The TCJA: A Revolution for Tax Preparers Like Me—And What Happens If It Expires in 2025

TCJA = Tax Cuts and Jobs Act of 2017

As a tax professional who entered the workforce after 2017, the Tax Cuts and Jobs Act (TCJA) is all I’ve ever known. It fundamentally reshaped the tax landscape, introducing sweeping changes that impacted individuals, businesses, and tax preparers alike. But with the TCJA set to expire at the end of 2025, the tax world could be in for another seismic shift. For those of us who’ve built our careers around this framework, it’s both an exciting and daunting prospect. Let’s break down the TCJA, its implications, and what its expiration could mean for taxpayers and tax preparers.

Key Points of the TCJA

The TCJA, enacted in December 2017, was the most significant overhaul of the U.S. tax code in decades. Here are some of its most notable provisions:

1. Lower Individual Tax Rates:
   The TCJA reduced individual income tax rates across the board, with the top rate dropping from 39.6% to 37%. While this provided immediate relief for many taxpayers, it also eliminated or limited several popular deductions.
2. Increased Standard Deduction:
   The standard deduction nearly doubled, making it more beneficial for many taxpayers to take the standard deduction rather than itemize. For single filers, it increased from $6,350 to $12,000, and for married couples filing jointly, it went from $12,700 to $24,000.
3. SALT Deduction Cap:
   The state and local tax (SALT) deduction was capped at $10,000, which disproportionately affected taxpayers in high-tax states like California and New York.
4. Corporate Tax Rate Reduction:
   The corporate tax rate was slashed from 35% to 21%, a move aimed at boosting business investment and economic growth.
5. Pass-Through Business Deduction:
   The TCJA introduced a 20% deduction for qualified business income (QBI) for pass-through entities like LLCs, S-corporations, and sole proprietorships.
6. Elimination of Personal Exemptions:
   While the standard deduction increased, personal exemptions were eliminated, which impacted larger families.
7. Changes to Itemized Deductions:
   Many itemized deductions were eliminated or limited, including unreimbursed employee expenses, tax preparation fees, and moving expenses (except for military personnel).

Legislation and Legal Cases Surrounding the TCJA

Since its enactment, the TCJA has faced both praise and criticism. Several legal challenges and legislative efforts have attempted to modify or overturn certain provisions:

• SALT Deduction Cap Lawsuits:
  High-tax states like New York, New Jersey, and Connecticut have challenged the constitutionality of the SALT deduction cap, arguing that it unfairly targets their residents. So far, these challenges have been unsuccessful.
• Legislative Efforts to Extend or Modify the TCJA:
  Some lawmakers have proposed extending or making permanent certain provisions of the TCJA, such as the lower individual tax rates and the pass-through business deduction. However, partisan gridlock has stalled these efforts.
• Technical Corrections and Guidance:
  The IRS has issued numerous regulations and guidance documents to clarify TCJA provisions, particularly around the QBI deduction and international tax changes.

What Happens If the TCJA Expires in 2025?

If Congress doesn’t act to extend or replace the TCJA, many of its provisions will sunset at the end of 2025. Here’s what that could mean:

1. Higher Individual Tax Rates:
   Tax rates would revert to their pre-TCJA levels, potentially increasing the tax burden for many Americans.
2. Lower Standard Deduction:
   The standard deduction would return to its pre-TCJA amounts, likely prompting more taxpayers to itemize deductions again.
3. Reinstatement of Personal Exemptions:
   Personal exemptions would return, benefiting larger families.
4. Uncapped SALT Deduction:
   The $10,000 cap on the SALT deduction would disappear, providing relief for taxpayers in high-tax states.
5. Repeal of the Pass-Through Deduction:
   The 20% QBI deduction for pass-through businesses would expire, potentially increasing taxes for small business owners.
6. Corporate Tax Rate Increase:
   The corporate tax rate would revert to 35%, which could impact business investment and economic growth.

My Personal Perspective on the TCJA

As someone who began their tax preparation career under the TCJA, I’ve seen firsthand how it has shaped the way Americans approach their taxes. On the surface, the TCJA delivered on its promise of simplifying the tax code and providing immediate savings for many taxpayers. However, I believe these benefits came at a cost.

While the average American saw lower tax bills initially, many of those savings were offset by the elimination of key deductions. For example, the SALT deduction cap hit middle- and upper-income taxpayers in high-tax states particularly hard. Additionally, the increased standard deduction, while beneficial for some, left others feeling like they lost out on valuable itemized deductions.

From a preparer’s perspective, the TCJA streamlined certain aspects of tax filing but also introduced new complexities, particularly around the QBI deduction and international tax provisions. As we approach 2025, I can’t help but wonder if the TCJA’s expiration will bring us full circle—back to a more complex tax code but with greater flexibility for taxpayers.

Was the TCJA a Success?

The answer depends on who you ask. For businesses, the lower corporate tax rate and pass-through deduction were clear wins. For individuals, the benefits were more mixed. While many saw immediate tax savings, the long-term impact of reduced revenue and increased deficits remains a concern.

As a tax professional, I appreciate the TCJA for giving me a clear framework to work within. But I also recognize its limitations and the challenges it created for many taxpayers. If the TCJA does expire in 2025, it will be a revolution for tax preparers like me—one that requires us to adapt once again to a changing tax landscape.

Final Thoughts

The TCJA has been a defining feature of my career, and its potential expiration marks the end of an era. Whether it’s extended, modified, or allowed to sunset, one thing is certain: the tax world will continue to evolve, and tax professionals like me will be here to help navigate the changes. As we look ahead to 2025, I’m excited to see what the future holds—and to continue simplifying taxes for my clients, no matter what the tax code throws our way.