What Major Provisions in Tax Cuts and Jobs Act Law Expire?

The TCJA fundamentally altered the federal income tax framework by lowering individual tax rates, nearly doubling the standard deduction, and suspending certain personal exemptions through 2025. The Act reduced the corporate tax rate from 35 percent to a flat 21 percent, a change intended to increase business investment and wage growth. These modifications affect how taxpayers calculate their annual tax obligation and determine which filing strategies may reduce their overall liability.

One of the most significant changes for individual taxpayers is the near-doubling of the standard deduction, which rose to $13,850 for single filers and $27,700 for married couples filing jointly in 2024 (adjusted annually for inflation). This increase means fewer taxpayers benefit from itemizing deductions, since the standard deduction threshold is now higher. The Act also eliminated personal exemptions that previously reduced taxable income on a per-dependent basis, a trade-off designed to simplify filing and offset some of the standard deduction increase.

The corporate rate reduction to 21 percent applies to all business entities taxed as C corporations, fundamentally changing the competitive posture between corporate and pass-through entity structures. Many business owners have since evaluated whether maintaining C corporation status remains advantageous, or whether converting to an S corporation, partnership, or LLC offers better tax efficiency given the lower individual rates and new pass-through provisions.

The TCJA compressed the number of individual tax brackets and lowered rates across most income levels, though the highest marginal rate remained at 37 percent for top earners. For most taxpayers, these rate reductions translated to lower annual tax liability during the years the TCJA has been in effect. However, because many of these provisions are scheduled to expire after 2025, taxpayers should monitor whether Congress extends them or allows rates to revert to pre-2017 levels.

The seven individual tax brackets under the TCJA (10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent, and 37 percent) replaced the earlier nine-bracket structure. Bracket thresholds are adjusted annually for inflation, which means a taxpayer's effective rate can shift year to year even if income remains constant. This indexing mechanism has important implications for long-term financial planning, particularly for high-income earners who monitor their position relative to the 37 percent bracket threshold.

The TCJA suspended the personal exemption entirely through 2025, a provision that eliminates the prior $4,050 per-person deduction that many taxpayers relied upon. Simultaneously, the Act increased the standard deduction substantially, creating a net benefit for most taxpayers who do not itemize. For those who do itemize, the TCJA capped the State and Local Tax (SALT) deduction at $10,000 annually, a significant constraint for residents of high-tax states, such as New York.

The SALT cap has created substantial planning challenges for New York taxpayers, particularly those in high-income brackets or with significant property holdings. Prior to the TCJA, many New York residents could deduct unlimited state and local property taxes, generating substantial federal tax savings. Under the new $10,000 limit, married couples filing jointly can deduct only that amount total across state income tax, property tax, and sales tax combined. Some New York professionals have explored pass-through entity tax (PET) elections under state law to mitigate this constraint, though the mechanics require careful structuring.

The TCJA also increased the Alternative Minimum Tax (AMT) exemption threshold, reducing the number of taxpayers subject to this parallel tax system. For high-income taxpayers who were previously caught by the AMT, this change has provided meaningful relief, though the exemption phases out at higher income levels and remains a compliance consideration for upper-bracket earners.

One of the most consequential provisions for business owners is Section 199A, which permits eligible pass-through entity owners to deduct up to 20 percent of qualified business income (QBI) on their individual tax returns. This deduction, available through 2025, effectively lowers the top marginal rate on business income to approximately 29.6 percent (from 37 percent), narrowing the gap between pass-through and corporate taxation. However, the deduction is subject to multiple limitations, including income thresholds, wage and asset tests, and restrictions on certain service businesses.

The Section 199A deduction applies to income from S corporations, partnerships, sole proprietorships, and certain trusts and estates, but not to C corporation dividends or W-2 wages paid to employees. For taxpayers whose QBI exceeds $191,950 (single) or $383,900 (married filing jointly) in 2024, the deduction phases out and becomes subject to wage and property limitations tied to the entity's W-2 payroll and depreciable property basis. Service businesses in fields, such as health, law, accounting, and consulting, face additional restrictions that may limit or eliminate the deduction entirely for high-income owners.

I have observed that many business owners underestimate the complexity of the Section 199A calculation, particularly when operating multiple entities or in specified service trade or business (SSTB) categories. Proper documentation of QBI, W-2 wages, and unadjusted basis of qualified property is essential to substantiate the deduction on audit. The IRS has issued extensive guidance on Section 199A, and taxpayers should ensure their return preparers understand the applicable limitations for their specific business structure and income level.

The TCJA reduced the federal corporate tax rate to 21 percent, fundamentally altering the calculus for business investment and capital structure decisions. For corporations with significant foreign earnings, the Act introduced a one-time mandatory repatriation tax on accumulated foreign income, assessed at reduced rates (8 percent on cash, 15.5 percent on other property) regardless of whether the income was actually brought into the United States. This repatriation tax was designed to encourage U.S. .orporations to bring foreign profits home, while raising revenue to offset the rate reduction.

The TCJA also implemented a Global Intangible Low-Taxed Income (GILTI) regime and a Base Erosion and Anti-Abuse Tax (BEAT) to prevent profit-shifting to low-tax jurisdictions. These provisions apply to U.S. .orporations with foreign subsidiaries and require complex calculations that have generated substantial IRS guidance and taxpayer disputes. Multinational corporations must carefully monitor their transfer pricing, intercompany transactions, and foreign tax credit positions to optimize their TCJA posture.

Smaller corporations without foreign operations benefit primarily from the lower 21 percent rate. Many closely held C corporations have since evaluated whether the rate reduction justifies remaining in C corporation form rather than electing pass-through taxation, particularly if owners plan to retain earnings or if the entity generates high levels of passive investment income.

New York State has not fully conformed to all TCJA provisions, creating potential differences between federal and state taxable income. For example, New York maintains higher tax rates on corporations and individuals than the federal TCJA rates, and the state has adopted different rules regarding the SALT deduction and certain business income provisions. Taxpayers must file both federal returns (reflecting TCJA calculations) and New York State returns (applying state-specific rules), which can result in different tax liability at each level.

The SALT cap under the TCJA has prompted New York to explore conformity options, though full alignment with federal provisions remains incomplete. Taxpayers should consult with a tax professional to ensure they are applying both federal and state rules correctly and maximizing available deductions and credits at each level.