Navigating Uncertainty in Tax Strategy Surrounding the Tax Cuts and Jobs Act Sunset

Throughout history, taxpayers have relied on tax strategies to reduce the proportion of income that is deemed taxable by the government. Today's tax environment is no exception, and with the changes surrounding the Tax Cuts and Jobs Act (TCJA) Sunset, taxpayers need to prepare their tax plans. In 2025, much of the current tax legislation for individual taxpayers will potentially revert to the pre-TCJA legislation. Preparing a strategy during this time period will be difficult because when the current legislation sunsets in 2025 many of the legislation changes will depend on which political party controls the presidency. This paper seeks to identify the best strategy that taxpayers can utilize to minimize their tax liability despite the uncertainty surrounding the 2025 deadline, by looking at historical strategies, pre-TCJA legislation strategies, and current strategies. By understanding these strategies, taxpayers can come closer to understanding their ideal strategy for the sunset. The research finds two tax plans can be created that are specific to the political party of the new president, Democrat or Republican. If taxpayers feel they know which party will win the election, some tax strategies can be implemented now. Otherwise, this research offers a third suggestion that is applicable, but not as tax efficient, regardless of which political party controls the presidency. However, this research cannot recommend a definitive best course of action until after the presidential election, as government elections will ultimately determine the legislation following the sunset.