Key Tax Cuts May Be Sunsetting — Here’s How to Plan Before They Do
If you’re a high-income earner or business owner, your 2025 tax year may be your last chance to take advantage of several provisions in the Tax Cuts and Jobs Act (TCJA) — unless Congress acts to extend them.
Originally passed in 2017, the TCJA brought sweeping changes to the individual tax code. But many of those changes are temporary, and are scheduled to expire on December 31, 2025. This could mean higher tax rates, smaller deductions, and a very different planning landscape in 2026 and beyond.
At Wealthnest, we help our clients stay ahead of the curve with proactive planning — not last-minute surprises. Here’s what you need to know now.
1. Individual Tax Rates May Rise
Under current law, marginal tax brackets will revert to pre-2017 levels in 2026. That means many taxpayers — particularly those in middle to high income brackets — will see higher federal income tax rates.
For example:
- The top rate would jump back to 39.6%, up from 37%.
- Lower brackets (10%, 12%, 22%, etc.) would shift upward as well.
Planning opportunity: Consider strategies like Roth conversions, realizing capital gains, or accelerating income into 2025 while rates are lower.
2. Estate and Gift Tax Exemptions Will Be Cut in Half
One of the most significant changes for high-net-worth individuals: the estate and gift tax exemption is set to drop from over $13 million per person (2025) to roughly $7 million in 2026 (adjusted for inflation).
Planning opportunity: Now is the time to consider gifting strategies, trust planning, and lifetime transfers. Use the higher exemption while it’s available — or risk losing it.
3. Qualified Business Income (QBI) Deduction Could Disappear
Business owners, especially those with pass-through entities like S-Corps or LLCs, have benefited from the 20% QBI deduction — but it’s scheduled to expire at the end of 2025.
Planning opportunity: If your business relies on the QBI deduction to reduce taxable income, now’s the time to evaluate how your tax liability will shift post-2025 — and whether a new entity structure or compensation strategy could help.
4. Standard Deduction Shrinks, Itemized Deductions Shift
The TCJA nearly doubled the standard deduction, which simplified filing for many. If it sunsets, the standard deduction will shrink, and personal exemptions may return — but certain itemized deduction limits (like SALT cap relief) will tighten.
Planning opportunity: Review whether you’ll itemize in 2026 and beyond. This is especially important for Arizona taxpayers with higher property taxes, mortgage interest, or charitable giving strategies.
5. Child Tax Credit Reductions
The enhanced Child Tax Credit may also revert to pre-TCJA rules — which means lower credit amounts and more limited income phase-outs for qualifying families.
Planning opportunity: For those with dependent children or multi-generational households, this could affect both your current budget and future tax credits.
What You Can Do Now
Tax laws are always subject to change — but waiting until Congress makes a decision is not a plan. Proactive tax strategy can help reduce uncertainty and position you to take advantage of today’s opportunities.
At Wealthnest, we believe mid-year tax reviews and multi-year planning horizons are the best way to create confidence, especially as major policy changes loom.
Let’s Review Your Tax Plan Before 2026
We help individuals, families, and business owners in Chandler and throughout Arizona prepare for what’s ahead — not just react to what’s passed.
Schedule your mid-year tax strategy review now and let’s talk about how your wealth could be impacted — and protected — before these changes take effect.