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Tax Time Tipping Point: Navigating the Sunset of the Tax Cuts and Jobs Act and Year-End Tax Strategies Webinar Review Thumbnail

Tax Time Tipping Point: Navigating the Sunset of the Tax Cuts and Jobs Act and Year-End Tax Strategies Webinar Review

Estate Planning Insights Retirement Funding Tax Planning

As the end of 2024 approaches, taxpayers and advisors find themselves at a pivotal moment—facing not just year-end planning pressures but also the looming sunset of the Tax Cuts and Jobs Act (TCJA). This sweeping legislation, enacted in 2017, brought significant changes to the tax code, many of which are set to expire in 2025. The countdown has begun, and the time to strategize is now. ClientFirst founder Ed Mahaffy recently held a webinar with estate and tax planning attorney Ashley Gill and CPA Ron Meyers to discuss what is changing and strategies to prepare for tax season.



What’s Changing?
The TCJA ushered in numerous tax benefits, including reduced individual tax rates, increased standard deductions, and a higher threshold for estate and gift taxes. But without legislative action, these provisions will revert to pre-2018 levels, leading to:

  • Higher Tax Brackets: Individual taxpayers could see their rates increase, affecting take-home pay and overall financial planning.
  • Reduced Standard Deduction: The doubled deduction will likely shrink, making itemizing deductions more common.
  • Lower Estate Tax Exemption: The generous estate tax exemption is expected to fall significantly, potentially impacting wealth transfer strategies.

Opportunities Before the Clock Runs Out
This impending shift has created a critical window for proactive tax planning. Whether you’re an individual, a business owner, or a family managing generational wealth, there are steps to take now to mitigate the effects of the TCJA’s expiration.

1. Maximize Current Tax Rates
Consider accelerating income into 2024 or 2025 to lock in today’s lower rates. This can be particularly useful for those in higher brackets who expect their taxable income to increase in future years.

2. Capitalize on Estate and Gift Tax Exemptions
The current lifetime exemption for estate and gift taxes is at a historic high, but it will likely be halved post-2025. Now is the time to make large gifts or transfer wealth strategically to avoid future tax implications.

3. Charitable Giving and Itemized Deductions
With the standard deduction set to decrease, more taxpayers will find it advantageous to itemize. Bundling charitable contributions or leveraging donor-advised funds can help maximize deductions.

4. Business Strategies for Tax Efficiency
Businesses can explore bonus depreciation benefits while they last and consider structuring income and expenses to align with anticipated changes in tax law.

5. Tax-Advantaged Retirement Savings
Max out contributions to retirement accounts like IRAs and 401(k)s. These accounts remain a cornerstone of tax-advantaged savings, offering benefits even as broader tax policies shift.

Preparing for an Uncertain Future
As policymakers debate the future of tax legislation, it’s critical to remain flexible and informed. Partnering with a trusted financial advisor or tax professional is more important than ever to ensure your strategy aligns with your goals and the evolving tax landscape.

Key Takeaway
The sunset of the TCJA represents both a challenge and an opportunity. By acting now, individuals and businesses can position themselves to mitigate higher taxes and optimize financial outcomes in the years ahead. With thoughtful planning, the end of 2024 can be a turning point rather than a tipping point.

Disclosure
The views expressed represent the opinions of ClientFirst Wealth Management, LLC as of the date noted and are subject to change. These views are not intended as a forecast, a guarantee of future results, investment recommendation, or an offer to buy or sell any securities. The information provided is of a general nature and should not be construed as investment advice or to provide any investment, tax, financial or legal advice or service to any person. The information contained has been compiled from sources deemed reliable, yet accuracy is not guaranteed.

Additional information, including management fees and expenses, is provided on our Form ADV Part 2 available upon request or at the SEC’s Investment Adviser Public Disclosure website at www.adviserinfo.sec.gov

Past performance is not a guarantee of future results.

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