Your Executive Briefing: The Key TCJA Provisions Set to Expire in 2025
As the CEO of your enterprise, your first move is always to secure a clear intelligence briefing on the operating environment. The Tax Cuts and Jobs Act (TCJA) of 2017 created a distinct financial landscape, but many of its most critical provisions are temporary, scheduled to sunset after December 31, 2025.
Understanding what is changing is the essential first step in turning this challenge into an opportunity. This is your definitive brief on the key expirations that will directly impact your bottom line.
- The 20% Qualified Business Income (QBI) Deduction: The centerpiece for independent professionals, Section 199A allows owners of pass-through businesses to deduct up to 20% of their qualified business income. On $200,000 of qualified income, this can mean a $40,000 deduction, translating into substantial tax savings. Its scheduled disappearance after the 2025 tax year is the single biggest risk to your future profitability and requires immediate strategic attention.
- The High-Earner Limitation (SSTB Rules): The QBI deduction includes a critical catch for many service-based professionals. If your work falls under a "Specified Service Trade or Business" (SSTB)—a category including consultants, creatives, and financial professionals—your access to the full deduction is limited by your income. Once your taxable income surpasses the annual threshold, the deduction phases out and is eventually eliminated. This limitation is precisely why the S-Corp strategy discussed later is so vital for high-earners.
- The Higher Standard Deduction: The TCJA nearly doubled the standard deduction, simplifying tax filing for millions but simultaneously devaluing many itemized deductions, like the home office deduction. Come 2026, the standard deduction is projected to be cut roughly in half, reverting to pre-TCJA levels (adjusted for inflation). This shift will make meticulous tracking and claiming of itemized deductions strategically critical once again.
- The SALT Deduction Cap: For professionals in high-tax states, the $10,000 cap on deducting State and Local Taxes (SALT) has been a significant financial constraint. This limitation, which applies to combined state and local income, sales, and property taxes, is also set to expire. Its removal could restore a valuable deduction for those who itemize, fundamentally changing the tax planning calculus.
- The Elimination of Business Entertainment Deductions: One of the clearest changes from the TCJA was the complete elimination of deductions for business entertainment expenses. Taking a client to a sporting event or a concert is zero percent deductible. This is distinct from business meals, which generally remain 50% deductible. Understanding this strict prohibition is crucial for maintaining compliance and avoiding costly audit mistakes.
Your 2-Year Windfall Strategy: Maximizing Advantage Before the Sunset
With a clear intelligence brief, your focus must shift from understanding the battlefield to executing the campaign. The next two years represent a critical window to secure a significant financial windfall before this unique tax landscape disappears. This is not about passive compliance; it is about decisive, strategic action.
- Re-evaluate Your Entity Structure (S-Corp vs. Sole Proprietor): For high-earning SSTB owners whose income eliminates the QBI deduction, the S-Corp election is the most powerful tool in your arsenal through 2025. The structure allows for an arbitrage play: you pay yourself a "reasonable salary"—which is subject to payroll taxes but is not QBI—and take the remaining profit as a distribution. This maneuver can lower your personal taxable income below the phase-out threshold, potentially re-qualifying you for the full 20% QBI deduction on your business profits. This requires careful analysis to ensure the tax savings outweigh the administrative costs, but the clock is ticking on this strategic opportunity.
- Master Strategic Expense & Income Timing: Control is a function of timing. The impending sunset gives you a compelling reason to manage your cash flow with precision to stay under the QBI income thresholds.
- Accelerate Expenses: If you need a new computer, professional software, or other significant business equipment, purchase it before year-end. Pre-paying for 2025's professional development courses or conference tickets in late 2024 can also shift expenses forward.
- Defer Income: Where contractually sound, consider timing invoices for late-year projects so that payment arrives in early January. This pushes the income into the next tax year, lowering the current year's QBI.
- Supercharge Your Retirement Accounts: The tax savings generated by the TCJA present a powerful opportunity to build long-term wealth. Instead of simply viewing the QBI deduction as extra cash, treat it as capital to be deployed. By funding pre-tax retirement accounts like a SEP-IRA or Solo 401(k), you execute a "double-dip" tax advantage. First, you claim the 20% QBI deduction. Second, you contribute the resulting tax savings to a retirement plan, which provides an additional deduction that lowers your overall taxable income. This transforms a temporary tax break into a permanent asset, fortifying your financial future long after these provisions have expired.
The Global Professional's Edge: Coordinating QBI with FEIE and FTC
This domestic strategy, however, is only half the picture for a global professional. Most advice on the TCJA is dangerously incomplete because it stops at the U.S. border. Your strategic advantage lies in understanding how these temporary provisions interact with the permanent fixtures of expat tax law.
