The Expiration of the Tax Cuts and Jobs Act

As we approach the end of 2025, businesses across the United States are bracing for significant shifts due to the impending expiration of provisions in the Tax Cuts and Jobs Act (TCJA). Enacted in 2017, the TCJA introduced numerous tax reforms, but many of these, particularly those affecting individuals and pass-through entities, are set to sunset. The removal of the 20% deduction for qualified business income could result in higher tax liabilities for LLCs, S corporations, and sole proprietorships, potentially increasing their effective tax rates. While the corporate tax rate was fixed at 21%, temporary measures like full expensing for capital investments will revert to traditional depreciation methods, which might influence cash flow and investment decisions. The doubling of the estate tax exemption will also expire, pushing family businesses to revisit their estate planning to mitigate tax impacts. Additionally, the cap on state and local tax (SALT) deductions could change, 

affecting businesses in high-tax states.

With the political landscape uncertain, there's a cloud of ambiguity over whether these tax provisions will be extended, modified, or left to lapse, urging businesses to engage in strategic tax planning. This includes scenario analysis to understand the potential impacts on cash flow, investment, and overall financial strategy. The potential cessation of current tax incentives might dampen business investments, particularly in areas like research and development, where tax benefits have spurred activity. Businesses may need to adjust their budgets, accelerate expenditures before the deadline, or consider new financing options. This moment presents both challenges and opportunities for businesses to reassess their financial strategies to ensure growth in a changing tax environment. Staying informed and adaptable to the evolving tax policy landscape will be key as we move into 2026 and beyond.