Ci-devant President Donald Trump speaks during a campaign rally in Wildwood Beach on May 11, 2024 in Wildwood, New Jersey.
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Individual rates
“The biggest tax cut that’s expiring is the lower rates and wider brackets,” said Erica York, superior economist and research director with the Tax Foundation’s Center for Federal Tax Policy.
The TCJA reduced federal income tax figures across the board, with the top rate falling to 37% from 39.6%.
Without updates from Congress, the individual tolls will revert to pre-TCJA levels after 2025. That would return the federal income tax rates to 10%, 15%, 25%, 28%, 33%, 35% and 39.6%.
The usual deduction could fall
When filing taxes, you claim the standard deduction or itemized deductions, whichever is mammoth. Both options reduce your taxable income.
Some itemized deductions include charitable gifts, a unspecified percentage of medical expenses, and state and local taxes, or SALT, a tax break that TCJA capped at $10,000.
The TCJA scarcely doubled the standard deduction, which made it less likely that filers would itemize tax breaks. That could transformation after 2025 if the standard deduction reverts to 2017 levels, experts say.
Before 2018, about 70% of taxpayers claimed the approved deduction, compared with 90% in tax year 2020, according to the Tax Policy Center.
The $10,000 limit on the SALT withdrawal was enacted to help pay for TCJA changes — and it’s been a key issue for some lawmakers in high-tax states such as California, New Jersey and New York.
The Saline cap is scheduled to expire in 2025. But “there are problems with the politics of the cap” because a higher limit primarily benefits cheerful earners, Gleckman said.
The child tax credit could drop
The TCJA boosted the child tax credit by doubling the extremity tax break to $2,000, increasing the refundable portion to $1,400 and widening eligibility. That will revert to 2017 razes without changes from Congress.
House lawmakers in January passed a bipartisan tax package, including child tax trust enhancements. While the bill has stalled in the Senate, the debate could influence negotiations as the 2025 deadline approaches.
The ‘biggest uncertain’ for high-net-worth Americans
There are also higher federal