As you've been saving for retirement with a 401(k), IRA or other tax-advantaged account over the last several years, you've likely been relying on existing widened tax brackets, tax rates, deductions and exemptions for the basis of your future planning.
But since 2018, these areas have all been affected by taxpayer-friendly adjustments made by the Tax Cuts and Jobs Act (TCJA). The tax relief created by the act, however, always was planned to be temporary, and it's on track to expire at the end of 2025.
That means that unless Congress takes action, significant tax law changes are on the horizon. Before they take effect is the best time to find out what the implications might be for your retirement income strategy and decide what you can do to preserve your money's tax efficiency.
What taxes did the TCJA change?
The TCJA ushered in sweeping federal tax code changes, and most of them are scheduled to expire on Dec. 31, 2025. Here are the key topic areas that taxpayers need to pay attention to:
Marginal income tax rates
The TCJA lowered marginal rates for most individual tax brackets. Those rates took effect in 2018 and will remain in place through 2025. After that, marginal rates are due to revert to their previous levels.
