As inauguration day approaches, we face a critical juncture in U.S. tax policy, with the potential extensions of the Tax Cuts and Jobs Act (TCJA). While President Trump has indicated his intention to reinstate these cuts once in office, and congressional support appears favorable with a Republican majority. The substantial $5 trillion impact on the national deficit does create uncertainty around their extension beyond 2025.
This article is to help you understand and prepare for potential changes that could affect your tax situation if the extensions to Trump tax cuts don't materialize.

Changes on the Horizon
Business Impact
The expiration of the Qualified Business Income (QBI) deduction would significantly affect small business owners. Currently, this valuable 20% deduction helps reduce the tax burden on pass-through entities. Without extension, business owners should prepare for a notable increase in their tax liability starting in 2026.
Individual Tax Changes
Several significant modifications would affect individual taxpayers:
The individual tax brackets will revert to pre-2018 rates, with the top marginal rate increasing from 37% to 39.6%
The standard deduction will be reduced by approximately half, though personal exemptions will return
The Child Tax Credit will decrease by 50%, impacting families' tax benefits
The $10,000 SALT deduction cap will be eliminated, potentially benefiting taxpayers in high-tax states
Estate Planning Considerations
Perhaps one of the most significant changes will be the reduction of the estate tax exemption by half. This adjustment could expose many more estates to federal estate tax liability, making immediate planning crucial.
Business Asset Acquisition
While hoping for its full reinstatement, the complete phase-out of bonus depreciation could fundamentally change how businesses approach capital investments. This shift requires careful consideration of timing for major equipment purchases and other capital expenditures.
What happens if the Trump Tax Cuts Don't Get Extended?
While political developments may affect the final outcome, prudent planning requires preparing for these changes while remaining flexible enough to adapt to new legislation. The complexity of these changes and their potential impact on your financial situation makes professional guidance more important than ever.
Regular consultation with your tax advisors will be even more important in the new year. You may want to consider quarterly reviews of your tax position to ensure your strategy remains optimized for the changing tax landscape.
Strategic Tax Planning Recommendations
Here are some proactive steps to consider:
1. Estate Planning Review
Don't wait to address estate planning. Schedule meetings with your estate attorney to:
Review current estate plans
Consider lifetime gifting strategies
Evaluate trust structures that could help minimize estate tax exposure
2. Business Structure Evaluation
With the potential loss of the QBI deduction, business owners should:
Analyze current business structure efficiency
Consider alternative entity elections
Evaluate the timing of income recognition and expenses
3. Capital Investment Strategy
Develop a comprehensive strategy for capital investments that:
Maximizes current bonus depreciation benefits
Plans for the transition to traditional depreciation methods
Considers alternative tax incentives that may remain available
4. Income Tax Planning
Begin preparing for higher tax rates by:
Evaluating opportunities for income acceleration before 2026
Exploring additional retirement contribution strategies
Considering Roth conversion opportunities while tax rates are lower

Take the Initiative
Don't wait for changes to take effect before beginning your tax preparation. The time to start planning is now, while there are still opportunities to implement strategic tax-saving measures.
Whether you're concerned about business structure optimization, estate planning, or personal tax strategy, work with your CPA or Tax Advisor to create a plan that positions you favorably for the future.
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