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Tax Cuts & Jobs Act of 2017 (TCJA)

The Tax Cuts and Jobs Act of 2017 (TCJA) introduced sweeping changes to the Internal Revenue Code, impacting both individual taxpayers and businesses. Signed into law in 2017, the TCJA aimed to simplify the tax code, reduce tax burdens, and stimulate economic growth. While some provisions are permanent, many are set to expire after 2025.

Tax Cuts & Jobs Act of 2017 (TCJA)

The Tax Cuts and Jobs Act of 2017 (TCJA) introduced sweeping changes to the Internal Revenue Code, impacting both individual taxpayers and businesses. Signed into law in 2017, the TCJA aimed to simplify the tax code, reduce tax burdens, and stimulate economic growth. While some provisions are permanent, many were set to expire after 2025.

Reduced Tax Brackets

  • Seven brackets adjusted to: 10%, 12%, 22%, 24%, 32%, 35%, and 37%
  • Income thresholds slightly increased, lowering overall tax liability

Standard Deduction Increase

  • Individual: from $6,500 to $12,000
  • Joint filers: from $13,000 to $24,000
  • Resulted in fewer taxpayers itemizing deductions

Mortgage Interest Deduction Limits

  • Cap reduced to $750,000 for new mortgages
  • Home equity interest deduction significantly restricted

SALT Deduction Cap

  • State and local tax deductions limited to $10,000

Elimination of Miscellaneous Itemized Deductions

  • Includes unreimbursed employee expenses and tax prep fees

Affordable Care Act Penalty Removed

  • No longer a penalty for lacking minimum health insurance coverage

Expanded Child Tax Credit

  • Increased credit amount and income eligibility thresholds

Key Business and Investment Provisions

Corporate Tax Rate Reduction

  • Permanent reduction from 35% to a flat 21%

Pass-Through Income Deduction

  • 20% deduction for qualified business income from partnerships, LLCs, and S corporations
  • Exclusions apply to certain service-based businesses

Bonus Depreciation

  • 100% bonus depreciation allowed for qualifying assets placed in service through 2022
  • Expensing provisions begin phasing out after 2022

International Tax Reform

  • Exemption for foreign-earned dividends for U.S. shareholders owning ≥10% of foreign corporations
  • Anti-base erosion measures introduced to prevent profit shifting

Sunset Provisions

  • Over 20 TCJA provisions are scheduled to expire after December 31, 2025
  • Individual tax rates, deductions, and credits will revert to pre-TCJA rules unless extended by future legislation
  • Businesses should prepare for potential changes in depreciation, pass-through deductions, and international tax treatment

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