was lowered from 39.6%. The TCJA rates will expire Dec. 31, 2025, and revert back to the prior rates. The top tax rate beginning Jan. 1, 2026 is currently slated to be 39.6%.
  • Standard deduction. The standard deduction was nearly doubled for all filing statuses ($12,000 for single filers and $24,000 for married filing jointly) by the TCJA. As a result, many taxpayers itemized deductions. Starting in 2026, the standard deduction is slated to be about half of what it is currently.

Other Concerns with Deductions

The act also impacted various Schedule A deductions:

  • SALT: The state and local tax deduction was capped at $10,000. After 2025, this limitation will expire, allowing greater benefit from deducting taxes during the calendar year, including real estate taxes, state and local income taxes, and personal property taxes.
  • Alternative Minimum Tax exemption and phaseout. The TCJA increased exemption amounts, as well as the exemption phaseout threshold, lessening the AMT burden on taxpayers. At sunset, the AMT exemption will revert to pre-TCJA levels. The number of taxpayers subject to AMT is expected to double.
  • Estate and Gift Tax. Beginning is 2-26, the estate and gift tax exclusion amount will be roughly cut in half. It will go from $10 million per decedent to $5 million. Clients with larger estates need to take advantage of the higher exemptions while they can.
  • Child Tax Credit. The TCJA temporarily doubled the maximum credit amount from $1,000 to $2,000 per qualifying child. It also modified the Additional Child Tax Credit formula. That means that both the maximum credit and the maximum ACTC will be $1,000 per qualifying child and the phaseout threshold will be reduced to $75,000 for unmarried filers and $110,000 for married filers.