In 2025, significant changes in federal taxes are expected as key provisions of the Tax Cuts and Jobs Act (TCJA) are set to expire. These changes could impact income taxes, deductions, and estate and gift tax exemptions. If you’re concerned about how these shifts might affect your finances, now is the time to prepare.
What Will Change in 2025?
When the TCJA provisions expire at the end of 2025, the following changes in federal tax law may take effect:
- The highest federal income tax rate may return to 39.6%, up from the current 37%.
- The standard deduction is expected to decrease, meaning more of your income could become taxable.
- Estate and gift tax exemptions may be cut roughly in half, making it more difficult to transfer wealth tax-free.
These shifts could significantly impact individuals and families—especially those with high net worth or large estates.
Strategies to Mitigate the Impact of Tax Increases
Before the 2025 tax changes take effect, there are several strategies you can explore with a financial advisor or estate planning attorney:
- Accelerate Income: Consider recognizing income in 2024 or early 2025 while current rates are still in place.
- Roth IRA Conversions: Converting traditional IRAs to Roth IRAs now could help avoid higher tax rates later.
- Use Gift and Estate Exemptions: With current estate and gift tax exemptions set to shrink in 2026, wealthy individuals may want to maximize their use of these exemptions before they’re reduced.
Don’t Wait Until It’s Too Late
Proactively planning for the upcoming federal tax law changes in 2025 can protect your income, assets, and heirs. Early action is key—waiting could mean higher taxes and missed opportunities.
Ask an Estate Plan Attorney Today
If you’re unsure how these changes might affect you, speak with a qualified estate planning attorney today. Visit Hudack Law Estate Planning Attorney to learn more. We proudly serve California, Utah, and Arizona. Call our toll-free number at (877) 314-4309 to schedule a consultation with one of our experienced attorneys.