With 2024 coming to a close, tax filing season is right around the corner.
While your clients are gathering the information to file their 2024 return, this leaves a great opportunity to start planning for 2025 and beyond. The IRS has recently published the changes for 2025 (https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2025). Since no major tax laws were published this year, 2025 is looking to be a typical year, with simple increases in the standard deduction, marginal tax brackets, and contribution limits to qualified plans.
The Tax Cuts and Jobs Act (TCJA) is still scheduled to expire in 2026, which will result in various rules reverting to those used before its passage in 2018. This will result in lower standard deductions and higher marginal rates. Its expiration will also result in changes to the income breakpoints between each marginal rate. There is still a chance for the changes to be made permanent, but as 2026 inches closer, now is a great time to start planning for the possibility of its expiration.
Expect to see the updated figures reflected in Moneytree by the end of January. These changes will be most prevalent in the Prosper calculation set available in Moneytree Plan and Moneytree Elite, which can also include estimated changes if the TCJA expires.
When entering the basic tax filing options for your client you can select whether or not the TCJA expires in the projections. Look for the option labeled Income Tax Sunset Provision Takes Effect. The Federal Income Tax Worksheet page in the reports is a great place to see how the brackets and rates may change in 2026.
