Corporate & Securities Blog

The Looming Tax ‘Armageddon’

“Yeah, one more thing, um … none of them wanna pay taxes again. Ever.”

— Harry Stamper (Bruce Willis), “Armageddon” (1998)

With a flurry of changes to tax laws starting with the Tax Cuts and Jobs Act of 2017 (TCJA) and continuing through the early COVID-19 years, the pace and scope was dizzying to business owners and their tax and deal advisers. Now, after a quiet few years, a wave of new potential changes looms in the next 18 to 24 months. Major provisions of the TCJA are scheduled to sunset by their own terms at the end of 2025. The changes would be so comprehensive that some commentators are referring to 2025 as tax “Armageddon.”

TCJA provisions of note for businesses and their owners that are scheduled to expire include:

  • The deduction for pass-through business income (199A deduction).
  • The reduction of marginal income tax rates (including the reduction of the top rate from 39.6 percent to 37 percent).
  • The $10,000 cap on deductions from state and local taxes (SALT cap).
  • The elimination of overall limitations on the amount of itemized deductions an individual may take (Pease limitations).
  • Certain income deductions for domestic C corporations related to the TCJA’s new global intangible low-taxed income (GILTI) regime (the deduction will be reduced from 50 percent to 37.5 percent starting in 2026) and foreign-derived intangible income (FDII) regime (the deduction will be reduced from 37.5 percent to 21.875 percent starting in 2026).
  • The doubling of the estate tax exemption.


The TCJA required research and development expenses beginning in 2022 to be amortized over time rather than immediately deducted. We are monitoring that provision, along with certain bonus depreciation provisions of the TCJA that are subjects of legislation currently pending in Congress.

Other related items of note from the TCJA include:

  • The TCJA’s new limitation on excess business losses is scheduled to sunset in 2028 and might be a part of a future tax package involving TCJA provisions.
  • The TCJA’s imposition of a 21 percent corporate tax rate is not scheduled to sunset.
  • Tax advantages with respect to qualified opportunity zones are scheduled to sunset for new investments made after 2026.


In parallel, the Internal Revenue Service and U.S. Department of the Treasury are currently considering offering guidance to better define the contours of what constitutes a limited partner for self-employment tax purposes, particularly in light of the Soroban Capital Partners v. Commissioner decision from November 2023. In Soroban, the U.S. Tax Court ruled that limited partners in state law limited partnerships could be subject to self-employment taxes. It is yet to be seen whether any changes to the self-employment tax regime will be part of a tax package that will potentially extend the otherwise expiring TCJA provisions.

The upcoming presidential and congressional elections this fall will significantly impact the extent to which any of the expiring TCJA provisions are extended and/or modified. We will be monitoring closely and are hopeful that watching the legislative process unfold will not be like watching a disaster movie. Stay tuned.

Meet the Author

Dean Krishna

Dean V. Krishna concentrates his practice on international and domestic tax and business matters. He advises on matters including mergers and acquisitions, private fund agreements, investments and structuring, commercial securities offerings, business restructurings, and general domestic and cross-border tax planning. Tax planning is good business planning, and over the course of his career, Dean has been able to build on his background as a corporate attorney to layer in practical, solution-oriented tax advice.

dkrishna@stradley.com

215.564.8707

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