What’s Ahead for 2025

Susan Powers, CFA, CPA, CFP®, CPFA |

It’s not too soon…a look ahead to the 2025 tax year

While we are all busy filing our 2024 tax returns, there are potential tax law changes coming in 2025 that merit paying attention to the impact on your portfolio.  While your current tax situation is top of mind, taking the time now to anticipate future tax changes will give you more time to plan, and if necessary, to act to minimize any impact.  

Provisions of the 2017 Tax Cuts and Jobs Act (TCJA) will expire at the end of this year unless Congress acts. Below are some of the key items we will be monitoring:

Individuals:

  • Individual Tax Rates: Marginal tax rates will increase for five of the seven tax brackets thereby raising the effective tax rate for most taxpayers.
  • Standard Deduction: TCJA doubled the standard deduction; upon expiration the deduction will return to its pre-TCJA levels and allow more taxpayers to itemize.
  • State and Local Tax (SALT) Deduction: The current $10,000 cap may expire, allowing for larger itemized deductions.
  • Estate and Gift Tax Exemption: The current exemption ($12.92 million per individual in 2024) is set to drop by nearly 50%.

 Businesses:

  • 100% bonus depreciation would phase out, with a reduced percentage deduction allowed in 2025.
  • 20% pass-through deduction (for sole proprietors, LLCs, and S-corps) will expire after 2025 unless it is extended.

Given the level of uncertainty regarding the possible outcome, it is too difficult to determine the potential impact.  We will continue to monitor progress as Congress starts to work through the legislative process this year.  Stay tuned for updates and implications as tax policy becomes clearer.