As we approach 2025, significant changes in the tax landscape are on the horizon, particularly with the expiration of key provisions from the Tax Cuts and Jobs Act (TCJA) of 2017. If you’re concerned about how these changes might impact your financial future, you’re not alone. At Favored Financial Planning, we specialize in crafting tax-advantaged financial strategies to help you stay ahead of the curve and protect your wealth.
The Expiration of the TCJA: What It Means for You
The Tax Cuts and Jobs Act (TCJA), enacted in 2017, brought sweeping changes to the U.S. tax system, affecting individuals, families, and businesses. However, many of the individual tax provisions in the TCJA are set to expire at the end of 2025, unless Congress takes action. Here are a few of the major changes that could affect your tax planning:
- Higher Tax Rates: The TCJA lowered tax rates across most income brackets, but these reductions will expire, leading to higher rates for many taxpayers. The current 12%, 22%, and 24% brackets are set to rise back to 15%, 25%, and 28%, respectively.
- Increased Standard Deduction Rollback: The nearly doubled standard deduction under TCJA will revert to pre-2017 levels, potentially increasing the taxable income for many families.
- Reduction in Estate and Gift Tax Exemptions: The estate and gift tax exemption amounts, which are currently at historically high levels, will drop significantly, potentially exposing more of your wealth to estate taxes.
- Changes to Child Tax Credit and Other Deductions: The expanded child tax credit and limits on state and local tax (SALT) deductions could revert, affecting families and homeowners, especially in high-tax states.
These changes will have a significant impact on many individuals’ tax bills and overall financial situations. For those planning for retirement, estate transfers, or major life changes, these shifts could present a new set of challenges.
How Favored Financial Planning Can Help
At Favored Financial Planning, we believe that every financial plan should be as unique as the individual or family behind it. With the potential expiration of the TCJA, there’s never been a better time to review your tax and financial strategy to ensure you’re optimizing your investments, savings, and estate plans. Here’s how we can help:
1. Personalized Tax-Advantaged Planning
We specialize in developing tailored tax-advantaged financial plans that align with your specific goals. Whether you’re focused on retirement savings, estate planning, or wealth management, we’ll identify strategies that maximize tax savings under the current code and prepare you for upcoming changes.
2. Maximizing Retirement Contributions and Tax Deferrals
As tax rates are set to rise, now is the time to explore maximizing contributions to tax-deferred retirement accounts such as IRAs and 401(k)s. We’ll help you evaluate Roth conversions to lock in today’s lower tax rates before they increase in 2026. We can also review your current portfolio to ensure tax-efficient investing, minimizing capital gains taxes and maximizing after-tax returns.
3. Estate Planning Before the TCJA Expires
The reduction in the estate tax exemption could subject a larger portion of your wealth to estate taxes. If you’ve been considering passing wealth to future generations, this is a crucial time to revisit your estate plan. We can assist with gifting strategies, irrevocable trusts, and other wealth transfer methods to minimize your tax burden and protect your legacy.
4. Optimizing Charitable Giving and Deductions
With the rollback of the higher standard deduction and potential limits on other deductions, charitable giving may become a more valuable tax strategy. We’ll work with you to optimize charitable donations through tax-efficient vehicles such as donor-advised funds or charitable trusts, allowing you to give generously while reducing your taxable income.
5. Proactive Planning for Families and Businesses
For families, the potential changes to the child tax credit and SALT deductions could significantly impact your bottom line. We’ll help you explore alternative tax-saving strategies to keep more of your hard-earned income. If you own a business, we’ll assist with tax-advantaged retirement plans for you and your employees, as well as ways to maximize deductions and credits available under the changing tax code.
Why Choose Favored Financial Planning?
Favored Financial Planning is dedicated to helping our clients build comprehensive, tax-efficient financial plans that stand the test of time. We offer a client-first approach, focusing on:
- Comprehensive Tax Planning: We stay up-to-date on the latest tax laws and changes, ensuring that your financial plan is always current and optimized for any legislative changes.
- Integrated Financial Strategies: We take an integrated approach to financial planning, incorporating tax considerations, investment strategies, retirement planning, and estate planning into one cohesive plan.
- Personalized Service: Your financial goals and situation are unique. We offer customized strategies and ongoing guidance to help you navigate life’s changes and new tax rules with confidence.
Prepare Now for 2025 and Beyond
The upcoming expiration of the TCJA could have a profound impact on your financial well-being. At Favored Financial Planning, we’re here to help you navigate these changes and create a strategy that ensures your financial future remains secure.
Now is the time to act. Contact Favored Financial Planning today to schedule a consultation and begin developing a tax-advantaged financial plan that aligns with your long-term goals.
Visit us at https://favoredfp.com/ or call us at 336-422-6734 to learn how we can help you make the most of your financial opportunities in 2025 and beyond.
