1. Sunset of the Tax Cuts and Jobs Act (TCJA) Provisions
Unless Congress acts, several provisions from the 2017 TCJA will expire at the end of 2025. High-net-worth households should pay particular attention to:
- Individual Tax Rates: Personal income tax brackets are expected to rise, reverting to pre-2018 levels.
- Estate and Gift Tax Exemption: Currently at $13.6 million per individual, this exemption is set to drop by nearly half—to about $7 million per person.
- Qualified Business Income (QBI) Deduction: The 20% deduction for pass-through business owners may expire.
- Note: The Trump administration has stated that they plan to extend the tax cuts.
What to do now:
- Consider accelerating income to 2025.
- Use the elevated gift and estate tax exemption before it’s reduced. Gifting assets to trusts now could save millions in future estate taxes.
- If you are a business owner, evaluate your entity structure… especially if you’re a business owner relying on QBI benefits.
2. The Tax Relief for American Families and Workers Act of 2024
This package includes:
- Expanded Child Tax Credit (phased in through 2025)
- Renewed Business Deductions for R&D and equipment expenses
- International Tax Coordination with Taiwan to avoid double taxation
- Disaster Relief Provisions for affected regions
What to do now:
- Talk with your tax advisor about deducting R&D and capital expenses in 2025.
- If you have overseas assets or income, reassess your international tax position, especially if you do business in Asia.
Strategic Planning Opportunities in 2025
1. Wealth Transfer and Estate Planning
With the estate exemption drop coming, this is a year for:
- Gifting into irrevocable trusts
- Utilizing grantor retained annuity trusts (GRATs)
- Locking in valuation discounts while they’re still available
2. Tax-Efficient Investing
High-income earners may face higher capital gains and income tax rates in 2026. Now is the time to:
- Review asset location strategies (tax-deferred vs. taxable accounts)
- Harvest gains strategically while rates are low
- Consider opportunity zone investments or charitable remainder trusts (CRTs)
3. Philanthropy and Impact Giving
The increased AGI limit for cash donations may not last forever. If giving is part of your legacy:
- Increase deductions in 2025
- Use donor-advised funds (DAFs) for flexibility
- Explore private foundations for larger-scale family philanthropy
Final Thoughts
No one can predict with certainty what Congress will do before year-end but waiting to “see what happens” is rarely a winning strategy. With tax rates set to increase and estate exemptions set to shrink, 2025 could present an opportunity to solidify your family’s financial legacy.
If you’d like to explore how these tax changes may affect your personal or business finances, let’s talk. Our team is helping to guide clients through planning strategies to help protect and growth their wealth.
Together, we can work to keep you on-track toward your financial goals.
Request a consultation to learn more.
Read more articles by Ryan Johnson