🇺🇸 The 2017 Tax Cuts and Jobs Act: A Quick Recap Before 2026
The Tax Cuts and Jobs Act (TCJA), enacted in late 2017, was the largest overhaul of the U.S. tax code in decades. Signed into law by President Donald Trump, the TCJA introduced sweeping changes to both individual and corporate taxation. While it permanently reduced the corporate tax rate from 35% to 21%, most of the provisions affecting individual taxpayers were only temporary—and they’re scheduled to expire after December 31, 2025.
As a result, the year 2026 is shaping up to be a pivotal moment in tax policy. Unless Congress acts to extend or amend these provisions, millions of Americans will see notable shifts in how much they owe and how they file.
Understanding these changes now can help you prepare, strategize, and avoid unpleasant surprises in your tax bill later.
📉 What’s Scheduled to Expire in 2026?
Let’s break down the major provisions from the TCJA that are scheduled to sunset at the end of 2025:
🏠 Standard Deduction Will Be Cut Nearly in Half
One of the most impactful changes under TCJA was the nearly doubling of the standard deduction. For tax year 2025, the standard deduction is projected to be around:
- $14,600 for single filers
- $29,200 for married couples filing jointly
- $21,900 for heads of household
If the TCJA provisions expire, these amounts will revert to pre-2018 levels—approximately half as much, adjusted for inflation. This means fewer Americans will take the standard deduction and more may once again itemize deductions.
💵 Personal Exemptions Will Return
Prior to TCJA, taxpayers could claim a personal exemption for themselves and each dependent. In 2017, this amount was $4,050 per person. The TCJA suspended personal exemptions in favor of the higher standard deduction.
In 2026, these personal exemptions are expected to return, which could reduce taxable income for families—particularly those with multiple dependents.
🧾 State and Local Tax Deduction (SALT) Cap May Disappear
The TCJA imposed a $10,000 cap on state and local tax deductions (SALT), which disproportionately affected taxpayers in high-tax states like New York, California, and New Jersey.
Once the TCJA expires, the previous rules—which had no such cap—will come back into effect. This could be especially beneficial for homeowners and high earners in those states.
🧮 Child Tax Credit: Shrinking Benefits for Families
One of the most widely used provisions of the TCJA was the expanded Child Tax Credit. It increased the credit from $1,000 to $2,000 per qualifying child and raised the income limits at which the credit phased out, allowing more families to qualify.
When the TCJA sunsets:
- The credit will return to $1,000 per child
- The income phase-out threshold will drop, disqualifying many middle-class and upper-middle-class families
- The refundable portion (Additional Child Tax Credit) will be reduced, limiting its benefit to low-income households
This change alone could increase the tax liability for millions of families with children.
🧾 Estate Tax Exemption Will Drop Significantly
Under the TCJA, the federal estate and gift tax exemption more than doubled from $5.49 million in 2017 to over $13 million in 2023 (adjusted annually for inflation).
Starting in 2026, the exemption will return to pre-TCJA levels, which are expected to be around $6–7 million per individual, again adjusted for inflation.
This means high-net-worth individuals may need to reassess their estate planning strategies to minimize future tax burdens. Trust structures, gifting strategies, and charitable contributions could all come into sharper focus.
🧮 Marginal Tax Rates Will Increase Across the Board
The TCJA lowered most individual income tax rates:
| Filing Status | Pre-TCJA (2017) | TCJA (2018–2025) |
|---|---|---|
| Top Rate | 39.6% | 37% |
| Middle Brackets | 28% / 33% | 24% / 22% |
| Lowest Rate | 10% | 10% (unchanged) |
Once TCJA expires, these brackets will revert to their higher levels, meaning that most households will pay more unless Congress passes new legislation.
💸 Charitable Contributions Will Become More Relevant Again
During the TCJA era, the higher standard deduction meant that fewer Americans itemized deductions—including charitable contributions. This led to a decline in itemized giving and made it harder for many households to benefit from donations on their taxes.
