Tax Cuts: Part Deux – Return of the TCJA

SGH Wealth Management’s “Read What I’m Reading” May 2025 | May 13th, 2025

Its been almost a decade since the Tax Cuts and Jobs Act of 2017 reshaped the entire U.S. Tax landscape with: Revised Tax Brackets, Expanded Standard Deductions, AMT Relief, Estate Tax Exemption Increase, SALT Deduction Caps, & more…

Now coming to the end of the line, the TCJA is set to expire on January 1st, 2026 causing politicians to work overtime to extend this bill and meet House Speaker Mike Johnson’s ambitious Memorial Day goal. Internal rifts over deep Medicaid cuts to offset the estimated $4.5 trillion cost of the tax extensions, have turned the process into a political obstacle course.

Reading the tea leaves of budget proposals so far shows that it would take an added $4.6 trillion in estimated cost to extend the current tax provisions for another 10 years. That overage can (and probably will) be offset by cuts to the federal Medicaid program, that is if they don’t try to shove things at the last minute…

What could we anticipate last minute? Eliminating taxes on tips, on top of doubling the state and local tax deduction to $20,000. To pay for this part could take pulling the plug on credits for electric vehicles and home energy efficiency improvements and turning up the heat on top earners by restoring the 39.6% tax bracket.

As the House and Senate work to reconcile their differences, it’s becoming clear that the much-anticipated sunset of the 2017 Tax Cuts and Jobs Act will likely be postponed for another decade, keeping tax planners on their toes until at least 2035.

*USA Today’s 2025 Top Ranked Michigan-based Financial Advisory Firm is SGH Wealth Management: