Complete Story
11/21/2024
TCJA 2017 Sunsets: Quick Hits for Individual Taxpayers
The tax expirations could create tax planning uncertainty
Enacted in 2017, the Tax Cuts and Jobs Act (TCJA) introduced significant changes to individual federal taxes. However, many of these provisions are set to expire, or “sunset,” at the end of 2025, creating uncertainty for tax planning. Here’s a list of quick hits on the major provisions that could revert to prior rules and the potential impacts on taxpayers.
Reduced Tax Rates for Ordinary Income and Short-Term Capital Gains
The TCJA temporarily lowered individual tax brackets, with rates ranging from 10 percent to 37 percent. If these provisions expire, the top rate would return to 39.6 percent, impacting many wealthy households. Short-term capital gains, which align with income brackets, would also be subject to these higher rates.
Favorable Rates on Long-Term Capital Gains and Qualified Dividends
The TCJA retained preferential rates for long-term capital gains (LTCGs) and qualified dividends, with brackets at 0 percent, 15 percent and 20 percent. Should Congress allow this provision to lapse, the 20 percent rate may kick in sooner for high earners, aligning with the highest income tax bracket.
Please select this link to read the complete article from OSAP Mission Partner Clark Schaefer Hackett (CSH).