Once the standard deduction drops and more taxpayers return to itemizing, donations will regain importance in reducing tax liability. In fact, many households may benefit from revisiting strategies to optimize contributions.
A related resource on how to maximize charitable giving is this guide on how to use charitable donations to lower your taxes, which explores donor-advised funds, timing strategies, and documentation best practices.
🧾 Business Owners: Section 199A Pass-Through Deduction Will Disappear
The TCJA introduced a significant 20% deduction for certain qualified business income (QBI) from pass-through entities—like LLCs, S-corporations, and sole proprietorships—under Section 199A. This was designed to offer some parity with the reduced corporate tax rate.
If TCJA expires, this deduction will vanish, potentially increasing the effective tax rate on small business owners by a significant margin.
Business owners should start analyzing the long-term impact now and consider restructuring options, incorporation strategies, or accelerating income and deductions before 2026.
🏠 Mortgage Interest Deduction Changes Will Reverse
Under the TCJA, taxpayers could only deduct interest on up to $750,000 of mortgage debt (down from $1 million). Additionally, the deduction for home equity loan interest was removed unless the funds were used to buy, build, or substantially improve the home.
When the law expires:
- The $1 million mortgage interest cap returns
- Deductibility of home equity loan interest for broader uses may be restored
These changes could affect new homeowners, those refinancing, or anyone considering home equity lines for large expenses.
💳 Other Itemized Deductions Returning
The TCJA eliminated or limited several miscellaneous itemized deductions. Once it expires, the following may return:
- Unreimbursed employee expenses
- Tax preparation fees
- Investment advisory fees
- Moving expenses for non-military (previously deductible under some conditions)
The reintroduction of these deductions will reward taxpayers who track and document their eligible expenses carefully throughout the year.
📌 Key Takeaway Table: Major Post‑TCJA Expirations
| Provision | 2025 Rule (TCJA) | 2026 Rule (Expected) |
|---|---|---|
| Standard Deduction | $29,200 (married) | ~$15,000 (married) |
| Personal Exemption | Eliminated | ~$4,500 per person (returns) |
| Child Tax Credit | $2,000 per child | $1,000 per child |
| SALT Deduction | Capped at $10,000 | Unlimited |
| Estate Tax Exemption | ~$13 million | ~$6–7 million |
| Tax Brackets | 10% to 37% | 10% to 39.6% |
| Section 199A (Pass-Through) | 20% deduction | Repealed |
| Mortgage Interest Deduction Cap | $750,000 loan limit | $1 million loan limit |
💡 Why You Should Start Planning Now
Although 2026 may feel far away, strategic planning today could save thousands later. Tax planning isn’t just about preparing documents each spring—it’s about looking ahead.
Whether you’re a salaried employee, small business owner, high-income earner, or retiree, understanding these post‑TCJA shifts will help you:
- Time income and deductions intelligently
- Adjust withholdings
- Restructure investments and estate plans
- Leverage deductions before they disappear
- Consult tax professionals proactively
Smart moves in 2024 and 2025 could be the difference between a big refund—or a surprise bill in 2026.
💰 New Tax Credits and Limitations Families Should Anticipate
As the TCJA expires in December 2025, several tax credits will revert or shrink, affecting millions of households:
🧑👧👦 Child and Dependent Care Credit
Under current TCJA rules, families can claim up to 35% of qualifying childcare expenses, capped at $3,000 per child or $6,000 total. In 2026, this will revert to pre-TCJA levels, meaning a smaller percentage, lower caps, and stricter AGI phase-outs.
This means:
- Lower undervalued credits for working parents
- A need to reevaluate day care expenses or alter filing status
- Family planning may incorporate tax timing to maximize benefits
💳 Saver’s Credit and Retirement Contributions
Existing TCJA-era rules have expanded access to the Saver’s Credit, offering match rates up to 50% of contributions for low- and moderate-income earners. Unless renewed, thresholds will tighten, lowering eligibility.
