Addicus Observations: What We Know and Anticipate as TCJA Sunsets Approach

The Legislative Evolution  

Tax legislation moves further into focus in 2025 as Congress navigates a path to address the many expiring provisions from the 2017 Tax Cuts and Jobs Act (TCJA). The TCJA, designed with a 10-year horizon, is approaching key expiration dates that will shape wealth management strategies in 2025 and beyond. Congress faces pivotal decisions this year—extend, modify, or allow provisions to lapse—creating uncertainty that requires proactive, strategic planning. 

Several provisions directly impacting entrepreneurial wealth creators and family estates are at the center of these discussions. These include business-related deductions, estate and gift tax exemptions, and limitations on state and local tax (SALT) deductions. In addition, evolving energy tax incentives offer new investment opportunities for those seeking tax-efficient portfolio diversification. 

Key Provisions Currently Set to Sunset 

As key provisions of the TCJA approach their expiration dates, entrepreneurs must prepare for significant tax implications. Whether through an extension, modifications, or entirely new legislation, these changes will influence wealth management strategies and long-term financial planning. Below is a snapshot of the most impactful provisions set to sunset and what they mean for sophisticated investors:  

Addicus Observations on Key Provisions 

Lawmakers will need to take decisive action in 2025 to address these critical provisions, ensuring clarity for both individuals and businesses, particularly those who leverage tax incentives for wealth preservation and strategic growth. The outcome of these legislative decisions will have significant implications for managing estates, investments, and tax liabilities in the years ahead. The following are our insights into how this legislation is likely to unfold. 

Bonus Depreciation, §168(k). Bonus depreciation has remained at or above 50% for more than two decades until 2025 when it dropped to 40% under current law. The business community has come to expect at least a 50% allowance but would like to see this provision made permanent at one hundred percent (100%)—a move last seen under President Reagan in 1986. 

Qualified Business Income Deduction, §199(a). Absent new legislation, the QBI deduction is set to expire at the 10-year window in 2028. Given its importance to small business owners, there is strong desire for an extension or permanence in a 2025 tax bill. 

Additional Key Tax Provisions: 

Timing of Legislative Changes  

President Trump has suggested passing a tax bill by May of 2025. However, history suggests that tax bills are typically passed later in the year. While the House favors a single bill approach, the Senate is considering breaking it into multiple pieces. There appears to be an effort to fast-track tax legislation in the first half of 2025, but experience suggests that final passage may not occur until the latter half of the year. 

Next Steps 

The Committee on Ways and Means of the U.S. House of Representatives is expected to begin drafting key tax legislation in early March, with provisions likely to include 100% bonus depreciation expensing, extensions of the Qualified Business Income (QBI) deduction, and enhanced research and development expensing. 

The House of Representatives allocated $4.5 trillion toward tax measures—while a substantial figure, it still falls short of what would be required to fully extend the Tax Cuts and Jobs Act (TCJA). As a result, lawmakers will need to carefully balance the current bill with the broader budget reconciliation process taking place with the Senate. 

The House aims to pass the legislation by Memorial Day, May 26, 2025, though ultimate timing will be shaped by the Senate's pace and priorities. Our conversations with congressional leaders remain active as this legislation continues to evolve. 
 

The Time for Strategic Planning is Now  

These changes will affect every taxpayer, particularly small business owners. Given the uncertainty ahead, tax planning remains critical. Addicus is actively monitoring legislative developments and how they impact entrepreneurial wealth creators. 

We remain highly confident in the performance of our products regardless of the tax incentive changes that unfold—and we are well-equipped to capitalize on favorable market conditions to deliver long-term value to our investors. 

For a deeper discussion on how these changes may affect your financial strategy, reach out to us to schedule a conversation. 

About the Authors 

Stephen Miles, Drew Adams and Matt Cotter bring extensive experience in tax policy, business advisory, private equity investments, and wealth planning. Their expertise helps entrepreneurs and investors navigate complex tax regulations and make informed decisions about strategic growth and investment opportunities.