10 Tax Provisions That Are Expiring in 2025 (And How They Affect You)

Learn how potential changes in the tax code could impact your bottom line.

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Updated June 10, 2024
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The Tax Cuts and Jobs Act (TCJA) of 2017, which the Trump administration introduced and signed into law, is set to sunset on December 31, 2025. Unless Congress renews the law, certain key tax provisions will expire at the end of next year.

The TCJA mainly impacts high-net-worth individuals and corporations. However, some also affect regular taxpayers. Keep reading to learn which TCJA provisions could expire at the end of 2025 and how they could affect your financial fitness.

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Tax rates

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Through the TCJA, individual income tax rates were lowered to 10%, 12%, 22%, 24%, 32%, 35%, and 37%. 

If Congress allows the TCJA to expire at the end of 2025, the 2026 income tax rates will revert to the higher pre-2017 rates of 10%, 15%, 25%, 28%, 33%, 35% and 39.6%.

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Standard deduction

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Under the TCJA, the pre-2017 standard deduction was more or less doubled, increasing to $24,000 for married couples filing jointly and $12,000 for individuals. 

However, if this component of the TCJA expires, the standard deduction will be cut in half, returning to pre-2017 rates (adjusted for inflation).

As a result of this change, taxpayers might revert to itemizing deductions on their taxes instead of claiming the standard deduction.

State and local tax (SALT) deduction

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State and local taxes are common line-item deductions that include state property, sales, and income taxes. The TCJA capped state and local tax deductions at $10,000, which was a notably large increase, but the provision will expire when the TCJA does.

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Child tax credits

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As with standard deductions, the TCJA doubled the amount taxpayers could receive in child tax credits for their dependents. 

The law also raised the income threshold required to qualify for the benefit, meaning more higher-income families could take advantage of the tax credit.

If this provision expires, the child tax credit will be cut in half starting in 2026, reverting to $1,000 per child from $2,000 per child.

Mortgage interest deduction

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With the advent of the TCJA, homeowners who were married and filing jointly could deduct interest paid only on the first $750,000 worth of home loan debt. (This provision only applied to home loans that originated on or after December 16, 2017.)

The cap will increase after 2025: You can deduct interest accrued on $1 million worth of home loan debt.

Home equity loan interest

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With the TCJA, homeowners could no longer deduct interest paid on home equity loans. If the TCJA expires, homeowners will once again be able to deduct home equity loan interest on loans up to $100,000.

Miscellaneous itemized deductions

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Along with limiting or changing some of the most common deductions (like SALT and mortgage loan deductions), the TCJA also eliminated deductions for miscellaneous expenses, such as unreimbursed employee expenses.

If the law expires, you’ll once again be able to deduct miscellaneous items as long as those expenses come to over 2% of your adjusted gross income for the year.

Personal exemptions

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The TCJA also eliminated personal exemptions, which are set to return in 2026. Prior to the 2017 law, personal exemptions were limited to $2,000 for each individual and qualifying dependent. Adjusted for inflation, that amount will likely be closer to $4,700.

Alternative minimum tax (AMT)

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The alternative minimum tax is a 1960s-era tax provision meant to stop the ultra-rich from exploiting tax deductions so they would pay even less in taxes than those in the lowest tax brackets.

However, the AMT was never adjusted for inflation, so laws meant to ensure fair tax collection in the 1960s can now cause middle-income earners to pay more than they should.

The TCJA instituted a higher earning threshold for the AMT, ensuring fewer individual citizens had to pay the AMT. 

Typically, Congress passes a new law each year to minimize the impact of the AMT on regular taxpayers, so it’s possible that Congress will do the same regardless of what happens with the TCJA at the end of 2025.

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Charitable donations

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Starting in 2018, the annual deduction for charitable cash donations to qualified charities was raised to 60% of your adjusted gross income (AGI) from 50%, which meant wealthy donors could benefit from higher deductions. 

If the TCJA expires, the deduction limit will decrease to 50%.

Bottom line

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Only time will tell if the TCJA expires or if the 2025 Congress and presidential administration decide to renew it or at least to renew certain provisions. 

No matter what happens, it pays to prepare yourself financially for the possibility of major tax changes that could change your end-of-year financial plans.

Talk to your accountant about how to prepare for these potential changes ahead of time instead of taking a wait-and-see approach that could negatively impact your finances.

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Author Details

Michelle Smith

Michelle Smith has spent a decade writing for and about small businesses. She specializes in all things finance and has written for publications like G2 and SmallBizDaily. When she's not writing for work at her desk, you can usually find her writing for pleasure near large bodies of water.