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What to Know

The 2017 Tax Cuts and Jobs Act (TCJA) was a major overhaul of the tax code, roughly doubling the estate-tax exemption, lowering income tax rates in most brackets, capping state and local tax (SALT) deductions and more. But key provisions of the act will expire at the end of this year unless lawmakers in Washington, D.C. extend them. So what’s expected to happen?

The Election Results Could Prove Pivotal

With Donald Trump winning the presidency in 2024, and his fellow Republicans in control of the House of Representatives and Senate, the likelihood of extending the TCJA’s provisions has significantly increased, experts say. President Trump has signaled that he wants not only an extension of the legislation’s tax breaks but also additional tax cuts, including lowering the corporate tax rate for companies that make their products in the U.S. and exempting income from tips, overtime pay and Social Security. Trump has also called for eliminating or increasing the cap on SALT deductions, which under the TCJA were capped at $10,000.

But narrow Republican majorities in the House of Representatives and Senate as well as concern about the country’s ballooning debt combine to create uncertainty about the TCJA’s future.

One Scenario: The TCJA Lapses

Without action from Washington, the top individual income tax rate is set to rise to 39.6%.¹ The highest rate is currently 37% and it applies to single taxpayers with incomes greater than $626,350. ² The second-highest tax bracket, which currently applies to single taxpayers with income above $250,525, would remain at 35% should lawmakers fail to act. The standard deduction, which in 2025 is $15,000 for single filers² would be reduced by about half. ¹

How Estate Taxes Could Change

Perhaps most importantly for high-net-worth families, the lifetime estate and gift tax exemption would be cut approximately in half from the $13.99 million per person³ level for 2025. The potential reduction would greatly impact the amount ultra-high-net-worth families can transfer tax-free to heirs because assets above the exemption ceiling are taxed at 40%.

Other Potential Changes

Additional provisions of the TCJA that could have a significant impact on American households if not extended include the 20% qualified business income (QBI) deduction, which allows owners of pass-through entities like LLCs, partnerships, sole partnerships and S corporations to deduct a fifth of that income. ⁴

How TCJA Provisions Could be Extended

Republicans hope to use the budget reconciliation process, which they used to pass the TCJA in 2017, to extend the legislation. The process allows lawmakers to pass legislation with a simple majority in the Senate, bypassing any potential filibuster. However, challenges remain. Lawmakers will need to balance tax cuts with concerns about the growing federal debt, which as of February 2025 stood at more than $36 trillion. ⁵

The Committee for a Responsible Federal Budget has warned that extending all the TCJA’s provisions would add more than $5 trillion to the deficit over the next decade.⁶ Republican majorities of just a few seats in the House and Senate means there is little room for division within the party.

A Tricky Balancing Act

Complicating the Republicans’ task is the Byrd Rule, which prohibits legislation passed through the reconciliation process from raising the federal deficit beyond a 10-year budget window. The rule requires lawmakers to find offsetting revenue increases or spending cuts to make tax cuts permanent.

We’re on Top of It

While it’s considered likely that important provisions of the TCJA will be prolonged, there’s no way to be certain, and compromises are likely. Rest assured that your Mariner wealth advisor, backed by our in-house tax team, will keep a close eye on the legislative process and advise their clients about any actions that may be in their best interests. But don’t hesitate to reach out with any questions or concerns.

Sources:

¹ “What to know about TCJA expiration”

^2,3 “IRS releases tax inflation adjustments for tax year 2025”

⁴ “What to know about TCJA expiration”

⁵ “National Debt Tracker: American taxpayers (you) are now on the hook for $36,220,206,738,047.96 as of 2/3/25”

⁶ “TCJA Extension Could Add $4 to $5 Trillion to Deficits”

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