Many tax law changes introduced in The Tax Cut & Jobs Act of 2017 will "sunset" and the end of 2025 - barring legislative action.
Here are the changes we can expect:
- The standard deduction will fall from $27,700 to $12,700 (Married, filing jointly)
- The SALT deduction cap will be eliminated (currently it's $10,000)
- The child tax credit will be cut in half (currently $2,000, will be $1,000) and the income phaseout for the child tax credit will lower to $75,000 filing single, and $110,000 MFJ
- For estate taxes, the lifetime exemption will drop from $12.920 million to $5 million
- Also, the current 40% maximum gift and estate tax rate will increase to 45%.
Tax planning is important every year, and a vital part of any financial plan.
I fear many high-net worth individuals aren't aware that these upcoming changes could derail the estate plans they already have in place, and skew their total financial picture.
Although this sunset is coming, the good news is that it's still a few years away.
We, along with your CPA and estate attorney, can help you with your tax and estate strategy—regardless of whether Congress takes action in time. Now may be an excellent time to get together and start thinking about your post-2025 strategy.