facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast phone blog external search brokercheck brokercheck Play Pause
Military Finances 301: What Happens When the TCJA Susnsets? Thumbnail

Military Finances 301: What Happens When the TCJA Susnsets?


The Tax Cuts and Jobs Act (TCJA) was an amendment to the Internal Revenue Code that was rolled out in 2018. It had implications for both businesses and individuals. However, most TCJA provisions are set to be sunsetted at the end of 2025. What does this mean for filers?

Let’s look at the TCJA, how it impacts individuals and businesses, and what to expect when some provisions are sunsetted.

What was the Tax Cuts and Jobs Act?

The TCJA was an amendment that “changed deductions, depreciation, expensing, tax credits and other tax items that affect businesses.”1 They also add that some provisions affecting individual taxpayers can also affect business taxes.

Major elements of the change included reductions in tax rates for businesses and individuals, increases in the standard deduction and family tax credits, and efforts to limit deductions for state and local income taxes and property taxes.2 The TCJA was the largest tax code overhaul in three decades.2

How the TCJA Impacted Filers

The TCJA impacted both personal and business taxes. Let’s look at a few of the most notable changes.

Personal Taxes

  • Lower Tax Rates–The TCJA reduced tax rates for most individuals and families.3 It maintained seven tax brackets but generally lowered the rates within those brackets.
  • Increased Standard Deduction—The standard deduction was nearly doubled for all filing statuses. This change meant fewer taxpayers needed to itemize deductions, simplifying the tax filing process for many.4
  • Changes to Itemized Deductions—While the standard deduction increased, several itemized deductions were either reduced or eliminated. This includes a cap on the state and local tax (SALT) deduction and limitations on the mortgage interest deduction.5
  • Child Tax Credit—The TCJA increased the Child Tax Credit from $1,000 to $2,000 per qualifying child.6

Business Taxes

  • Corporate Tax Rate Reduction—One of the most notable changes was a reduction in the corporate tax rate from a maximum of 35% to a flat rate of 21%.7
  • Pass-Through Business Deduction—The TCJA introduced a new deduction for certain pass-through businesses, such as partnerships, S corporations, and sole proprietorships. This deduction allows eligible taxpayers to deduct up to 20% of their qualified business income, subject to certain limitations and thresholds.8

Because this was such a substantial change, we haven’t listed all of the updates here, but they can be found on the IRS website.

What to Expect When the TCJA is Sunsetted in 2025

Now that we understand some of the changes the TCJA included let’s look at what may change if the bill is sunsetted in 2025, as projected.

  • The SALT deduction would no longer be capped at $10,000 annually but would be subject to phaseouts at higher income levels.9
  • The deduction allowed for mortgage interest would increase from $750k of debt to $1M plus $100k in home equity debt.
  • Miscellaneous deductions could return.
  • The standard deduction would be cut in half to the level it was before the TCJA.10
  • The AMT would apply again to many more taxpayers.9
  • The unified lifetime exclusion for estates and gifts would be reduced roughly in half.11
  • The TCJA expiration would result in passthrough business income being taxed according to ordinary individual income tax rates without a deduction for qualified business income.12

Overall, the TCJA’s changes to business taxes aimed to promote economic growth, incentivize investment and make the United States more competitive in the global marketplace. The impact varied depending on the business’s size, structure, and industry. Now, the rollback of these changes will impact many taxpayers. How they will affect you depends on your personal financial situation.

Military Finances are Different

The sunset of the TCJA will affect all taxpayers. It won't affect them all the same way. Additionally, it may affect Active and Retired Senior Military Officers and NCOs differently than your civilian counterparts. Military members, active and retired, are treated differently by the tax code and their finances are different too. That's why we think you should work with a financial advisor/planner that deals with your unique circumstances every day. If you'd like to find out how we work with people like you, use the button below to schedule a free initial consultation.

If you found this article useful, you might like the following blog posts:

3 Mistakes Military Retirees Make on Their Tax Returns

Get Some Green by Going Green (We're not talking about joining the Army)

The Court has Spoken: The Rumor You Heard About Tax Free Military Retirement Pay is Not True

  1. https://www.irs.gov/newsroom/tax-cuts-and-jobs-act-a-comparison-for-businesses
  2. https://www.investopedia.com/taxes/trumps-tax-reform-plan-explained/
  3. https://www.law.cornell.edu/wex/tax_cuts_and_jobs_act_of_2017_(tcja)#
  4. https://taxfoundation.org/research/all/federal/the-tax-cuts-and-jobs-act-simplified-the-tax-filing-process-for-millions-of-americans/
  5. https://www.investopedia.com/tax-deductions-that-are-going-away-4582165
  6. https://www.taxpolicycenter.org/briefing-book/how-did-tcja-change-taxes-families-children#
  7. https://www.taxpolicycenter.org/briefing-book/how-did-tax-cuts-and-jobs-act-change-business-taxes
  8. https://taxfoundation.org/taxedu/glossary/pass-through-business-deduction-sec-199a/#
  9. https://www.thetaxadviser.com/issues/2023/dec/tax-planning-for-the-tcjas-sunset.html
  10. https://www.elliottdavis.com/preparing-for-the-tax-cuts-and-jobs-act-sunset/
  11. https://www.wipfli.com/insights/articles/wam-prepare-for-the-sunset-of-the-current-gift-and-estate-exemption
  12. https://crsreports.congress.gov/product/pdf/R/R47846

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by C.L. Sheldon & Company, LLC ), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. C.L. Sheldon & Company, LLC does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to C.L. Sheldon & Company, LLC website or incorporated herein, and C.L. Sheldon & Company, LLC takes no responsibility therefore. All such information is provided solely for convenience, educational, and informational purposes only and all users thereof should be guided accordingly. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from C.L. Sheldon & Company, LLC . To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. C.L. Sheldon & Company, LLC is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the C.L. Sheldon & Company, LLC ’s current written disclosure statement discussing our advisory services and fees is available for review upon request. DISCLAIMER OF TAX ADVICE: Any discussion contained herein cannot be considered to be tax advice. Actual tax advice would require a detailed and careful analysis of the facts and applicable law, which we expect would be time consuming and costly. We have not made and have not been asked to make that type of analysis in connection with any advice given in this blog post. As a result, we are required to advise you that any Federal tax advice rendered in this blog is not intended or written to be used and cannot be used for the purpose of avoiding penalties that may be imposed by the IRS. In the event you would like us to perform the type of analysis that is necessary for us to provide an opinion, that does not require the above disclaimer, as always, please feel free to contact us.