TCJA Tax Cuts Made Permanent: What It Means for Your Long-Term Tax Strategy
The 2025 Tax and Budget Reconciliation Act brings one of the most significant shifts in federal tax policy in recent years: the permanent extension of several cornerstone provisions from the 2017 Tax Cuts and Jobs Act (TCJA). This move eliminates the uncertainty surrounding the “sunset” provisions, which were initially set to expire after 2025. It provides taxpayers—especially high-income earners and business owners—with a more predictable landscape for long-term planning.
Key TCJA Provisions Now Locked In
Here’s what’s now permanently in place:
🔹 Lower Federal Income Tax Brackets
The individual income tax rates introduced by the TCJA have been locked in, with the top marginal rate remaining at 37%, rather than reverting to the pre-TCJA rate of 39.6%. This change preserves the broader rate structure that many high earners have come to rely on for income tax planning.
🔹 Permanently Higher Standard Deduction
The standard deduction has been permanently increased to:
$15,750 for single filers
$31,500 for married couples filing jointly
These amounts will continue to be adjusted annually for inflation, simplifying deductions for many households and reducing the need to itemize to benefit.
🔹 Expanded Alternative Minimum Tax (AMT) Exemption
The AMT exemption thresholds, which were substantially increased under TCJA, are now permanent. This is especially beneficial for taxpayers who:
Exercise incentive stock options (ISOs)
Claim large deductions, such as for state and local taxes or multiple dependents
This adjustment significantly reduces the number of taxpayers subject to AMT, particularly among higher-income households.
What This Means for Taxpayers
With these provisions made permanent, individuals and business owners now have:
Greater clarity for multi-year tax planning
Improved ability to forecast effective tax rates
More confidence in decisions around income recognition, retirement planning, Roth conversions, and charitable giving
For those previously hesitant to implement multi-year strategies due to the looming 2025 sunset, the door is now open to lock in proactive moves with greater certainty.
Strategic Takeaway
If your income varies from year to year or you’re approaching key financial milestones (such as retirement, asset sales, or business succession), this permanent extension creates a more favorable environment for planning. It may be time to revisit:
Roth conversion timelines
Trust and estate structures
Entity classification for your business
Timing of asset sales and stock option exercises
We’re happy to help you assess how these changes align with your overall tax strategy and financial goals.