This can disproportionately impact:
- Early career individuals
- Households saving aggressively for retirement
Proper planning now—maximizing contributions before 2026—could lock in favorable credit rates before they fade.
🏡 Mortgage Interest and Itemized Deductions
While mortgage interest limits have been addressed in Part 1, there’s another shift:
- Home equity interest that was previously deductible (if used for improvement) may vanish entirely
- Miscellaneous itemized deductions, like investment fees or unreimbursed work expenses, will revert as well
These changes favor households using structured strategies like bunching deductions in high-income years. More on that in this helpful guide on how to use bunching to maximize tax deductions.
🏦 Planning for the Loss of SALT Cap
With the SALT cap potentially lifted in 2026, taxpayers in high-tax states can reconsider strategies:
💵 Timing Payments for Maximum Benefit
- State and local taxes paid in December 2025 may be deductible in 2026 returns
- Advance property or school tax payments could preserve deductibility
- Align your payment timing to tax years based on filing strategy
Be sure to work with a tax professional to avoid timing errors that result in multi-year misalignment.
📌 Itemization vs Standard Deduction
As deductions return, the decision to itemize becomes central:
- Track mortgage interest and SALT expenses carefully
- Compare itemization vs standard deduction each year
- Simple scenario: a homeowner in New York or NJ may find itemizing beneficial again.
Consistency in recordkeeping and expense tracking now will mean fewer surprises when reversion takes effect.
🏛️ Corporate and Business Tax Shifts Impacting Small Enterprises
Several small-business provisions set to expire will reshape calculations for entrepreneurs:
🧾 Section 199A QBI Deduction Disappears
As noted in Part 1, the 20% pass-through deduction expires post-TCJA, increasing tax liability for LLCs and S corporations. Business owners should consider:
- Accelerating income and expenses before 2026
- Evaluating entity structure—C‑corporation might become more attractive
- Consulting professionals on depreciation and asset purchase timing
These decisions have long-term financial implications.
🏢 Depreciation and Section 179 Adjustments
The TCJA expanded Section 179 limits—allowing businesses to deduct up to $1 million in qualifying equipment costs. Reversion to prior lower caps may force:
- Accelerated purchases in 2024–25
- Deferral planning for large capital investments
- Reassessment of tax strategy for major asset purchases
This could impact strategies for startups or firms investing in vehicles, computers, or equipment.
🌐 R&D and Business Credits
Certain temporary credits—like incentives for R&D or work opportunity credits—may be scaled back or sunset:
- R&D credits may be limited to non-refundable status
- New incentives for local hiring may shrink
Businesses should look closely at credit claims and ensure documentation is current and comprehensive.
📊 Preparing for Estate and Gift Tax Reversion
With the estate tax exemption expected to decline, older taxpayers and high-net-worth individuals must rethink planning:
🏛️ Gift and Trust Strategies
- Lifetime exemptions reverting from ~$13M to near $6–7M per individual
- Time gifts strategically—2024–2025 can be peak gifting windows
- Consider establishing trusts or using annual exclusion gifts to reduce future tax liability
📝 Professional Advice Is Key
Because state and federal estate laws interact, it’s important to:
- Keep trust documents updated
- Review beneficiary designations
- Stay aware of proposed legislative changes
Many estate plans rely on forward-thinking timelines—they’ll need revising before 2026.
🔁 Corporate Tax Rate Stability—and What It Means
Although personal tax provisions are set to expire, the corporate tax rate (21%) remains permanent under TCJA. This allows business owners to plan entity strategy with certainty, but only temporarily:
- If pass-through deductions disappear, some may convert to C corporations
- The permanent lower rate may still offer shelter with effective planning
- Timing income accrual and capital gains before shifts can preserve savings
📅 Timing Strategies to Maximize Credit and Deduction Use
Forward-thinking taxpayers can save significantly through proactive planning:
🕒 Implement Income and Expense Acceleration
- Defer income until after TCJA expiry if likely facing lower rates
- Accelerate deductible expenses into 2025 (year before reversion)
- Use prepayments or pre-investments strategically
🗓 Consider Multi-Year Planning Tools
- Tax professionals can model scenarios for 2025 vs 2026 or later
- Use tax projection tools to assess reforms’ impacts before filing
- Revisit withholdings or estimated tax strategies now to avoid surprises later
🧑💼 Advisory and Planning Services Surge Expected
As expiration nears, demand for tax professionals is expected to rise:
- Proactive multiyear consulting may grow in popularity
- CPA firms may launch dedicated “TCJA Sunset Planning” services
- Financial professionals may host webinars, workshops, and micro-coaching
Staying connected to your planning resources now ensures you’re ahead when policy shifts hit.
