Significant changes to tax laws can ripple through every corner of the economy, impacting how individuals and businesses manage their finances and make decisions. In years marked by tax reform, careful income tax planning becomes a vital tool to stay ahead. And 2025 may be one of the most important years in almost a decade to get proactive about your taxes.
That’s because several major provisions from the 2017 Tax Cuts and Jobs Act are set to expire after 2025, and lawmakers are already debating whether to extend, modify, or overhaul them. The choices made in Washington over the next few months could significantly affect your income, deductions, estate planning, and overall tax burden for years to come.
With the new tax bill coming to a head, planning ahead in 2025 could mean the difference between minimizing your tax liability, or being caught off guard when you file your 2025 income tax returns.
1. New Rules = New Opportunities
Tax law changes often bring new deductions, credits, or tax brackets—but they may also eliminate some tax benefits or impose new limits. Without proper planning, you might:
- Miss out on valuable deductions or credits
- Get pushed into a higher tax bracket
- Lose eligibility for benefits you previously counted on
For example, Congress is currently considering making bonus depreciation 100% again (and also permanent going forward).
2. Timing is Everything
In tax reform years, you might benefit by accelerating or delaying certain actions. With quality income tax planning, you can:
- Accelerate income or deductions before unfavorable changes take effect
- Defer income to take advantage of lower future rates (or vice versa)
- Strategically time the sale of investments or purchases of assets
The timing of certain decisions is a critical factor in income tax planning that when evaluated appropriately, can reduce your overall tax burden.
3. Business Owners Face Bigger Stakes
Businesses often see the biggest impact from tax law changes. New rules can affect how profits are taxed, what expenses are deductible, and how much owners can contribute to retirement plans. A tax planning strategy might include:
- Deciding if you should accelerate or defer income based on your projected tax rates
- Whether to invest in capital assets this year or next year
- Changing your compensation structure
With rule changes on the horizon, 2025 could be a key year to evaluate and restructure your business tax strategy.
4. Avoid Surprises at Filing Time
One of the worst outcomes is discovering you owe much more than expected, or didn’t capitalize on an opportunity. Tax planning helps you:
- Accurately estimate your income tax bill
- Provide you with tax efficient strategies to implement
- Align your income tax strategy with your overall strategic objectives
Strategic income tax planning in 2025 will position you to adapt quickly and make informed decisions as tax laws evolve.
5. Tax Reform Often Creates Uncertainty
Even after a new law is passed, details may still be unclear. IRS guidance, state-level changes, or court rulings can follow months – and sometimes years – later. A tax professional can guide you through changing rules, helping you stay compliant and identify potential tax-saving opportunities.
2025 is shaping up to be a pivotal year for tax policy. Whether you’re an individual or a business owner, taking the time to plan could result in significant tax savings—and help you avoid costly mistakes.
The earlier you start, the more flexibility and opportunity you’ll have.
When tax laws change, your tax strategy should too. And with major changes likely on the horizon, there may be no better time to start planning than now.