Keeping an Eye on the TCJA: What New Jersey Businesses and Individuals Need to Know Before 2026
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Written By:
Andrea J. Dutto
CPA
MSPC Certified Public Accountants and Advisors, P.C.
When the Tax Cuts and Jobs Act (TCJA) took effect in late 2017, it represented the most significant overhaul of the federal tax code in decades. It lowered tax rates, nearly doubled the standard deduction, expanded tax credits, and introduced new business deductions that impacted both individuals and corporations alike. Now, as we approach 2026, many of the TCJA’s key provisions are set to expire or “sunset," with most individual-related provisions, including tax rates and credits, sunsetting at the end of 2025, while business-related ones, including some affecting pass-through entities, sunset between the end of 2025 and 2028. For New Jersey businesses and individual taxpayers, these looming expirations could mean substantial tax increases and a return to pre-2018 tax rules, unless Congress acts to extend or modify them.
As tax professionals, it is critical we remain vigilant and proactive to help clients navigate the uncertainty and plan accordingly. This note outlines certain key TCJA provisions set to expire, their potential impacts, and what to watch for as 2026 approaches.
Sunsetting Provisions
One of the most visible TCJA changes was nearly doubling the standard deduction to $12,000 for single filers, $18,000 for heads of household, and $24,000 for married couples filing jointly in 2018. This led to a decline in itemized deductions. If the TCJA expires, the standard deduction will drop to approximately half of its current amount (adjusted for inflation), prompting many taxpayers to resume itemizing. However, itemized deductions may not always exceed the former higher standard deduction, creating new planning considerations.
Also under the TCJA, tax rates were lowered across various income brackets. Come 2026, rates will revert to the pre-TCJA structure, with top individual rates rising from 37% back to 39.6%. This will significantly affect tax planning strategies for wage earners, retirees, and business owners starting in that year, a reality further underscored by the reduced child tax credit of $1,000 (from the $2,000 granted by the TCJA), along with its substantially tightened phaseouts, which will in turn reduce the attendant benefit for many families.
Moreover, the TCJA imposed a $10,000 cap on state and local tax (SALT) deductions, substantially impacting taxpayers in high-tax states like New Jersey. If the cap expires, taxpayers may again deduct all eligible state and local taxes, but the political debate on SALT remains active, as does the doubled estate and gift tax exemption amount under the TCJA (presently about $14 million, adjusted for inflation, for individuals passing away in 2025), which will decrease to $7 million (adjusted for inflation) in 2026.
Finally, the 20% deduction on qualified business income (QBI) for pass-through entities is one of the TCJA’s most impactful business tax provisions. Without extension, it will disappear, increasing the tax burden on many small business owners.
Planning for the Tax Future
Both political parties propose different paths forward regarding these provisions. Democrats generally favor extending many TCJA benefits for middle- and lower-income taxpayers, with proposals to expand the child tax credit and increase certain exemptions, and they have mixed views on the SALT deduction and estate tax. Conversely, Republicans advocate for making most TCJA provisions permanent, including tax rates, standard deductions, and the current child tax credit, while largely opposing SALT cap changes and favoring the repeal or continuation of estate tax exemptions.
With the potential for significant tax changes on the horizon, accountants and tax advisors must monitor legislative developments closely to provide timely guidance and then assist clients in tax planning strategies that maximize current benefits. This includes reviewing estate plans for high-net-worth clients ahead of exemption reductions, educating clients on how the loss of QBI deductions could impact small business taxes, and helping clients evaluate the benefits of itemizing deductions if the standard deduction decreases.
The approaching sunset of key TCJA provisions therefore presents both challenges and opportunities. By staying informed and proactively advising clients, tax professionals can help New Jersey businesses and families navigate the evolving tax environment with confidence and strategic foresight.
About the Author:
Andrea J. Dutto, CPA, is a tax and advisory professional with over 35 years of experience at MSPC Certified Public Accountants and Advisors. She specializes in helping New Jersey businesses and individuals with strategic tax planning designed to align with their long-term financial goals.