We are approaching a time when numerus tax provisions will sunset. This article includes expiring tax provisions 2025 through 2034 that can affect your tax clients.
LIST OF EXPIRING FEDERAL TAX PROVISIONS
Reference: Joint Committee on Taxation (JCX-1-23)
https://www.jct.gov/publications/2023/jcx-1-23
SUNSET DATES – 2025-2034 |
||
|
Expiring Tax Provisions |
This column briefly explains what will happen if Congress takes no action to extend or modify the provisions & includes IRC Code Sec and Big Book of Taxes References. |
Sunset |
|
SUNSETTING AFTER 2025 |
||
|
Modification of Individual Tax Rates |
Sec 1(j). Top bracket would revert from 37% to 39.6%. (BB of Taxes 08.04.05). |
After 2025 |
|
Child Tax Credit |
Sec 24(h). Would revert to $1,000 from current $2,000 and other enhancements expire. (BB of Taxes 09.02.01). |
After 2025 |
|
Premium Assistance Credit Enhancements |
Sec. 36B(b)(3)(A)(iii) and (c)(1)(E). (BB of Taxes 12.02.00 search TCJA). |
After 2025 |
|
New Markets Credit |
Sec 45D(f)(1). Subject to carryover. No carryovers after 2030 |
After 2025 |
|
Employer Credit for Paid Family and Medical Leave |
Sec 45S(i). The credit will expire. (BB of Taxes 09.17.01). |
After 2025 |
|
Work Opportunity Credit |
Sec 51(c)(4). The credit will expire. (BB of Taxes 09.13.01). |
After 2025 |
|
Increase in exemption amount and phaseout threshold of individual AMT |
Sec 55. The exemption amount and phaseout threshold of individual AMT will revert to pre-TCJA amounts which are substantially lower and will trigger the AMT more frequently for lower income taxpayers. (BB of Taxes 08.00.03). |
After 2025 |
|
Standard Deductions |
Sec 63(c)(7). Will revert to pre-2018 amounts adjusted for inflation, roughly half the current amounts. (BB of Taxes 07.01.01). |
After 2025 |
|
Suspension of Tier 2 Miscellaneous Itemized Deductions. |
Sec 67(g). Since TCJA miscellaneous deductions subject to the 2% of AGI floor haven’t been deductible. Sunsetting of this rule would restore deductions for employee business expenses, tax prep fees, legal fees, etc. (BB of Taxes 07.09.04). |
After 2025 |
|
Suspension of limitation on itemized deductions |
Sec 68(f). The rule that limited itemized deductions to the lesser of 3% of AGI or 80% of those allowable for the year will return. (BB of Taxes 07.01.02). |
After 2025 |
|
Exclusion from gross income of discharge of indebtedness on principal residence |
Sec 108(a)(1)(E). The exclusion of acquisition debt COD income of up to $750,000 ($375,000 MFS) will no longer apply. (BB of Taxes 02.09.09). |
After 2025 |
|
Special rule for certain discharges of student loans |
Sec 108(f)(5). This provision applies to any loan provided expressly for post-secondary educational expenses, regardless of whether provided through the educational institution or directly to the borrower, if such loan was made, insured, or guaranteed by the U.S., DC, state, eligible education institution, etc. Will no longer apply after 2025. (BB of Taxes 06.02.04).
|
After 2025 |
|
Exclusion for certain employer payments of student loans |
Sec 127(c)(1)(B). Employer-Provided Educational Assistance funds will no longer be able to be used to make payments up to $5,250 towards an employee’s student loan debt. (BB of Taxes 06.02.04). |
After 2025 |
|
Suspension of exclusion for reimbursement of bicycle commuting |
Sec 132(f)(8). Bicycle commuting would be reinstated as a qualified monthly transportation fringe benefit of $20 adjusted for inflation. (BB of Taxes 02.01.04). |
After 2025 |
|
Suspension of exclusion for moving expense reimbursement |
Sec 132(g)(2). Would reinstate the exclusion for qualified moving expense reimbursement. (BB of Taxes 06.01.03). |
After 2025 |
|
Suspension of deduction for personal exemptions |
Sec 151(d)(5). Personal exemption deduction and phaseouts for higher income taxpayers would return in 2026. (BB of Taxes 01.03.01). |
After 2025 |
|
Limitation on deduction for qualified residence interest, suspension of deduction for home equity interest |
Sec 163(h)(3)(F). Would revert loan limit to $1 Million for a combination of 1st and 2nd homes and would allow a Sch A home equity interest deduction on $100,000 of home equity debt. (BB of Taxes 07.05.01). |
After 2025 |
|
Limitation on deduction for State, local, etc., taxes (SALT) |
Sec 164(b)(6). The $10,000 SALT limitation would be eliminated. (BB of Taxes 07.04.01). |
After 2025 |
|
Personal casualty losses limited to Federally declared disaster areas. |
Sec. 165(h)(5). Personal casualty losses would again be deductible. (BB of Taxes 07.11.01). |
After 2025 |
|
Modification of rules relating to computation of wagering losses |
Sec 165(d). For 2018 through 2025 the term “losses from wagering transactions” includes any deduction otherwise allowable incurred in carrying on any wagering transaction. This would no longer apply. (BB of Taxes 07.12.04). |
