TCJA 2025 Sunset

The Tax Cuts and Jobs Act (TCJA) of 2017 introduced several significant tax benefits for businesses and individuals—including reduced corporate tax rates, increased standard deductions, and a 20% qualified business income deduction—but many of these key provisions are set to expire at the end of 2025, potentially leading to substantial changes in the tax landscape for both businesses and individuals.

TAX

1/12/20252 min read

Tax Cuts and Jobs Act Sunset
Tax Cuts and Jobs Act Sunset

2025 Tax Changes: What Houston Businesses Need to Know About the TCJA Sunset

If you're a business owner or high-net-worth individual, there's an important deadline approaching that could significantly impact your tax situation. The Tax Cuts and Jobs Act (TCJA) of 2017, which brought substantial tax benefits to businesses and individuals, is set to expire at the end of 2025. Our Houston tax firm is here to help you understand what this means for your business and personal finances.

Key Business Tax Changes Affecting Houston Entrepreneurs

Qualified Business Income Deduction Changes

If you operate a pass-through business whether it's an LLC, S-corporation, or partnership – you're currently enjoying a valuable 20% deduction on qualified business income. This deduction has been a game-changer for many Texas businesses, but it's scheduled to disappear after 2025 unless Congress acts.

Bonus Depreciation Phase-Out

Texas businesses have benefited from the ability to fully expense qualified business assets immediately. This 100% bonus depreciation is already phasing out and will be completely gone after 2026. For businesses in manufacturing, energy, or other capital-intensive industries, this could significantly impact your tax planning strategy.

Individual Tax Changes Affecting Houston Residents

Tax Rates and Standard Deduction

Currently, residents benefit from lower tax rates and a higher standard deduction. After 2025, the top tax rate will increase from 37% back to 39.6%, and the standard deduction will be cut in half. This means many Houstonians who currently take the standard deduction might need to return to itemizing.

State and Local Tax (SALT) Deduction

While Texas has no state income tax, the current $10,000 SALT deduction cap affects property owners who pay high property taxes. This cap will expire after 2025, potentially providing relief to Houston homeowners with significant property tax bills.

Family Tax Benefits

Families currently benefit from a $2,000 child tax credit, which will be reduced to $1,000 per child after 2025. Additionally, personal exemptions will return, which could benefit larger families.

Planning Ahead: What Houston Businesses Should Do Now

As experienced Houston law firm, we recommend:

  1. Reviewing your business structure to ensure it's optimized for the post-2025 tax landscape

  2. Accelerating major business purchases while bonus depreciation is still available

  3. Developing a strategic plan for managing pass-through income after the QBI deduction expires

Don't wait until 2025 to start planning. Our Houston team can help you navigate these changes and develop a strategy that protects your business and personal interests. Contact our downtown Houston office today for a consultation about your tax planning needs.

This article is for informational purposes only and does not constitute legal advice. For specific advice about your situation, please consult with a qualified tax attorney.