- The QBI and FEIE Conflict: You cannot double-dip tax benefits. The law explicitly forbids claiming the QBI deduction on any income you have already excluded using the Foreign Earned Income Exclusion (FEIE). This forces a strategic choice. If your income is below the FEIE threshold (approx. $126,500 for 2024), the FEIE is often the simplest path. But if your income is significantly higher, forgoing the FEIE to preserve your ability to claim the 20% QBI deduction on the entire amount might result in a lower overall tax bill.
- Modeling QBI vs. The Foreign Tax Credit (FTC): For high-earners in countries with moderate to high income tax rates, the Foreign Tax Credit (FTC) is almost always the superior tool. Unlike the FEIE, claiming the FTC does not prevent you from also taking the QBI deduction. This allows you to stack benefits: the QBI deduction reduces your total U.S. taxable income, and then the FTC provides a dollar-for-dollar credit for taxes paid to a foreign government, often wiping out your final U.S. tax liability.
This simplified model illustrates a powerful truth: the combination of the FTC and the full QBI deduction can be a cornerstone of effective tax planning abroad through 2025.
- SALT Cap Irrelevance for FTC Filers: The $10,000 SALT deduction cap is a major issue for U.S.-based professionals. For you, as a global professional claiming the Foreign Tax Credit, this cap is a non-issue. You are claiming a credit for foreign income taxes, not a deduction for state and local taxes. This distinction frees you from a major headache that occupies your stateside peers.
The 2026 Resilience Plan: Bulletproofing Your Business for the Post-TCJA World
A true CEO's vision extends beyond the current landscape to anticipate and neutralize future risks. The expiration of key TCJA provisions is a predictable headwind that requires strategic preparation now. Your proactive planning will determine whether you face a financial shock or execute a seamless transition.
- Model Your "Reverted" Tax Liability: The first step in mitigating risk is to measure it. Your 2026 tax reality will likely involve a triple hit: the loss of the 20% QBI deduction, a reversion to higher marginal income tax rates, and a standard deduction nearly cut in half. Work with a tax professional this year to model your potential 2026 tax bill based on current income. Knowing this number allows you to adjust savings and estimated tax payments long before the bill comes due.
- Re-evaluate Your Business Structure: The S-Corp election was often a move made specifically to optimize outcomes under the TCJA. Without the QBI deduction, the calculus changes dramatically. The administrative costs of an S-Corp—running payroll, filing separate returns—may no longer be justified. Schedule a formal review of your entity structure for late 2025. For many, reverting to a simpler Sole Proprietorship or LLC will be the most efficient path forward.
- Revive Your Itemized Deduction Strategy: The TCJA's high standard deduction made itemizing irrelevant for many. That is set to reverse. With the standard deduction expected to be slashed, the value of meticulous record-keeping comes roaring back. Reinstate rigorous tracking of all potentially deductible expenses: dedicated accounting of home office expenses, precise mileage logs, and other miscellaneous deductions that will likely return.
- Adjust Your Pricing and Savings Strategy: The end of the QBI deduction represents a direct threat to your net income. Treat this as a fundamental business challenge, not just a compliance issue. Start planning now to protect your bottom line. This could involve a strategic adjustment to your service pricing, a disciplined increase in your savings rate through 2025, or a thorough re-evaluation of business expenses to trim inefficiencies.
From Anxiety to Action: Securing Your Financial Future
The end of these TCJA provisions is not a surprise event; it is a known, quantifiable shift in the operating environment. Your ability to act decisively now is what separates a reactive freelancer from a resilient global professional.
The goal is to shift from a mindset of simply filing taxes to one of architecting your financial outcomes. This requires a clear, three-phase approach:
- Intelligence: You now understand which provisions are sunsetting and how their expiration will impact your bottom line.
- Offense (2024-2025): You have a playbook to maximize your advantage under the current, more favorable law—leveraging entity structure, timing income and expenses, and supercharging retirement accounts.
- Defense (2026 & Beyond): You have a resilience plan to ensure the structural integrity of your business for the post-TCJA world by modeling future liabilities and adjusting your operational and financial strategies accordingly.
The expiration of the TCJA is not a future problem; it is a current strategic reality. By viewing it through this CEO lens—assessing the situation, executing a short-term windfall strategy, and building a long-term resilience plan—you transform a source of anxiety into a source of competitive advantage. You have the framework to not only navigate this change but to emerge from it more profitable and financially secure than ever before.
