Could These Be the Final Years for Some Major Tax Breaks?

Nearly every taxpayer in the United States relies on some tax “breaks” that are written in the IRS code as a means of reducing taxpayers' financial burdens.

Over time, it is not uncommon for certain tax breaks to be phased out in favor of different terms or new deductions/credits. However, 2025 is turning out to be rather unique in the sense that we are seeing several major tax breaks in jeopardy for the coming tax years. And because these are popular tax breaks that are relied upon by so many taxpayers, it's important for you to be aware and plan accordingly.

Why Are These Tax Breaks in Danger?

When President Trump took office earlier in 2025, his administration began working on a tax bill to extend certain benefits that were covered under the Tax Cuts and Jobs Act (TCJA). What many people don't realize, however, is that keeping these provisions from expiring as they were meant to could easily add up to trillions of additional dollars of debt. As a result, the Trump administration has been looking for ways to offset the costs of extending TCJA provisions — and one of the possibilities is phasing out some other tax breaks that have been available in the past.

Popular Tax Breaks Under Fire

So, which tax breaks are in danger of being cut under the current administration? Only time will tell, but here are some of the most notable tax breaks that could be cut in the coming years based on current information and speculation.

Home Mortgage Interest Write-offs

Perhaps the most significant tax break that could be on the chopping block is the home mortgage interest write-off, which allowed taxpayers who itemize their deductions on Form 1040 to deduct up to $1 million of mortgage interest off their taxable income prior to 2018. Following the Tax Cuts and Jobs Act, this limit was reduced to $750,000. If the provision is extended past 2025, this will result in the $750,000 deduction limit being maintained or possibly even reduced to $500,000. Otherwise, the limit will once again increase to $1 million.

Child and Dependent Care Credits

Many families rely on dependent tax credits, such as the child and dependent care credit, to offset some of the costs related to daycare and similar expenses. However, there are rumors floating around that this credit could be eliminated for those filing head-of-household in the coming years. Instead, taxpayers would need to change their filing status to single, which could mean a lower standard deduction.

Likewise, it is possible that the Trump administration will require parents/guardians claiming this credit to provide proof of Social Security Numbers in the coming years — a requirement that is currently only in place for the dependent children.

Education Credits

For students who rely on the Lifetime Learning Credit and/or American Opportunity Credit to help them offset the costs of school, it is important to note that these credits may be eliminated in the coming years. There has also been some talk about taxing scholarship funds and fellowship grants for college students, but it is not yet known if any formal changes will be made.

What This Means for Taxpayers Like You

These are just a few of the major tax credits that could see significant changes in the years ahead, depending on what the current administration decides to do moving forward. Ultimately, if these changes were to take place, it is most likely that the hard-working taxpayer will be affected the most.

Those claiming dependents for a child/family tax credit, those relying on education credits to stay in school and those who count on mortgage interest deductions to minimize their tax burdens could all face significant obstacles if these changes are made. For this reason, it's important to keep a close eye on any updates as they arise.

Plan Ahead to Protect Your Finances

Taxpayers who may be affected by these potential changes are also encouraged to schedule a consultation with a trusted tax professional. This is the best way to learn more about how specific changes to the tax code could affect you down the road, as well as some proactive steps you could take now to plan ahead and protect your hard-earned money as much as possible.

To learn more about LGT and how we can serve you, contact us here.