As we move through 2025, major tax changes are on the horizon. The Tax Cuts and Jobs Act (TCJA)—which has shaped tax planning since 2018—is scheduled to expire on December 31, 2025. If Congress doesn’t act, most provisions will revert to pre-2018 rules. Meanwhile, a new proposal by House Republicans seeks to extend and even expand many TCJA benefits.
Understanding what’s at stake now can help you make smarter decisions for 2026 and beyond.
What Happens If TCJA Expires?
Without new legislation, tax rules will roll back to their 2017 structure. That means:
- Higher tax brackets – Top rate increases from 37% to 39.6%
- Lower standard deductions – Cut nearly in half from $15,000/$30,000 (single/married) back to approximately $8,300/$16,600
- Reduced Child Tax Credit – Drops from $2,000 to $1,000 per child
- Section 199A: Elimination of the 20% pass-through deduction
- Estate tax exemption cut – From nearly $14M to nearly $7M per person
- Alternative Minimum Tax expansion – More middle-income households could be affected
According to the Tax Foundation, 62% of filers would see a tax increase in 2026 if TCJA sunsets without replacement.
What the New Proposal Would Change
The proposed legislation would extend most TCJA provisions and add new taxpayer-friendly features.
Tax Brackets & Deductions:
- Maintain current brackets (10%–37%)
- Temporary increase to the standard deduction ($1,000 for individuals, $2,000 for couples through 2028)
- Extra $4,000 deduction for individuals 65+, with phaseouts at higher income levels
Business Owner Benefits:
- Section 199A deduction extended and increased to 23% of qualified business income
- Expanded eligibility for high-earning service professionals once their income exceeds certain thresholds.
SALT Deduction (State and Local Taxes):
- A key sticking point in the original TCJA, the $10,000 cap on SALT deductions would increase to $30,000
- The expanded cap would phase down between $400,000–$500,000 of income
- For Arkansas residents (with lower state taxes), this may be less impactful—but still meaningful for those with large property or local tax bills
New & Enhanced Tax Savings Opportunities:
- Auto Loan Interest Deduction – Up to $10,000 for loans on U.S.-assembled vehicles (with income phaseouts)
- Expanded HSA limits – Up to $17,100 for families, with income-based phaseouts
- Broader 529 Plan Usage – Now includes professional credentialing and K–12 expenses
Estate Tax Planning:
- Exemption increased to $15 million per person, offering added certainty for high-net-worth families
Why You Should Plan Ahead Now
These proposals aren’t final. Some provisions may change, and many are temporary—set to expire in 2028 unless renewed. That makes multi-year planning essential.
Relying on year-end tax prep is no longer enough. Today’s environment calls for advanced modeling to visualize the impact of these shifting rules.
How We Can Help
At Pathway by Willow, we use proactive tax modeling and forecasting to help clients make confident, forward-thinking decisions. From evaluating when to take income to understanding how rule changes affect your savings and estate, we build strategies that adapt to whatever comes next.
Disclosure: This blog post is for informational and educational purposes only. It is not intended as financial, investment, or tax advice. Please consult a financial advisor, accountant, or attorney before making any decisions based on this content.
