(Not Yet Anyway.)

What the TCJA sunset means for your small business — in plain English, with a side of dread.

By Susan Wozena – High Rock Accounting  ·  7 min read

Imagine you’ve been renting an amazing apartment. Low rent, great location, the landlord never bothers you. Life is good. Then one day you get a letter that says: “Hey, just a heads up — your lease might expire at the end of the year. We might renew it, we might not. We’ll let you know… eventually.”

That’s where millions of American small business owners find themselves right now.

Back in 2017, Congress passed the Tax Cuts and Jobs Act — the TCJA. It was a sweeping overhaul of the tax code that handed a lot of businesses (and individuals) a significant tax break. Lower rates, bigger deductions, more flexibility. Good stuff.

The catch? A lot of those benefits were written to expire at the end of 2025. Congress is currently in the middle of debating what to do about it — extend everything, let it all expire, or land somewhere in the middle. As of right now, nobody has finalized a deal.

So, what does that mean for you, a real business owner with real money on the line? Let’s take a look.

First, What Actually Changed in 2017?

The TCJA included various changes. Here are a few that matter most to small business owners:

The 20% pass-through deduction. If you own an S-Corp, partnership, LLC, or sole proprietorship, this one probably made you smile when you first heard about it. It let eligible business owners deduct up to 20% of their qualified business income right off the top. That’s a big deal. And it’s currently scheduled to disappear.

Lower individual tax rates. Since most small business income flows through to your personal tax return, the decrease in individual rates also helped small business owners directly. Those lower rates are also on the chopping block.

Bigger standard deductions. The standard deduction roughly doubled under the TCJA. For many business owners, that meant simplifying their personal tax situation considerably. Also expiring.

The estate tax exemption. This one’s relevant if you’re thinking about passing your business on to family someday. The exemption more than doubled, protecting significantly more of your estate from federal taxes. You guessed it — expiring.

“Most small business owners I talk to have no idea this is coming. They’ve been filing taxes the same way for years and assume things will just… stay that way. They won’t.”

So, What Happens If Nothing Gets Done?

If Congress doesn’t act — and right now that is certainly possible — most of those benefits went away on January 1, 2026. That means:

That 20% pass-through deduction? Gone. Your taxable business income goes up overnight, even if your actual revenue didn’t go up.

Tax rates nudge back up across multiple brackets. Again, for pass-through businesses, that hits you personally.

The bigger standard deductions shrink back. More complexity, potentially more exposure.

For some business owners, we’re talking thousands of dollars in additional taxes annually. Possibly more than that for others.

Before anyone panics: Congress is working on an extension package. There’s a real chance many of these provisions will be extended. But there’s also a real chance they won’t, or they get extended in a modified form, or they get extended for some taxpayers and not others. We genuinely don’t know yet.

And waiting until Congress figures it out is not a tax strategy. It’s a stress response.

Is There Anything You Can Actually Do Right Now?

ACTION CHECKLIST

Five things worth doing before year-end

• Run a “what if” projection with your accountant — what does your tax bill look like under the current rules, and what does it look like if the TCJA expires? The gap between those two numbers is important to know.
• Think about timing of income and expenses. If rates are going up, there may be value in accelerating certain deductions into 2026 or pushing income into 2026 while rates are still lower. (Or the reverse — this is why you need an actual human looking at your actual numbers.)
• Review your retirement plan contributions. Retirement plans are one of the most powerful tax tools available to small business owners, and they work regardless of what Congress does. If you’re not maxing yours out, now is a great time to fix that.
• Check in on estate planning if it’s on your radar. The estate tax exemption changes are significant, and proper planning takes time. If passing your business to family is part of your long-term plan, don’t put this conversation off.

The Bigger Point Here

Tax law changes all the time. What doesn’t have to change is whether you’re caught off guard by it.

The business owners who end up in the best position aren’t necessarily the ones who pay the least in taxes in any given year — they’re the ones who plan ahead, make informed decisions, and aren’t scrambling in a panic every time Washington does something unexpected.

The TCJA situation is genuinely uncertain right now. But uncertainty is actually a great reason to plan, not a reason to wait. Once Congress makes a final decision, everyone will be scrambling to respond at the same time. If you’ve already done your homework, you’ll be ahead of the curve.

And if it all gets extended and you spent an hour with your accountant for nothing? Well, you probably learned something useful anyway.

“The business owners who end up ahead aren’t the ones who pay the least in any given year — they’re the ones who never get caught off guard.”

As always, tax law is complicated and your situation is specific to you. Nothing in this post is a substitute for actual advice from an actual accountant who knows your business. But if this post gets you thinking, that’s exactly the point.

Have questions about how the TCJA sunset could affect your business specifically? We’re here for it. Reach out and let’s talk through it before things get hectic.

Not sure how this affects your business?

Let’s run the numbers together before the deadline pressure hits. It’s a lot more fun that way.

Contact High Rock Accounting → www.highrock.co