A major shift in the tax landscape is on the horizon—and it could have a significant impact on your financial plan. The Tax Cuts and Jobs Act (TCJA), passed in 2017, brought sweeping changes to individual and business taxes. But many of those changes are set to expire at the end of 2025, unless new legislation is passed.

 

What happens if it expires? And what is Congress doing about it? A new proposal—“The One Big, Beautiful Bill”—is aiming to address these concerns.

 

Here’s what you need to know.

 

What the TCJA Changed

 

The TCJA lowered income tax rates, nearly doubled the standard deduction, capped state and local tax (SALT) deductions, and significantly increased the federal estate and gift tax exemption (currently $13.61 million per person). It also introduced favorable treatment for pass-through businesses and offered expanded deductions for corporations.

 

But many of those provisions were temporary. Unless extended, they will revert to pre-2017 levels on January 1, 2026. That means:

• Higher individual tax rates
• A lower standard deduction
• The return of personal exemptions
• A significant drop in the estate and gift tax exemption (potentially cut in half)
• Changes to itemized deductions, including the $10,000 SALT cap

What’s at Stake

 

For high earners, business owners, and families with significant assets, the expiration of the TCJA could result in higher taxes, reduced planning flexibility, and a narrowed window for efficient wealth transfer.

 

Here are a few examples:

• Estate Planning: The lifetime gift and estate tax exemption may drop from over $13 million to around $7 million per person. For families with generational wealth, that’s a potential loss of more than $13 million in exemption for a married couple.
• Income Planning: Tax brackets will widen, and more of your income could be taxed at higher marginal rates.
• Small Business Planning: Pass-through income deductions may phase out, changing how many business owners structure their income.
• Charitable Giving and Gifting: With lower deductions and changing exemptions, strategies like donor-advised funds, family trusts, and gifting plans may need to be re-evaluated.

What Is the “One Big, Beautiful Bill”?

 

In response to the looming sunset, lawmakers in Congress are crafting what’s being referred to as the One Big, Beautiful Bill—a comprehensive proposal aimed at preserving or extending key parts of the TCJA, particularly the tax cuts that affect individuals and small businesses.

 

As described in  a Fidelity Investment overview, the bill’s goal is to make certain TCJA provisions permanent, giving Americans more certainty in their long-term tax planning.

 

But as with any major piece of legislation, passage will depend on political dynamics and budget considerations.

 

What You Can Do Now

 

With so much uncertainty, here are three proactive steps to consider:

1. Evaluate Roth Conversions: Lock in today’s low tax rates by moving money from pre-tax retirement accounts to Roth accounts.
2. Use the Estate Tax Exemption While It’s High: Gifting now, either directly or through irrevocable trusts, may help you maximize the current exemption.
3. Revisit Business and Income Strategies: Business owners and executives may benefit from reviewing entity structure, compensation plans, and income timing strategies before the TCJA provisions expire.

 

Start Planning Now

 

Whether or not Congress passes the One Big, Beautiful Bill, the potential expiration of the TCJA is one of the most significant planning moments in recent memory. Taking a wait-and-see approach could cost you flexibility, tax efficiency, and long-term wealth.

 

If you would like to learn more, please contact us anytime.