As 2025 comes to a close, it is worth taking stock of the major tax and legal developments that shaped the year. From legislative drama over the TCJA extension to significant court decisions and IRS enforcement trends, 2025 was a year of consequential change for business owners, estate planners, and tax practitioners. This post provides a comprehensive review of the developments that matter most heading into 2026.
Legislative Developments
The dominant legislative story of 2025 was the reconciliation process and the fate of the TCJA provisions. The House passed its version of the tax package, and the Senate conducted its own negotiations with significant modifications. Whether the final legislation was signed into law or the process stalled, the legislative journey consumed enormous attention and planning energy throughout the year. Business owners who positioned themselves to act quickly—whether the TCJA was extended or allowed to sunset—were best served by the outcome.[1]
Beyond the TCJA, other legislative developments of note included the resolution of the Corporate Transparency Act litigation, potential modifications to the retirement plan rules under SECURE 2.0, and any state-level tax legislation affecting Mississippi business owners.
IRS Enforcement Trends
The IRS continued its enforcement focus on large partnerships, high-income individuals, and digital asset transactions during 2025. The hiring of additional enforcement personnel funded by the Inflation Reduction Act began to produce results, with the IRS announcing increased examination rates for partnerships with assets exceeding $10 million and for individual returns reporting income above $1 million. The IRS also expanded its use of artificial intelligence to identify audit targets and detect non-compliance patterns.[2]
Significant Court Decisions
The courts issued several noteworthy decisions during 2025. The Fifth Circuit—which covers Mississippi—continued to weigh in on conservation easement cases, partnership tax issues, and penalty cases. The Tax Court addressed hobby loss challenges, real estate professional status disputes, and reasonable compensation cases. Any Supreme Court tax decisions during the year also warrant attention for their precedential impact.[3]
Estate Planning Developments
The estate planning landscape was dominated by the exemption sunset discussion. Throughout 2025, estate planners and their clients executed an unprecedented volume of gifting strategies—SLATs, IDGTs, and other advanced planning vehicles—to lock in the enhanced exemption before any potential reduction. The IRS finalized the anti-clawback regulations, providing certainty that gifts made under the higher exemption would be protected.[4]
Looking Ahead to 2026
The tax and legal landscape for 2026 is defined by whatever emerged from the 2025 legislative process. Business owners should begin the new year with a comprehensive review of their tax planning, entity structure, estate plans, and compliance obligations in light of the current law. The firms that adapt quickly to the new environment will be best positioned for success. As always, working with experienced tax and legal counsel is essential to navigating the evolving landscape.[5]