How Trump’s ‘Big Beautiful Bill’ Shaped Your Last Five Tax Seasons—And Why It Might Expire Soon
Published: 6/27/2025
This information is current as of 6/27/2025. Tax laws change frequently. Verify updates with the IRS or FTB if reading this later.
Most Californians Are Unprepared for a Historic Tax Change
The Big Beautiful bill – It’s easy to assume tax rules change gradually. But a seismic shift is set to shake California’s taxpayers at the end of 2025—and almost no one is ready. Trump’s landmark Tax Cuts and Jobs Act (TCJA)—the “Big Beautiful Bill”—unlocked savings for business owners, real estate investors, and high-earning employees statewide. But with most provisions sunsetting after this year, the window to act is closing fast.
Here’s the catch: If you don’t plan now, you risk losing $5,000, $15,000, or more in deductions, higher audit odds, and fewer financial levers next season—all because the law quietly expires. Let’s break down exactly what’s vanishing for Californians, uncover hidden traps, and map out bold moves you can make while time remains.
Bottom Line: What Changes—and Why It Matters in 2025
Beginning January 1, 2026, most of the TCJA’s signature tax breaks disappear: the doubled standard deduction, 20% QBI for pass-through entities, $10K SALT cap, and bonus depreciation accelerators. If you’ve relied on bigger write-offs or creative strategies since 2018—prepare to pivot now. California taxpayers, especially business owners and real estate investors, have the most to lose if caught flat-footed.
Who Benefited Most? Five Years of TCJA Windfalls for Californians
Let’s get concrete. When the TCJA hit in 2018, it:
- Doubled the standard deduction ($12,000 to $24,000 for joint filers)
- Added a 20% Qualified Business Income (QBI) deduction for pass-throughs (LLCs, S Corps, partnerships)
- Slashed individual and business tax rates
- Limited state/local tax (SALT) deductions to $10,000—painful for Californians, but offset for many by lower rates
- Supercharged bonus depreciation—letting businesses write off 100% of many assets up front
Example Persona: Maya (LLC Owner, $250K/year)
– Before 2018: Maya’s effective federal tax rate hovered around 32%. She claimed itemized deductions (large state taxes, mortgage, charitable) and slow depreciation on new equipment.
– 2018-2025: Maya’s rate drops to 24%. She claims the 20% QBI deduction (saving $10,000+) and writes off $50,000 worth of new tech in year one.
– Net savings since TCJA: Over $60,000 across five years.
W-2 Employees/High Earners reaped the doubled standard deduction—more than $24,000 off the top for joint filers, though at the cost of SALT deduction phaseouts.
Real Estate Investors win with full bonus depreciation for qualifying improvements—accelerating deductions on big projects. For a mid-sized landlord, this might mean $30K+ in upfront deductions in a single year.
Does This Mean Everyone Won?
No. Big earners in high-tax states like California felt pain from the $10,000 SALT cap, but many found the lower tax rates and QBI deduction more than offset the loss—if they structured income strategically.
What’s Sunsetting? The Cost to California If You Don’t Plan Now
Most TCJA provisions vanish after December 31, 2025, unless Congress acts. Here’s what’s going off the ledge:
- Standard deduction halves: Back to ~$13,000 for joint filers, $6,500 for singles
- Personal exemptions return (small consolation, low value for most)
- QBI deduction vanishes: LLCs, S Corps, and real estate investors lose the 20% write-off
- Bonus depreciation drops from 100% to 0%: New business asset purchases get slow depreciation—no more massive upfront deductions
- SALT deduction limit could end: CA residents may claim higher state/local deductions again, but math favors few
- Estate exemption halves: Dropping from $13M+ per person to ~$7M
- Child tax credit shrinks, multiple other tweaks for credits and brackets
Persona Examples:
- Condo Investor (Alex, $90K in rental income): In 2025, writes off $25K in bonus depreciation; in 2026, forced to spread over decades. Immediate $6,500 tax hit.
- S Corp Professional (Dina, $350K in receipts): Claims $70K deduction annually from QBI; in 2026, bill increases by almost $14,000 overnight.
- Bay Area Tech Employee (Pat, $450K, joint filer): Loses $11,000 in standard deduction offset but regains full property tax write-off if itemizing—net change actually negative for many.
How Bad Is It for Californians?
Complex. For some, the end of the SALT cap may slightly soften the blow. But most lose more with the elimination of QBI and bonus depreciation than they gain from bigger SALT deductions—especially business owners and investors.
