TCJA Sunset Provision Comparison Guide

TCJA Sunset Provision Comparison Guide. As the 2024 tax season approaches, understanding the impact of the Tax Cuts and Jobs Act (TCJA) sunset provisions is crucial for both taxpayers and financial professionals. The TCJA, enacted in 2017, brought significant tax changes, but many of its provisions are set to expire or “sunset” at the end of 2025. Here’s a guide to navigating these sunset provisions and how they may affect your 2024 tax planning.

Key Provisions Affected by the TCJA Sunset

1. Individual Income Tax Rates: One of the most notable changes involves the individual income tax brackets. Under the TCJA, rates were lowered across the board, but these rates are set to revert to their pre-2018 levels after 2025. While this won’t affect your 2024 taxes directly, it’s a good time to plan ahead for potential increases.
2. Standard Deduction and Personal Exemption: The TCJA nearly doubled the standard deduction and eliminated the personal exemption. These changes are also slated to sunset, which could lead to higher taxable income in the future. Understanding this shift is vital for effective tax planning.
3. Child Tax Credit: The TCJA temporarily increased the Child Tax Credit from $1,000 to $2,000 per qualifying child. This enhancement is scheduled to expire, which could reduce the credit back to its original amount, impacting families with children.
4. State and Local Tax (SALT) Deduction Cap: The $10,000 cap on the SALT deduction is another provision that may sunset. Without action from Congress, the limitation could be lifted, significantly altering tax liabilities for taxpayers in high-tax states.

Preparing for the TCJA Sunset

Taxpayers should review their financial plans for the 2024 tax season with an eye toward these impending changes. Consulting with a tax professional can help you make informed decisions, optimize your tax situation, and prepare for potential shifts in tax law. Staying ahead of these sunset provisions is essential for minimizing your tax liability and maximizing your financial health.

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