You may recall, that about 7 years ago, the President at the time (Trump), implemented the "Tax Cuts and Jobs Act", which was a pretty significant set of tax changes. I believe these changes first impacted the 2018 tax returns. At the time, much was written to explain some of the new laws, but the important element I want to mention at this time is that many of these laws are set to expire at the end of 2025. Unless Congress takes action, there will be the following changes back to the pre-2018 rules (this is not all encompassing but are the ones that will impact most):
Individual tax rates/brackets will go back up
The standard deductions will be lowered and personal exemptions will return
Sched A $10,000 state tax cap will be removed
QBI deduction (essentially 20% deduction on pass-through entity income) will be removed
Although it is a long-ish way off, it's a good idea to start thinking abut how this may impact you for your 2026 tax returns. There may be some strategizing you may want to do for 2024 and 2025. Of course, I will be monitoring this over the next year to see if there will be an extension of these rules or if they will indeed expire.
Although we taxpayers can use all the tax breaks we can get due to the horrible inflation we've had the last few years, the government needs all the money it can get to deal with their ever increasing debt...so it is pretty much futile to try to predict what will happen once this next election is over.
Stay tuned !
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