Trump-Era Tax Cuts Are Set To Expire: 4 Ways To Avoid an Increase in Taxes

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The tax changes from the Tax Cuts and Jobs Act of 2017 are scheduled to expire on Dec. 31, 2025. Some provisions have already started phasing out. 

The TCJA reduced most tax rates for the seven federal income tax brackets and lowered the rate for the highest tax bracket from 39.6% to 37%. It also increased the standard deduction to simplify filing by letting more Americans avoid itemizing their deductions. Additionally, it capped the state and local tax deduction at $10,000 and lowered the cap on mortgage interest deductions to the first $750,000. 

Finally, the TCJA doubled the lifetime gift and estate tax exemptions. 

Congress could extend these tax changes, of course. But if the changes do expire, how can you protect your wallet?

1. Prepare To Start Tracking Deductible Expenses Again

One of the most popular provisions of the TCJA was doubling the standard deduction. That allowed most middle-class Americans to simply take the standard deduction rather than hassle with documenting and itemizing deductible expenses.

To minimize your tax bill if the standard deduction reverts to the pre-TCJA amount, you may need to track all deductible expenses, keep evidence of them and itemize them on your tax return. 

2. Delay & Bundle Charitable Gifts

Charitable gifts remain deductible. However, you have to itemize deductions to claim them.

That may well change come 2026. If you plan on giving $5,000 per year over the next three years, for example, it might make sense to wait and give $15,000 in 2026, when a lower standard deduction could make itemizing the better option for you.

3. Do a Roth Conversion

A tax bracket reset could push you into a higher income bracket. You can stay ahead of it by paying taxes on your retirement savings now so you never have to pay taxes on them again. 

The way to do that with current savings is through a Roth conversion. A conversion involves transferring money from a traditional individual retirement account or 401(k) to a Roth account. You pay income taxes on the converted money this year, but then the money compounds tax-free, and you pay no taxes on withdrawals in retirement. The catch is that the converted funds must sit untouched for five years — an important consideration if you’re nearing retirement age.

4. Start Giving Money to Your Grown Children Now

The TCJA increased the lifetime exemptions for estate and gift taxes. If those exemptions are reduced, your beneficiaries may have to pay taxes on their inheritance and gifts. 

You (and they) can get around that if you start giving them money every year while you’re still alive. In 2024, you can gift each individual up to $18,000 tax-free, with no effect on the lifetime limit.

Just make sure you don’t give away money you might need in retirement. And always check with a tax professional or financial advisor before making changes that affect your estate.

Final Thoughts

Higher tax rates and more complex rules push taxpayers to devote more brain space to tax strategy. That could mean a return to itemizing deductions in 2026, piecemealing out your children’s inheritance or jumping on Roth conversions to avoid paying more in taxes later.

Start thinking about your tax strategy now, before tax changes actually arrive. 

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