Trump’s Tax Cuts: The Expiring Tax Cuts and Jobs Act

Update

Review a comparison of the Tax Cuts and Jobs Act and the One Big Beautiful Bill Act, signed into law on July 4, 2025, here.

Upcoming Tax Cliff

The 2025 tax cliff is a concern for real estate investors as well as tax professionals the closer 2025 gets to us.

But what IS the 2025 tax cliff?

The cliff is the expiration of the tax provisions provided by the 2017 Tax Cuts and Jobs Act (TCJA)

This tax cliff is viewed as a ‘Tax Armageddon’ of sorts because of the numerous tax provisions that taxpayers have gotten adjusted to over the past years.

However, many of these provisions could disappear if Congress and the Executive Branch of the US does not take any action on them.

Simplifying the Tax Code

These provisions were promised to ‘simplify’ the tax code so much you can mail your 1040 on a postcard (all tax professionals and real estate investors know THIS was not the truth).

In a few ways, there was simplification for a lot of individuals. And a lot of business ‘breaks’ were also given as well.

Trump has said he wants to make all of these items permanent in the tax code.

Harris has stated she would repeal these items if it were up to her.

But what is included in these tax provisions? And what do the expirations mean for real estate investors?

Business Provisions in the Tax Cuts and Jobs Act

100% Bonus Depreciation

While we had 100% Bonus Depreciation 2018-2022, the rate has been dropping 20% since 2023 (2023 80%, 2024 60%, 2025 40%).

‘Full expensing’ has been a major boon for real estate investors who use cost segregation studies and carve out a piece of their property and take large immediate deductions.

Bonus Depreciation is popular with both parties and clearly many investors.

The recent Tax Relief for Workers and Families Act (TRAWFA) would have restored bonus depreciation to 100% expensing for 2023 through 2025. However, that bill did not do well in the Senate for multiple reasons and did not pass.

This would be an expensive provision to make permanent; however, the likelihood of getting an extension to bonus depreciation is definitely on the table after November’s election cycle.

Qualified Opportunity Zones

This is a major provision that wasn’t capitalized as early, possibly due to misunderstanding.

Essentially, taxpayers have until 2025 to defer the realization of capital gains that allow taxpayers to invest in specialized zones called Opportunity Zones.

The zones are (supposed) to be in low-income areas that will boost investment across the states.

There are many specific requirements overall for qualifying, the largest factor that the only ‘qualifying’ investment would be capital gains.

The ‘qualifying investment’ allows tax-free appreciation IF the property is held for a ten year period.

Opportunity zones expire at the end of 2026, and that is when the deferral of capital gains would end.

This is another provision that seems to have popularity but one of the louder tax voices in Congress, Senator Ron Wyden, has had issues with the transparency of the program and its actual effect.

Qualified Business Income Deduction

QBID is another provision that is set to expire at the end of 2025.

Currently, business owners receive a 20% deduction of net business income.

There is additional complexity as income rises up, however, both Trump and the current Biden administration showed support for keeping this in place for families that make $450,000 or less.

Any real estate investors who own a business have been able to utilize this deduction (with rental properties there are certain safe harbors to hit) in their personal businesses or their income-producing properties.

Research & Development

This one has been the most controversial, as it is also the most supported provision that’s a part of the TCJA.

Originally, this was a provision that was never truly meant to continue. It was used to help make the TCJA revenue neutral, but has hurt small business owners so far.

In 2022, the capitalization requirement kicked in and has hurt many start-ups that need the deduction.

Oddly, the provision is very bipartisan, however, it has been unable to be passed yet.

This is a key, if not top priority, provision for many congressmen and was also included in the failed TRAWFA.

Here is to hoping it would be able to return and relive many start-ups to begin receiving their deductions again.

This has less of an effect on real estate investors but can affect start-ups in the software industry for real estate.

Interest Deductions

Interest deductions were also changed from 2017, and began a change to the calculation in 2025.

It essentially pulled in depreciation and amortization out of the equation to get to earnings and therefore introduced a higher cap on the deductibility of interest.

