Trump's tax cuts could expire after 2025. Here's how top advisors are preparing

It is unclear which TCJA provisions, if any, could be extended by Congress, especially with uncertain control of the Senate, House, and White House.

Meanwhile, some financial advisors have begun tax planning for clients who may be affected. Here are some of their key strategies.

Currently, there are significantly higher estate and gift tax exemptions under the TCJA, allowing tax-free transfers from wealthier Americans to the next generation.

In 2024, the lifetime estate and gift tax exemption is $13.61 million for individuals or $27.22 million for married couples. Next year, if Congress doesn't extend the provision, the limit will adjust for inflation before dropping by about half after 2025.

Transfers above this threshold may be subject to a maximum tax rate of 40%.

“It's really been a big focus for us,” said certified financial planner Peter Trafagen Jr., managing director of Oradell, New Jersey-based Trafagen Financial Group, which is ranked No. 9 on CNBC's 2024 FA 100 list.

Estate planning strategies allow exemptions to remove assets from the estate during life. However, strategies vary by family depending on their wealth level, goals, life expectancy and other factors.

Plans can involve financing trusts, gifts to beneficiaries, direct payments to educational institutions or medical providers, a 529 college savings plan and other strategies, said Shea Abernethy, an investment advisory representative based in Winston-Salem, North Carolina.

“Once it leaves your estate, it doesn't earn interest or compound,” said Abernethy, who is chief compliance officer at Salem Investment Counselors, which ranked No. 8 on the FA 100 list.

Some advisers are planning for higher federal income tax brackets after 2025.

Without changes by Congress, the brackets will revert to 2017 levels, shifting to 10%, 15%, 25%, 28%, 33%, 35% and 39.6%.

“We're now looking at strategies to accelerate income in the lower bracket,” said Samantha Pahlow, chair of wealth management at Ferguson Wellman Capital Management in Portland, Oregon. The firm is ranked number 10 in the FA 100 list.

For example, that could include converting personal retirement accounts to Roths or recognizing business income sooner, he said.

Pass-through businesses, such as sole proprietors, partnerships or S corporations, may also seek to accelerate income for the 20% qualified business income deduction, which may sunset after 2025, Trafegen said.

At tax time, filers claim the standard deduction or their total itemized deductions, whichever is higher. After 2025, they are more likely to itemize, if the standard deduction is cut in half.

For 2024, the standard deduction is $14,600 for single taxpayers and $29,200 for married couples filing jointly. That means most filers won't claim itemized tax breaks like deductions for charitable gifts, medical expenses and state and local taxes, experts say.

But with a lower standard deduction set for 2026, you can consider “deduction deferrals,” such as charitable donations, Pahlow said.