CFP® Board In The News
The 2025 sunset of key provisions from the Tax Cuts and Jobs Act (TCJA) is set to reshape the tax landscape for 2026 and beyond. For CFP® professionals, this shift presents both challenges and opportunities — particularly in the realm of proactive planning, client education, and long‑term strategy.
What’s Changing in 2026
Unless Congress acts, many individual and small business tax provisions under the TCJA will revert to pre-2018 rules. Here’s what clients (and advisors) should prepare for:
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Standard deduction cuts in half: The standard deduction is projected to fall from approximately $29,200 (2025, married filing jointly) to around $14,000 in 2026 — nearly halving the amount. This makes itemizing more common again and reopens conversations around charitable giving, mortgage interest, and SALT deductions.
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Personal exemptions return: These were eliminated under the TCJA, but are expected to come back in 2026 — a relevant shift for families with dependents.
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Child Tax Credit drops: The CTC could fall from $2,000 back to $1,000 per qualifying child, with lower income phaseouts.
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Estate and gift tax exemption shrinks: The current federal estate tax exemption of $13.61 million (per individual in 2024) is expected to drop to around $6 million in 2026.
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Qualified Business Income (QBI) deduction disappears: The 20% QBI deduction for pass-through businesses (Section 199A) is scheduled to sunset — significantly impacting S corps, sole proprietorships, and partnerships.
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Higher individual rates: Top marginal rates are set to rise: from 37% to 39.6%, and other brackets will shift accordingly.
Strategic Implications for CFP® Professionals
These changes offer a timely reason to re‑engage clients, revisit assumptions, and adjust strategies before year‑end 2025. Key planning opportunities include:
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Income acceleration or deferral: Some clients may benefit from pulling income into 2025 or deferring it to 2026, depending on their long‑term bracket forecasts.
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Bunching deductions: With the standard deduction shrinking, 2026 may revive interest in donor‑advised funds, mortgage strategies, and advanced charitable planning.
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Estate planning reviews: The lower exemption could create urgency for gifting strategies, GRATs, and trust structures.
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Roth conversions: For high‑income clients, the 2025 window may be optimal for Roth conversions before tax rates increase.
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Entity structure review: Small business owners using pass‑throughs may need to reevaluate their structure if the QBI deduction vanishes.
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Life insurance discussions: In light of estate tax shifts, certain clients may see life insurance as a more valuable wealth transfer vehicle again.
Helping Clients Adjust Their Thinking
Many clients may not realize how much these expirations could affect their planning. The most valuable thing a CFP® professional can do now is initiate the conversation early and model scenarios under both current and post‑sunset rules.
This creates not only a differentiated planning experience but positions the CFP® as a forward‑thinking strategist.
Sources
- Tax Policy Center. “What Provisions of the Tax Cuts and Jobs Act Expire in 2025?” https://www.taxpolicycenter.org/briefing-book/what-provisions-tcja-expire-2025
- CFP Board. “TCJA Sunset: What CFP Professionals Need to Know for 2025 and Beyond.” https://www.cfp.net/news/2025/10/tcja-sunset-brief
- IRS. “Estimated 2025 and 2026 Standard Deduction and Tax Brackets.” https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2025
- Kiplinger. “The TCJA Sunset is Coming. Are You Ready?” https://www.kiplinger.com/taxes/602670/the-tcja-sunset-is-coming-are-you-ready
