Take advantage of TCJA’s lower tax rates before 2026. Max out the 24% bracket and shift assets to tax-free accounts now.
Tax Cuts and Jobs Act: 2025 Tax Strategy Before Rates Rise Again
The Tax Cuts and Jobs Act (TCJA), enacted in late 2017, reshaped the U.S. tax code by lowering marginal tax rates across the board. But what many forget is this: these lower tax rates are temporary—set to expire on January 1, 2026.
As we move into 2025, we’re nearing the end of this tax window, often referred to by advisors as “The Tax Sale of a Lifetime.” Now is the time to implement tax-saving strategies before rates revert to pre-2018 levels.
1. What Is the Tax Cuts and Jobs Act?
The TCJA adjusted tax brackets, nearly across all income levels, from 2018 through 2025. For married couples filing jointly, the law reduced most tax rates by approximately 3%, while expanding the size of certain brackets. However, the biggest winners are those in a very specific income range.
2. Who Benefited Most from TCJA?
Taxpayers with taxable income between $237,950 and $315,000 (pre-TCJA figures) saw their marginal tax rate drop from 33% to just 24%—a whopping 9% cut. This bracket restructuring offered a unique opportunity to pay less tax on the same income.
If your 2025 taxable income remains under $326,600 (adjusted for inflation), you still benefit from this low 24% rate before it disappears.
TCJA vs Pre-TCJA Tax Brackets by Filing Status
The following table compares pre-2018 tax brackets with the TCJA-adjusted brackets (still effective through 2025). This highlights how significant the rate reductions were across income levels.
| Filing Status | Income Bracket | Pre-TCJA Tax Rate | TCJA (2018–2025) Tax Rate | |
|---|---|---|---|---|
| From | To | (Before 2018) | (Current Law) | |
| Married Filing Jointly | $0 | $19,050 | 10% | 10% |
| $19,051 | $77,400 | 15% | 12% | |
| $77,401 | $156,150 | 25% | 22% | |
| $156,151 | $237,950 | 28% | 24% | |
| $237,951 | $315,000 | 33% | 24% | |
| $315,001 | $400,000 | 33% | 32% | |
| $400,001 | $600,000 | 35% | 35% | |
| Over $600,000 | 39.6% | 37% | ||
| Single | $0 | $9,525 | 10% | 10% |
| $9,526 | $38,700 | 15% | 12% | |
| $38,701 | $93,700 | 25% | 22% | |
| $93,701 | $195,450 | 28% | 24% | |
| $195,451 | $424,950 | 33% | 32% | |
| $424,951 | $426,700 | 35% | 35% | |
| Over $426,700 | 39.6% | 37% | ||
| Head of Household | $0 | $13,600 | 10% | 10% |
| $13,601 | $51,800 | 15% | 12% | |
| $51,801 | $133,850 | 25% | 22% | |
| $133,851 | $216,700 | 28% | 24% | |
| $216,701 | $424,950 | 33% | 32% | |
| $424,951 | $453,350 | 35% | 35% | |
| Over $453,350 | 39.6% | 37% | ||
| Married Filing Separately | $0 | $9,525 | 10% | 10% |
| $9,526 | $38,700 | 15% | 12% | |
| $38,701 | $78,075 | 25% | 22% | |
| $78,076 | $118,975 | 28% | 24% | |
| $118,976 | $157,500 | 33% | 24% | |
| $157,501 | $200,000 | 33% | 32% | |
| Over $300,000 | 39.6% | 37% | ||
3. What Happens After 2025?
Unless Congress extends TCJA, tax rates will revert to their pre-2018 levels starting in 2026:
- The 24% bracket may jump back to 28% or 33%
- Brackets will narrow, pushing income into higher rates faster
- The window for Roth conversions and tax-free shifting will close
4. Why This Matters for Your Retirement
If you expect to have retirement taxable income over ~$80,000, your future marginal tax rate could easily exceed 25% after 2026. That’s why 2025 offers an ideal opportunity to act now.
5. The Roth Conversion Opportunity
Roth conversions move funds from tax-deferred to tax-free accounts. You pay tax now at the lower rate and enjoy tax-free growth later—especially powerful while in the 24% bracket.
6. Who Should Be Most Proactive?
- Taxable income in $250,000–$325,000 range
- Future expected retirement income over $80,000
- Heirs who may be in higher brackets
7. Summary Table: TCJA Strategy Planning
| Strategy | Why It Matters in 2025 |
|---|---|
| Max out 24% bracket | Before it resets to 28% or higher in 2026 |
| Roth IRA conversions | Pay tax now at lower rate; future growth tax-free |
| Backdoor Roth IRA | Bypass income limits while rates are low |
| Roth 401(k) contributions | Long-term tax-free withdrawals vs traditional deferral |
| 529 Plan funding | Tax-free education savings in low-tax years |
Conclusion
The clock is ticking. The Tax Cuts and Jobs Act ushered in one of the most favorable tax environments in decades—but it’s set to expire soon.
2025 is your final full year to take action. Once these low tax rates disappear, your opportunities for Roth conversions and income shifting may shrink dramatically.
Make the most of today’s tax code:
- Move assets to tax-free accounts while rates are low
- Lock in the 24% bracket before it’s gone
- Strategically reduce your lifetime tax burden
Tax rates may rise, but your preparation doesn’t have to wait. Act now—because the best time to plan for higher taxes is while they’re still low.
