You have almost seven years’ experience with the Tax Cuts and Jobs Act (TCJA).
There was much to this experience, and you may have had a good one or a bad one. Either way, here’s the deal now.
Some TCJA provisions expire at the end of 2025. Others are permanent (or so they say). You can count on new legislation changing the tax game.
To know what’s up, check out this rundown of expiring and permanent TCJA provisions that are most likely to affect you and your business in the near future.
To make this more interesting, we also indicate which scheduled expirations and which permanent provisions are bad news (business taxpayer losers), which are good news (business taxpayer winners), and which are mixed news. Here goes.
Mixed News: Expiration of TCJA Tax Rates for Business Income Recognized by Individuals
For 2018 through 2025, the TCJA retained seven ordinary income tax rates for individuals. Such income can be from a sole proprietorship, an LLC, or an S corporation.
Good news. Five of the rates under the TCJA are lower than before.
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The 15 percent pre-TCJA rate was replaced by the 12 percent rate.
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The 25 percent rate was replaced by the 22 percent rate.
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The 28 percent rate was replaced by the 24 percent rate.
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The 33 percent rate was replaced by the 32 percent rate.
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The 39.6 percent rate was replaced by the 37 percent rate.
Bad news. For singles and heads of households, the thresholds for the 35 percent rate were significantly lowered by the TCJA. This lower-income threshold trapped more upper-middle-income individuals in the 35 percent rate bracket.
The 2024 individual rate brackets for ordinary income are as follows (for single, married-filing-jointly, and head-of-household taxpayers, respectively):
| Single | MFJ | HOH |
10 percent tax bracket | $0-11,600 | $0-23,200 | $0-16,550 |
Beginning of 12 percent bracket . . . | 11,601 | 23,201 | 16,551 |
Beginning of 22 percent bracket . . . | 47,151 | 94,301 | 63,101 |
Beginning of 24 percent bracket . . . | 100,526 | 201,051 | 100,501 |
Beginning of 32 percent bracket . . . | 191,951 | 383,901 | 191,951 |
Beginning of 35 percent bracket . . . | 243,726 | 487,451 | 243,701 |
Beginning of 37 percent bracket . . . | 609,351 | 731,201 | 609,351 |
Assuming no legislation to the contrary, these 2024 bracket thresholds will be inflation-adjusted for 2025.
Expiration. For 2026 and beyond, the pre-TCJA rates and bracket thresholds that were in place for 2017 (with cumulative inflation adjustments for bracket thresholds) are scheduled to return unless future legislation changes that outcome. Perhaps most important,
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the top rate would move from ... Log in to view full article.