After 2025 |
|
Increase in percentage limitation on cash contributions to public charities |
Sec 70(b)(1)(G). The AGI limitation on cash charitable gifts will be reduced from 60% to 50%. (BB of Taxes 07.08.02). |
After 2025 |
|
Suspension of deduction for moving expenses except for military |
Sec 217(k). Would reinstate the moving deduction. (BB of Taxes 06.01.01). |
After 2025 |
|
Deductibility of employer de minimis meals and related eating facility, and meals for the convenience of the employer. |
Sec. 274(o)). w/o Congressional action as of 2026, employer isn’t allowed any deduction. (BB of Taxes 03.10.03). |
After 2025 |
|
Transfer of excess pension assets to retiree health and life insurance accounts |
Sec. 420(b)(4)). (Not included in the BB of Taxes) Does not require action on a tax return. |
After 2025
|
|
ABLE Account contribution eligibility for saver’s credit |
Sec 25B(d)(1)(D). Contributions based on earned income of disabled taxpayer would no longer qualify for the saver’s credit. (BB of Taxes 05.06.03). |
After 2025 |
|
ABLE Account - Rollovers from qualified tuition (Sec 529) programs permitted |
Sec 529(c)(3)(C)(i)(III). Rollovers to Sec 529 plans would no longer be allowed. (BB of Taxes 05.06.03). |
After 2025 |
|
ABLE Account - Increase in contributions limit |
Sec 529A(b)(2)(B). The contribution limit would revert to pre-TCJA amounts. (BB of Taxes 05.06.02). |
After 2025 |
|
Increase in estate and gift tax exemption |
Sec 2010(c)(3)(C)). Would revert from $13.61 Million (2024) to $5.49 Million adjusted for inflation. (BB of Taxes 11.05.03). |
After 2025 |
|
Qualified business income (QBI) deduction |
Sec 199A(i). Will end the 20% deduction for pass through businesses. (BB of Taxes 03.24.01). |
Tax Year beginning after Dec. 31, 2025. |
|
SUNSETTING AFTER 2026 |
||
|
Qualified Opportunity Fund investment to defer capital gain |
Sec 1400Z-2(a)(2)(B). Election to invest in QOF. (BB of Taxes 02.16.01). |
December 31, 2026, is expiration date for election to invest |
|
Saver’s Credit on elective deferrals and IRA contributions by certain individuals |
Sec 25B. Elective deferrals will no longer be allowed. The current version of the Saver’s Credit available to low- and mid-income individuals will be replaced for contributions made after 2026 by a Retirement Savers Matching Contribution credit where the government will contribute the credit directly to the retirement plan. (BB of Taxes 09.07.03). |
After 2026 |
|
Election of additional depreciation for certain plants bearing fruits and nuts |
Sec 168(k)(5)(A). Subject to a phasedown in 2023-2026 - Sec. 168(k)(6)(C). |
After 2026 |
|
SUNSETTING AFTER 2027 |
||
|
Expensing of certain costs of replanting citrus plants lost by reason of casualty |
Sec. 263A(d)(2)(C)(ii). Would no longer qualify for expensing. (BB of Taxes 07.11.01). |
After 2027 |
|
Bonus Depreciation |
Sec 168 - Phase-out 80% 2023, 60% 2024-25, 40% 2026, 20% 2027, 0% 2028. (BB of Taxes 03.04.05). |
After 2027 |
|
SUNSETTING AFTER 2028 |
||
|
Limitation on excess business losses of noncorporate taxpayers |
Sec 461(l). The limitation would no longer apply. (BB of Taxes 03.25.01). |
After 2028 |
|
SUNSETTING AFTER 2029 |
||
|
Specified health insurance policy fee |
Sec 4375(e). Fee would no longer apply - (Not included in the BB of Taxes) Does not require action on a tax return. |
After Sept. 30, 2029 |
|
Self-insured health plan fee |
Sec 4376(e). Fee would no longer apply - (Not included in the BB of Taxes) Does not require action on a tax return. |
After Sept. 30, 2029 |
|
SUNSETTING AFTER 2032 |
||
|
Energy efficient home modifications credit |
Sec 25C(h). The credit would no longer apply. (BB of Taxes 09.10.04). |
After 2032 |
|
Credit for previously owned clean vehicles |
Sec. 25E(f). The credit would no longer apply. (BB of Taxes 09.15.04). |
After 2032 |
|
Credit for alternative fuel vehicle refueling property |
Sec. 30C(i). The credit would no longer apply. (BB of Taxes 09.15.09). |
After 2032 |
|
Credit for clean vehicles |
Sec. 30D(h). The credit would no longer apply. (BB of Taxes 09.15.02). |
After 2032 |
|
Credit for construction of new energy efficient homes |
Sec. 45L(g). The credit would no longer apply. (BB of Taxes 09.12.01). |
After 2032 |
|
Credit for qualified commercial clean vehicles |
Sec. 45W(g). The credit would no longer apply. (BB of Taxes 09.15.07). |
After 2032 |
|
Credit for residential clean energy (includes Solar) |
Sec. 25D(h). Phase-out: 30% 2022-2032, 26% 2033, 22% 3034. (BB of Taxes 09.10.01). |
After 2034 |
|
RMD Starting Age of 73 |
Sec 401 - the age will increase to 75 beginning in 2033. (BB of Taxes 04.17.02). |
After 2032 |