If Congress does nothing, the 2017 Tax Cuts and Jobs Act (TCJA)—one of the most sweeping overhauls of the U.S. tax code—will sunset at the end of 2025, and taxes will go back to pre-2018 levels.
So what does this mean for you, your take-home pay, and your estate planning strategy?
Let’s break it down.
What Were the 2017 Tax Cuts?
Signed into law in December 2017, the TCJA made major changes to both individual and business tax codes. Some of the biggest provisions included:
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- Lower individual income tax rates across all brackets
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- Doubled the standard deduction ($13,850 single / $27,700 married in 2023 vs. ~$6,500 / $13,000 pre-2018)
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- Reduced estate tax exemption nearly doubled to over $12 million per person
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- Capped state and local tax (SALT) deductions at $10,000
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- Child Tax Credit increased from $1,000 to $2,000 per child
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- Eliminated personal exemptions
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- Lowered the corporate tax rate from 35% to 21%
Learn more: IRS Summary of TCJA
What Happens If the TCJA Sunsets?
Unless Congress acts to extend or make these provisions permanent, the following changes will occur starting January 1, 2026:
Higher Tax Brackets Return
Income tax rates will rise for most brackets. For example:
| Filing Status | Current (TCJA) | Reverts To (Pre-2017) |
|---|---|---|
| Middle-income (e.g., $80k–$170k) | 22% / 24% | 25% / 28% |
| Top rate | 37% | 39.6% |
This means less take-home pay for many working families.
Standard Deduction Will Shrink
The deduction will nearly halve, increasing the likelihood you’ll itemize—or owe more taxes.
Estate Tax Exemption Will Be Cut in Half
The current federal estate tax exemption of $13.61 million per person in 2024 will drop to about $6–7 million per person.
High-net-worth families could face millions in unexpected estate taxes if they don’t plan accordingly.
What Should You Do Now?
Whether you’re a high-income earner, business owner, or looking to retire soon, proactive tax and estate planning is critical right now.
Here are a few key actions to consider:
Review Your Paycheck Withholdings
Work with a financial professional to adjust for higher taxes coming in 2026. You might also want to explore Roth conversions while rates are still historically low.
Maximize Gifting Strategies
Consider using your current lifetime gift exemption before it drops. You can gift up to $13.61 million tax-free in 2024 ($27.22M per married couple).
Lock in Estate Planning Tools
Set up or update trusts, consider life insurance to offset future estate taxes, and review your will or legacy plan.
Tax-Efficient Income Planning
If you’re close to retirement, structure income in ways that reduce your taxable footprint—such as annuities, Roth IRAs, or life insurance with tax-advantaged features.
Don’t Wait Until 2026
The tax code is changing, and if you don’t plan now, you may pay more later. Whether it’s your paycheck or the legacy you plan to leave behind, the time to act is now.
At Brightside Financial, we specialize in helping professionals and families protect what matters most—before the laws change.
Schedule a complimentary strategy call today Or visit www.getonthebrightside.com
