Game On: The tax Cuts and Jobs Act (TCJA) and Its Impact on Your Taxes

The Tax Cuts and Jobs Act (TCJA) has shaped the U.S. tax system for nearly seven years, influencing how businesses and individuals manage their taxes. With key provisions set to expire at the end of 2025, now is the time to plan for these changes.

Expiring Provisions: Changes Coming for Businesses and Individuals

Several important provisions under the TCJA will sunset soon. Here’s what to watch:
- Lower Individual Tax Rates: Rates are set to revert to pre-TCJA levels, with the top rate climbing back to 39.6%. Middle and upper-income taxpayers may see higher liabilities.
- QBI Deduction: The 20% deduction for qualified business income (pass-through businesses) is set to expire, potentially raising taxes for small business owners.
- Bonus Depreciation: First-year bonus depreciation drops to 40% in 2025 and phases out completely by 2027 unless extended.

Permanent Provisions: Long-Term Benefits for Businesses

Not all TCJA provisions are expiring. Some are permanent and offer long-term advantages:
- Corporate Tax Rate: The flat 21% rate continues to benefit C corporations, simplifying tax calculations.
- Section 179 Deduction: Enhanced deduction limits for capital investment remain at $1.22 million for 2024.
- Repeal of C Corporation AMT: Personal service corporations benefit from the elimination of the alternative minimum tax (AMT).

Crypto Investors: Year-End Tax Strategies for 2024

Bitcoin’s record highs in 2024 mean big profits—and big tax bills. Here are key strategies to reduce your liability:
-Harvest Crypto Losses: Sell underperforming cryptocurrencies to offset gains. Losses can reduce taxable income by up to $3,000 annually, with remaining losses carried forward.
- Donate Appreciated Crypto: Avoid capital gains and claim a charitable deduction equal to the appreciated value.
- Gift Crypto: For 2024, gift up to $18,000 per recipient ($36,000 for married couples) tax-free.
- Use a Self-Directed IRA: Invest in cryptocurrency through tax-advantaged accounts like IRAs or solo 401(k)s.

EV Tax Credits: Maximize Savings on Your Next Vehicle

The Inflation Reduction Act revamped EV tax credits, offering up to $7,500 in savings. Options include:
1. Clean Vehicle Credit: For new EVs, subject to income and price caps.
2. Used EV Credit: Up to $4,000, with stricter eligibility requirements.
3. Commercial EV Credit: Ideal for business owners, with no income or price caps.
4. Leasing Discounts: Dealers claim the $7,500 credit, passing savings to customers through lower payments or rebates.

Supreme Court Ruling: New Opportunities to Challenge IRS Regulations

In a game-changing decision, the U.S. Supreme Court overturned the Chevron doctrine in the Loper Bright Enterprises v. Raimondo case. Taxpayers now have more power to challenge IRS regulations.

Key Takeaways for Taxpayers:
- Expect an increase in legal challenges to IRS rules, including new cryptocurrency regulations.
- IRS may issue fewer formal regulations, relying more on informal guidance.
- The IRS might be more inclined to settle disputes over regulation validity rather than risk losing in court.

Why Proactive Tax Planning Matters in 2024

With tax laws constantly changing, staying informed and planning ahead can make a significant difference in your financial outcomes. Whether it’s maximizing deductions, preparing for expiring provisions, or leveraging new opportunities like EV tax credits, proactive planning is the key to saving more.