What Will Happen If Congress Doesn’t Extend the Expiring Tax Cuts and Jobs Act in 2025?
Written by
John Csiszar
Edited by
Amber Barkley
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With the Republican party taking control of not just the White House but both chambers of Congress, the Tax Cuts and Jobs Act of 2017 (TCJA) may have gotten a reprieve. The sweeping tax legislation is currently set to expire at the end of 2025. However, as the TCJA was passed by a majority-Republican Congress in 2017, the current majority-Republican Congress may vote to extend or modify it, rather than letting it expire.
Here’s a look at the major provisions enacted by the legislation, what would happen if it expires and what the odds are that it will be extended.
Standard Deductions Could Shrink
One of the most widespread tax benefits of the TCJA for the average American was the near-doubling of the standard deduction. In 2017, before the TCJA went into effect, the standard deduction was $6,350 for single filers and $12,700 for joint filers. As of tax year 2025, those amounts are now $14,600 and $29,200 respectively, thanks to the combination of TCJA changes and annual inflationary adjustments.
If the TCJA expires, standard deduction levels will fall to $8,300 for single filers and $16,600 for joint filers in 2026.
Corporate Tax Rates Could Jump
On the corporate level, one of the biggest changes implemented by the TCJA was the reduction in the corporate tax rate to just 21%. This was a significant drop from the former level of 35%. Unlike other provisions of the TCJA, however, this cut to corporate taxes is permanent and will not expire even if the legislation does.
But while this tax cut will not change automatically, lawmakers still have the ability to modify it as they see fit. While on the campaign trail, for example, President Donald Trump said that he wanted to drop the corporate tax rate to just 15% for companies that make their products in America.
However, according to Bloomberg Government, this might be hard to enact, as any additional cuts will have to be offset with increased revenue somewhere else.
The Pass-Through Business Income Deduction Could Vanish
American taxpayers who run so-called “pass-through” businesses received something of a windfall from the TCJA, in the form of a 20% deduction of their qualified business income.
Pass-through businesses include any structure that’s not subject to the corporate income tax, including sole proprietorships, S-corporations and partnerships. This means that if you’re a sole proprietor with $100,000 in business income, for example, you can immediately deduct $20,000 of that income and not have to pay tax on it.
This tax benefit, also known as the 199a deduction, is generally supported by Republicans, making it more likely that it will be extended thanks to the Republican-dominated Congress. However, if it’s allowed to expire, small businesses should expect a fairly significant boost to their tax bills.
The Cap for State and Local Income Tax Deductions May Increase
The deduction for state and local income taxes (SALT) was limited to $10,000 by the TCJA. This was bad news for high-income taxpayers in high-tax states, like California, New York and New Jersey, as many of them paid more than $10,000 in state and local taxes.
Before the TCJA, there was no limitation on this SALT deduction, so its expiration could actually benefit wealthy taxpayers in high-tax states.
The Expanded Child Tax Credit May Get Cut in Half
One of the TCJA provisions that most assisted lower- and middle-income taxpayers was the expansion of the Child Tax Credit to $2,000 from $1,000. While an extension of the elevated Child Tax Credit is supported by Democrats, it has been opposed by Senate Republicans and may not be extended, according to Bloomberg Government.
Personal Income Tax Brackets Could Jump
Another widespread benefit of the TCJA was the reduction in personal income tax brackets, both in terms of rates paid and their income thresholds. Before the TCJA, income tax brackets were 10%, 15%, 25%, 28%, 33%, 35% and 39.6%.
Under the TCJA, those brackets dropped to 10%, 12%, 22%, 24%, 32%, 35% and 37%. Income thresholds to reach each bracket were also increased.
However, those changes would revert to pre-TCJA levels if the legislation expires.
Mortgage Interest and Charitable Donation Deductions Could Change
From 2018 to 2025, the TCJA actually reduced the property value on which homeowners could deduct their mortgage interest, to $750,000 from $1 million. If the TCJA expires, this original limit would be reinstated.
The TCJA raised the limit on deductions for charitable contributions to 60% of adjusted gross income, up from 50% before the legislation passed. The 50% limit would also be reinstated if Congress doesn’t extend the Tax Cuts and Jobs Act.
Boosted Estate and Gift Tax Exemptions Could Be Repealed
While only affecting a very small percentage of Americans, the TCJA also boosted estate and gift tax exemptions by a significant amount. For 2024, the estate tax exemption is $13.6 million, but if the legislation expires, that will drop back down to about $5 million.
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