Tax Cuts and Jobs Act Provisions Still on Track to Expire in 2025

When Congress passed the Tax Cuts and Jobs Act (TCJA) of 2017, the expiration date for some of the provisions seemed far off. Now, the date is imminent.

Problem is, it’s unclear if the provisions will end when originally planned on December 31, 2025 — if at all.

Let’s face it: No one likes to be overwhelmed by having to quickly input tons of updates, but by the same token, no one likes to make changes and then have to reverse course.

So on the one hand, if you prepare now for major updates to your payroll system, you’ll be ahead of the game. But if Congress decides to extend some of the provisions — or make them permanent — that’ll be wasted effort on your part.

Bottom line: Employers are in a tough spot.

The Congressional Research Service recently released a report on the TCJA for members and committees of Congress.

That report — Reference Table: Expiring Provisions in the “Tax Cuts and Jobs Act” — summarizes the provisions of the law that have a sunset date at the end of 2025.

Here are some of the highlights of the November 13, 2024, report:

Tax Brackets in Flux

The 2017 law called for changes to the tax brackets, and those changes took effect in TY 2018.

By way of background, the brackets are comprised of both federal income tax rates and income ranges.

First, the tax rates. The following chart compares the current income tax rates with the rates to which we’re set to return in 2026:

• 10% now, 10% anticipated
• 12% now, 15% anticipated
• 22% now, 25% anticipated
• 24% now, 28% anticipated
• 32% now, 33% anticipated
• 35% now, 35% anticipated, and
• 37% now, 39.6% anticipated.

Second, the income ranges. They’re expected to return to the pre-TCJA levels, too.

Both the tax rates and income ranges — like many other IRS-related measures — are annually adjusted for inflation.

What Will the Standard Deduction Be?

The standard deduction amounts — that individuals deduct from their adjusted gross income, unless they itemize — increased under the TCJA.

In fact, the amounts nearly doubled!

For example, in TY 2018, for single filers, the standard deduction would have been $6,500. But due to the TCJA, it was $12,000 for taxpayers with that filing status.

The provision is supposed to remain in place through TY 2025. Then it’ll end, barring future legislative action.

A Comeback for Personal Exemptions

When the IRS did its major overhaul of Form W-4 in 2020, one of the most visible differences to employees was that they no longer needed to enter any withholding allowances. That was even evident in the form’s name — it went from being called the Employee’s Withholding Allowance Certificate to the Employee’s Withholding Certificate.

Employers knew what was going on behind the scenes: Withholding allowances were tied to personal exemptions, and under the TCJA , the personal exemption amount was temporarily reduced to $0.

But with that TCJA provision coming to an end on December 31, 2025, the IRS will need to rework Form W-4 again. So, in the coming months, it’ll be important to keep tabs on this form for any developments.

A Green Light for Fringe Benefits

Prior to the passage of the TCJA, employers that offered employees reimbursements for moving expenses could exclude the amounts from employees’ income. But what once was a nontaxable fringe benefit suddenly became taxable under the 2017 law.

Indeed, as stated under the TCJA, this fringe benefit was only excludable for certain members of the Armed Forces.

As things stand now, in 2026, employers will once again be able to provide moving expense reimbursement without having to withhold income tax or employment taxes.

The story is similar for another fringe benefit: reimbursement for bicycle commuting expenses. Before the TCJA came along, up to $20 per month could be excluded from an employee’s income.

Then, employers had to hit the brakes on this fringe benefit. But in 2026, it’ll be “go time” again — or at least that’s the plan.

To Pay or Not to Pay for FMLA Leave?

Over the past few years, employers that have paid wages to employees on family and medical leave have been able to claim a federal tax credit.

That’s thanks to the TCJA, but the provision has an end date of December 31, 2025.

As you may recall, the credit amount is calculated based on a percentage of wages.

Say an employer pays 50% of normal wages to someone who’s taking time off under the Family and Medical Leave Act (FMLA). The tax credit would be 12.5% of wages.

The maximum credit an employer can claim is 25% of wages, and that’s if the employer is paying 100% of wages to the employee on FMLA leave.

Can you claim the credit if you pay less than 50% of wages? Nope.

Can you claim a credit of more than 25% of wages if you exceed the employee’s normal wage rate? Nope.

The list of conditions goes on: You must allow full-time employees to take at least two weeks of FMLA leave if you’re going to claim the tax credit. Note: That time can be prorated for part-time employees.

Whether FT or PT, paid FMLA leave must be separate from paid:

• vacation time
• personal leave, or
• sick leave.

And here’s another condition that’s becoming more of a sticking point: You can’t claim the federal tax credit for leave that’s required by state or local law — and more states and localities are requiring such leave.

The impact for you: While you’re busy tracking various changes that states have announced, you simultaneously have to consider the impact on federal laws.

Continue to keep yourself informed! HRMorning offers live and on-demand webinars, such as Trump’s Impact on HR: Get Ahead of New Regulations, Expirations, and Policy Shifts.