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Important Updates on the 2025 Tax Sunset

Important Updates on the 2025 Tax Sunset

April 18, 2024

“We can make our plans, but the Lord determines our steps.”

—Proverbs 16:9

You may have heard the famous quote by Benjamin Franklin that states, “Nothing is certain except death and taxes.” While taxes may be certain, they are still subject to change over time. That is the case as we near the 2025 expiration date of several laws established in the 2017 Tax Cuts and Jobs Act (TCJA). This event, referred to as the 2025 Tax Sunset, could trigger significant tax changes for both individuals and businesses. 

To help prepare for these eventual changes, our team works with clients by giving them all the information they need to make informed financial planning decisions. Here is a breakdown of what to expect from the 2025 Tax Sunset, including what’s expiring and the potential ramifications.  

Individual Taxes

Let’s start with an explanation of how the 2025 Tax Sunset could affect individual taxpayers.

  • Lower income tax brackets: The lower tax brackets that were put in place by the Tax Cuts and Jobs Act (TCJA) will revert to pre-2017 levels. That means that millions of taxpayers could potentially be pushed into higher tax brackets.
  • Decreased standard deductions and personal exemption: By decreasing both standard deduction amounts and personal exemptions, the 2025 Tax Sunset could cause higher taxable income for individual filers.
  • Child tax credit: Currently, the child tax credit allows families with children to reduce their taxable income; this allowance would expire.
  • State and local tax (SALT) deduction cap: If the current $10,000 cap on deductions for state and local taxes expires, residents in high-tax states like California, New York, and New Jersey could benefit. The downside is that eliminating the deduction cap could potentially shift the tax burden to the federal government. 

Business Taxes

Here’s a snapshot of how the 2025 Tax Sunset could impact business taxes:

  • Full expensing of deductions: This temporary condition that allows instant expensing of business expenses would expire. For affected businesses, the result would be increased taxable income.
  • Pass-through business income deductions: This tax provision allows the deduction for income from pass-through businesses like partnerships and S corporations. When this law expires, the tax liability for many small businesses could increase.
  • Bonus depreciation: Businesses that invest in equipment and machinery will be impacted when this deduction for specific depreciable property disappears.

How Will the Tax Sunset Affect You? 

Ultimately, the consequences of the 2025 Tax Sunset are unsettled. There’s a possibility that Congress will extend or alter these tax laws before the end of 2025, but if that doesn’t happen, the above changes can take place. 

If the 2025 Tax Sunset occurs without intervention from the government, the effects on individuals and businesses will vary contingent upon their unique situations. Some taxpayers would experience an increased tax liability, while others could potentially gain from changes like the SALT deduction cap removal. Or, conversely, some businesses could face a higher tax bill if temporary deductions expire.

Are You Prepared? 

Navigating the federal tax system can be complicated, to say the least. Depending on your situation, it may be best to work with a professional who can help you prepare your finances for the changes that may result from the 2025 Tax Sunset. At EagleFlight Wealth Management, we take a comprehensive approach to managing your wealth, including tax records, expenses, and investments. If you choose, we can work closely with your tax advisor to confirm your financial plan is prepared for the changes outlined above.

Whether you’re nearing or already in retirement, an individual or family, in the Muncie, IN, area or surrounding states looking for an advisor with a Biblical worldview, we would love to meet you and see how we can help you prepare for the upcoming 2025 Tax Sunset. To get in touch to schedule an introductory meeting,call (765) 288-1927 or email barry.hickey@cfdinvestments.com.

About Barry

Barry Hickey is the founder, managing partner, and financial advisor at EagleFlight Wealth Management, a financial services firm based in Muncie, Indiana, helping people live and retire with dignity and financial peace by planning their financial future with a biblical worldview. Barry has been in the financial services field since the mid-1980s. In 2006, inspired by Isaiah 40:31 (“They that wait upon the Lord shall renew their strength; they shall mount up with wings as eagles; they shall run, and not be weary.”), Barry became an independent financial advisor and founded EagleFlight with the mission to help people plan for their financial future and find financial peace, and to fulfill the mission God gave him.

Born and raised in Muncie, Barry graduated from Muncie Southside and served in the Marine Corps during the Vietnam War. He holds a Series 6, 7, 63, and 66 securities licenses and the Indiana Life and Health Insurance License. He also holds the Accredited Asset Management Specialist℠, Chartered Retirement Planning Counselor℠, Certified Kingdom Advisor®, and Retirement Income Certified Professional® designations. 

Outside of work, Barry enjoys reading, watching football and baseball, and spending time with his wife (Carla), children (Kristin, Ryan, and Lauren), and grandchildren (Emmi, Cate, Ben, Maddie, Sophia, Bella, and Brady). His favorite Scripture is Matthew 6:33, “But seek first his kingdom and his righteousness, and all these things will be given to you as well.” To learn more about Barry, connect with him on LinkedIn.

Barry Hickey offers Advisory Services through Creative Financial Designs, Inc., a Registered Investment Adviser. Barry Hickey and Ryan Hickey offer Securities through CFD Investments, Inc., a Registered Broker/Dealer, Member FINRA & SIPC, 2704 S. Goyer Rd., Kokomo, IN 46902. 765-453-9600. Neither EagleFlight Wealth Management or the CFD Companies provide tax or legal advice.