The next U.S. president could face a tax battle in 2025 — here's what it means for investors

As millions of Americans cast ballots on election day, advisors are bracing for major tax changes that could be on the horizon. 

Enacted by former President Donald Trump, the Tax Cuts and Jobs Act of 2017, or TCJA, brought sweeping changes for individuals, including lower tax brackets, higher standard deductions, a more generous child tax credit and a bigger estate and gift tax exemption, among others.

Many of the individual TCJA provisions will sunset after 2025 without action from Congress, which will be a key issue for the next president, policy experts say.  

The TCJA expirations "have been the universal theme for a good portion of this year" with clients, said certified financial planner Jim Guarino, managing director at Baker Newman Noyes in Woburn, Massachusetts.

However, planning can be complicated with several tax provisions scheduled to sunset, experts say.

Without TCJA extensions, more than 60% of taxpayers could see higher taxes in 2026, according to the Tax Foundation.

However, it's difficult to predict which provisions, if any, Congress could extend with uncertain control of the Senate and House. TCJA negotiations could also be tough amid growing concerns about the federal budget deficit, which topped $1.8 trillion for fiscal 2024.

Still, with possible tax rate increases in 2026, some investors are already accelerating income into 2024 and 2025, said Guarino, who is also a certified public accountant.

Without changes from Congress, the income tax brackets will revert to 10%, 15%, 25%, 28%, 33%, 35% and 39.6% after 2025.

Higher rates could be significant for retirees with sizable pretax retirement balances when they need to take required minimum distributions, or RMDs, he said. Since 2023, most retirees must take RMDs from pretax retirement accounts starting at age 73.

As some advisors execute tax strategies, others are running projections to prepare for looming TCJA changes.

"Every tax profile is different," said Mark Baran, managing director at financial services firm CBIZ's national tax office. "In some cases, there's not going to be much of a change."

Regardless of who wins the election, outside groups are already preparing to battle lawmakers over various TCJA provisions, which adds to the uncertainty, he said.

"Pulling the trigger to do something is a big decision," Baran said. "I think it's premature most of the time."

The exception could be estate planning, which typically involves a multiple-year strategy, he said.