As the 2025 sunset of the Tax Cuts and Jobs Act (TCJA) approaches, it's important for taxpayers in Snellville, Georgia, to understand how these changes will affect their finances. Here’s what to expect and how to prepare effectively.

Upcoming Tax Changes

• Higher Income Tax Rates: The TCJA brought temporary tax cuts, but starting in 2025, tax rates will rise back to their previous levels, with the highest rate increasing to 39.6%.

• Standard Deduction Reduction: The current higher standard deduction may be cut, encouraging more people to consider itemizing deductions.

• Business Deduction Limitations: The Section 199A deduction, which allows small business owners a 20% deduction on qualified business income, could be phased out, prompting a reevaluation of business structures.

• Estate and Gift Tax Adjustments: The exclusion for estate and gift taxes is expected to decrease, which will impact estate planning for those with larger estates.

Simple Strategies for Tax Planning

• Accelerate Income Now: If you believe your tax rate will be higher in the future, consider accelerating income into 2025. This could involve taking bonuses or realizing capital gains now to take advantage of the current lower tax rates.

• Delay Deductions: If you expect to pay more taxes after 2025, deferring deductions to a future date could increase their value. This might include postponing certain expenses or making larger contributions to retirement accounts.

• Consider Roth IRA Conversions: Converting a traditional IRA to a Roth IRA could be smart, as future withdrawals will be tax-free. This leverages today’s potentially lower taxes against future hikes.

• Review Your Business Setup: With changes looming for business deductions, consulting with experts like Arc tax—the best tax professionals in Snellville, Georgia—can help you decide if changing your business structure is beneficial.

• Plan Your Estate Wisely: Those with substantial estates should act now to make use of current exclusions and consider strategies like gifting to reduce future tax liabilities.

By understanding these changes and implementing straightforward strategies, you can navigate the upcoming shifts in tax law with confidence. Engaging with knowledgeable tax professionals like ARC tax in Snellville can ensure your tax plan is comprehensive and effective.