Most real estate investors think this does not apply to them but the ‘tax shelter’ rules of § 163(j) means that a a shelter is a ‘syndicate’, which then means that if 35% of losses are allocated to limited partners or limited entrepreneurs, then § 163(j) will apply.

Personal Tax Provisions in the Tax Cuts and Jobs Act

While there were multiple business taxes, many real estate investors were able to take advantage of deductions on the personal side as well

Standard Deduction

The TCJA doubled the standard deduction for both single and married taxpayers (going from $12,000 to $24,000 for MFJ, with inflation indexing)

This has truly simplified filing for many folks as many were able to itemize their deductions, but now they can claim the standard deduction and receive a larger deduction.

SALT Cap

Beginning in 2018, State and Local Tax deductions were capped at $10,000 for all taxpayers. This cap has caused a lot of high income earners to be forced to pay more in tax due to not being able to deduct a larger portion of their state taxes paid on the federal side. This is one of the changes that could provide some tax savings to taxpayers in the long run.

This is one of the items that could help Congress ‘pay for’ other reductions of taxes or credits in later legislation after November 2025.

Mortgage Interest Deduction

The Mortgage Interest Deduction limitation was reduced from $1,000,000 to $750,000 as well.

This meant interest that was related to a 1st or 2nd home would be capped earlier and would not provide as large of a deduction for high net-worth taxpayers.

This limitation does expire at the end of 2025.

Pease Limitation

The ‘pease’ limitation is a limitation on high-income earners who also itemize their deductions.

As a taxpayer’s income increased, so did the limit on their itemized deductions.

Essentially, it is a 3% limitation on itemized deductions and would overall reduce part of the itemized deductions on taxpayers over certain income thresholds.

Miscellaneous Itemized Deductions

There are ‘miscellaneous’ itemized deductions that were suspended as deductions for taxpayers and real estate investors such as unreimbursed employee expenses, theft and casualty losses, tax preparation fees, and many others. Those within a disaster area can still claim casualty losses under current law

Alternative Minimum Tax (AMT)

AMT is a ‘catch’ provision that prevented high-income earners from paying 0$ in income tax.

In the TCJA, many items were adjusted that have mostly decreased the number of taxpayers that have to deal with AMT.

However, should TCJA entirely expire in 2025, the 2017 rules of AMT would come back into play

Personal Exemptions

Personal Exemptions was another individual item that was suspended until 2025. Essentially, every dependent or spouse claimed on a return was able to claim an ‘exemption’ of $4,050 per person prior to the enactment of the TCJA. Again, this suspension ends at the end of 2025 allowing large families to have increased deductions.

There is a phaseout of 2% for every $2500 of income over $318,000 for married filing joint families.

Child Tax Credit

The child tax credit was doubled from $1000 to $2000 with the TCJA, and would be cut in half if we returned to 2017 thresholds.

Tax Rates

Tax Rates were cut for most taxpayers. The old brackets, if put in place, would add an additional 1 to 3% potentially, shifting from 10%, 12%, 22%, 24%, 32%, 35%, and 37% to 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%.

Estate Tax

Estate Tax is one of the more significant changes that could occur.

Currently, the estate tax exemption is $13.61 million, and if was allowed to expire, then it would be half.

What this means is that those who pass away and leave inheritances to their descendants would lose on $6.8 million of exemption if they hadn’t passed away a year earlier.

This is a cause for a lot of planning right now for investors to ‘lock in’ the current exemption before it totally decreases and disappears.

TCJA Conclusion

Overall, the TCJA provided tax savings to ‘most’ taxpayers and truly tried to provide additional deductions for businesses.

If the TCJA were to expire in its majority, there could be significant taxes raised on many taxpayers.

Kamala Harris has promised to not raise taxes on taxpayers who earn less than $400,000 but also has promised to get rid of the TCJA completely.

It would be interesting to see how this would be done by fully removing TCJA.

Trump has promised to make TCJA permanent. This would be incredibly difficult and incredibly expensive to allow all of these provisions to continue.

It will be interesting to see what the proposed legislation ends up becoming whether either party takes control of Congress or the presidency.

Stay updated as changes occur with our live presidential tax plan tracker.