TCJA Sunset 2025: 7 Tax Changes That Could Cost You Thousands (And How Professional Planning Saves You Money)

Well, we made it through 2025, and what a year it's been for tax policy! The Tax Cuts and Jobs Act (TCJA) was supposed to sunset at the end of this year, potentially costing taxpayers thousands. But here's the good news: the One Big Beautiful Bill Act passed earlier this year, making most of those provisions permanent or extending them significantly.

As someone who's been helping folks navigate tax changes for years, I can tell you that understanding these 7 major changes is crucial for your financial future. Let me break down what happened and how smart tax planning can still save you serious money.

1. Individual Income Tax Rates: Locked In Permanently

The biggest change? Those lower individual tax rates from the TCJA are now permanent. The top rate stays at 37% instead of jumping back up to 39.6%. For higher-income earners, this could mean thousands in annual savings.

Let's say you're married filing jointly with $400,000 in taxable income. Under the old rates, you'd have paid roughly $4,000 more per year. That's $40,000 over a decade – enough for a nice family vacation or significant investment in your retirement.

But here's where professional planning makes the difference: knowing your exact bracket and planning income timing can amplify these savings. We help clients strategically time bonuses, retirement distributions, and business income to maximize the benefit of these permanent lower rates.

2. SALT Deduction: Temporary Relief Through 2030

The state and local tax (SALT) deduction cap got a major boost. Instead of the $10,000 limit, you can now deduct up to $40,000 through 2030, with annual increases of 1% until it drops back to $10,000.

If you live in a high-tax state like California, New York, or Illinois, this change is huge. A family paying $25,000 in state and local taxes can now deduct the full amount instead of being capped at $10,000. That's potentially $3,750 in federal tax savings for someone in the 25% bracket.

The key? Planning ahead for that 2030 cliff. Smart taxpayers are already discussing strategies to prepay property taxes or time major purchases before the cap drops back down.

3. Child Tax Credit: Extended Benefits for Families

The enhanced Child Tax Credit provisions got extended, keeping the credit at $2,000 per child with higher income thresholds. Without this extension, families would have seen the credit drop to just $1,000 per child.

For a family with two kids earning $150,000, that's a $2,000 annual difference. Over 18 years, we're talking about $36,000 in additional savings per child.

Professional tip: The credit phases out at higher income levels, but there are legitimate strategies to manage your adjusted gross income to stay within the beneficial ranges, especially for business owners with flexible timing on income recognition.

4. Pass-Through Business Deduction: 20% Savings Preserved

The Section 199A deduction for pass-through businesses – sole proprietorships, partnerships, and S-Corps – is now permanent. This 20% deduction on qualified business income can be massive for business owners.

Consider a consultant with $200,000 in qualified business income. That's a $40,000 deduction, potentially saving $10,000 or more annually in federal taxes. But here's the catch: the rules are complex, with income limitations and specific business type restrictions.

This is where professional guidance becomes invaluable. We help business owners structure their entities properly, manage the income thresholds, and ensure they're capturing every dollar of this deduction legally.

5. New Campaign Provisions: Tax-Free Tips, Overtime, and More

Four new provisions make certain income completely tax-free:

• Tips for service workers

• Overtime compensation

• Car loan interest deductions

• Social Security benefits (for eligible individuals)

While these don't apply to everyone, they can be significant for those who qualify. A server earning $15,000 annually in tips now keeps that entire amount without federal income tax. An hourly worker earning $10,000 in overtime saves potentially $2,500 or more.

Important note: These provisions eliminate income tax, but FICA taxes (Social Security and Medicare) still apply. Professional planning helps maximize these benefits while understanding the full tax picture.

6. Estate Tax Exemptions: Doubled and Permanent

The estate tax exemption doubled to $11.2 million for individuals and $22.4 million for couples, and it's now permanent. This removes estate tax concerns for the vast majority of Americans.

But if you're in that higher net worth range, this change is massive. Previously, estates above $5.6 million faced a 40% tax rate. Now, significantly more wealth passes tax-free to heirs.

Estate planning strategies need updating to reflect these permanent changes. Trust structures, gifting strategies, and business succession plans all need professional review to maximize these benefits.

7. Business Interest Deduction: More Favorable Rules

The final major change affects how businesses deduct interest expenses. The rules now allow businesses to add back depreciation, amortization, and depletion when calculating the limitation on interest deductions.

This particularly helps capital-intensive businesses – manufacturing companies, real estate firms, and equipment-heavy operations. A manufacturing company with $1 million in interest expenses might now deduct amounts that were previously limited.

The retroactive effect back to the beginning of 2025 also means some businesses can file amended returns to capture additional deductions they missed.

Why Professional Planning Still Matters

Here's the thing: even with these favorable changes locked in, tax planning remains complex. The devil is in the details, and small mistakes can cost thousands.

Consider Sarah, a client who owns a marketing consultancy. She thought the pass-through deduction was automatic, but her business structure wasn't optimized. After working with us, we restructured her S-Corp elections, optimized her salary vs. distribution mix, and helped her capture an additional $8,000 annually in tax savings.

Or take Mike and Janet, a married couple earning $180,000. They were thrilled about the SALT deduction increase but didn't realize they could optimize their property tax payments and charitable giving timing to capture even more benefits. Our planning saved them an extra $2,200.

The Bottom Line

These seven changes represent potentially tens of thousands in tax savings for many Americans. But capturing those savings requires understanding the nuances, planning ahead, and staying compliant with complex rules.

The TCJA sunset crisis turned into a permanent win for taxpayers, but only if you know how to navigate the system properly. Whether you're a business owner looking to maximize pass-through deductions, a family wanting to optimize child tax credits, or someone planning for estate tax implications, professional guidance makes the difference between good and great outcomes.

Don't leave money on the table. These changes are now permanent fixtures of our tax code, which means the time to optimize your strategy is now. The earlier you start planning, the more you'll save over the long haul.

Ready to make sure you're capturing every dollar of savings from these changes? Contact us to discuss how these provisions affect your specific situation and develop a customized tax strategy that puts more money back in your pocket.

Remember, tax laws can be complex and individual situations vary. This article is for informational purposes and shouldn't replace personalized professional advice.