Red Flag Alert: Reluctance to Plan Guarantees Higher IRS Scrutiny
The IRS and FTB won’t warn you—tax law changes are your responsibility. If you don’t adjust income timing, business structure, or documentation for the new world, you risk misfiled forms, missed deductions, and red flags that attract audit letters.
According to IRS data, the jump in Schedule C and E mismatches and miscalculations in law change years almost doubles. California filers are especially vulnerable due to complex state-federal offset rules.
Trap: Assuming your 2025 return will look anything like 2024’s. It won’t. And “waiting to see what Congress does” only limits your options.
Will the IRS or FTB Notify Me of the TCJA Sunset?
No. You must proactively check IRS guidance or use a specialized tax advisor. Most CPAs won’t update midyear unless you press them.
Action Steps Before TCJA Sunsets—Seize These While You Can
Here’s how to lock in benefits before the sunset:
- Income Acceleration: If able, pull income into 2025 to take advantage of lower rates and/or QBI deduction. (E.g., real estate closing, bonus payouts, business invoicing)
- Asset Purchases: Place business property in service before December 31, 2025, to qualify for 100% bonus depreciation. Delaying means years to recover the write-off.
Example: Commercial equipment, computers, qualifying improvements - Roth Conversions: Convert retirement funds in 2025 when top rates are lower. Delay might mean a 6–8% hit after 2025.
- Review Entity Structure: Some S Corp or LLC setups will lose tax advantages post-2025. If your formation was tailored for QBI, consider whether a C Corp or sole prop model can deliver more after TCJA.
- Gift/Estate Planning: Lock in the elevated estate/gift exemption by making gifts or moving assets by 2025 if your net worth exceeds $8M.
💡 Pro Tip: Document all accelerated moves and major purchases with receipts and use a tax planning calendar. The IRS expects fully substantiated filings during law transitions.
What If I Wait for Congress to Act?
If Congress intervenes and extends key provisions, you’ll have flexibility. But all history suggests you should act as though TCJA sunsetting is a certainty—the last two major rewrites (2001, 2012) left many filers scrambling after retroactive fixes. The price of waiting: lost deductions, audit lottery risk, and low negotiating power on year-end moves.
FAQ: Common Taxpayer Questions About the TCJA Sunset
Can I Retroactively File for Expired Provisions?
No. Once TCJA sunsetting is triggered, you cannot go back and “claim” missed QBI deductions or bonus depreciation. You must file with the current year’s law. For more, see IRS TCJA Comparison.
Will California Conform to the Federal Law Changes?
Historically, California lags in conforming to major federal shifts. Already, CA has retained some old rules longer. For the 2026 season, anticipate federal changes to hit first, then state-level mismatches—meaning double-check both for each asset or entity!
What Happens if I’m Mid-Transaction?
Deduction eligibility depends on when property is placed in service (bonus depreciation) or when income is earned/booked (QBI). Timing beats intent—always verify the transaction closes in 2025 for current law treatment.
Myth Bust: “Waiting for Congress” Is NOT a Tax Strategy
Rumors swirl every time a tax sunset nears that lawmakers will “fix it in time.” History says otherwise: Congress often acts last-minute or retroactively, leaving high-earning Californians and business owners unable to optimize year-end decisions.
What to do: Don’t delay. Put your 2025 plan in writing, schedule check-ins with your tax strategist, and use your projected returns to model both scenarios: sunset and no-sunset.
Explore our Tax Planning services or use the KDA tax strategy session tool to run your numbers today.
“The IRS isn’t hiding these write-offs—you just weren’t taught how to find them.”
Book Your TCJA Sunset Readiness Session
If you’re unsure which TCJA breaks will hit your bottom line, don’t wait for 2026 sticker shock. Book a personalized consultation with our California tax strategy team and leave with a tailored plan for the sunsetting rules—before the opportunity disappears. Click here to book your TCJA readiness session now.
This information is current as of 6/27/2025. Tax laws change frequently. Verify updates with the IRS or FTB if reading this later.
3 Social-Media Ready Takeaways
- TCJA sunsetting means big tax benefits may vanish after 2025—plan your income and asset moves now, not later.
- Most California LLCs and real estate investors will lose thousands in write-offs if they ignore 2025’s approaching deadline.
- The IRS won’t notify you when the rules change—proactive tax planning is your best defense this year.