📋 Key Mid-Article Summary for Readers
- Family-focused provisions like Child Credit and Care Credit will shrink
- SALT limitations may lift, favoring itemizers again
- Business owners lose Section 199A deductions and face depreciation caps
- Estate and gift exemptions revert, prompting planning revisions
- Strategic timing of income and deductions is vital in 2024–2025
📌 What You Should Do Before 2026
- Review and document all charitable and SALT payments in 2025
- Max out eligible retirement contributions while credits are stronger
- Accelerate capital expenditure deductions via Section 179
- Engage your tax professional to model multiple scenarios
- Evaluate organizational structure (e.g., switch to C‑corp if more favorable)
- Begin estate planning updates: gifting, trusts, beneficiary alignment
🔍 Spotlight on Generation-Skipping Transfer (GST) Changes after TCJA Expiry
As we move toward 2026, estate planning will change dramatically, and one area to watch is the generation-skipping transfer (GST) tax. Under TCJA, the GST exemption increased along with the estate tax exemption. Once those sunset, the GST exemption drops from more than $13 million to around $6–7 million per person—effectively halving the threshold
Families using trusts to pass assets to grandchildren or future generations will need to rethink their strategies. Moves made before the expiration can lock in higher exemption limits. This is especially important for high-net-worth individuals building intergenerational wealth.
🧾 Transitioning Charitable Strategies and Prepayments
With itemized deduction thresholds tightening post-2025, charitably inclined taxpayers can accelerate planned giving into 2025:
- Donate appreciated assets before the sunset to lock in itemized deductions at high thresholds
- Use donor-advised funds or bunching to maximize deductions while itemizing
- Consider prepaying upcoming deductible expenses like SALT or mortgage interest for early-year filing benefit
These moves rely on solid tools and planning—see guidance on tax tools here for optimizing timing and receipts.
🏡 Planning for Shifting Saver’s and Residential Credits
Retirement and residential credit structures are expected to tighten post-TCJA:
- Saver’s Credit thresholds will shrink, lowering maximum benefits and qualifying income limits
- Mortgage interest deductibility may return to previous limits ($1M cap) — impact high-value home owners
Acting before 2026 allows eligible filers to benefit under current terms. For retirement savers, contributing and claiming credits sooner locks in best rates.
🏛 Impacts on Small Business Deductions and Entities
Business owners still need to navigate uncertainty:
📉 Section 199A Phase-Out
The 20% pass-through deduction expires in 2026. Business owners should evaluate:
- Accelerating income or expenses before 2026
- Exploring restructuring as C corporations if favorable
- Timing depreciation, Section 179 purchases now before deduction caps shrink
🔧 Depreciation and Business Credit Rollbacks
Reversion of TCJA means reduced limits on:
- Equipment and asset deduction via Section 179
- Loss carryovers and bonus depreciation rules
- R&D credits and other employer-based incentives
Businesses must model long-term capital expense strategy now to avoid future deduction loss.
📋 Estate Planning Moves: Structuring for Expiring Exemptions
Estate changes go beyond GST—gift and estate exemptions revert simultaneously:
- Lifetime gifting up to the 2025 exemption can shelter assets from 2026 limits
- Family trusts and annual exclusion gifting strategies should be reevaluated
- Update wills and beneficiary designations to align with changing exemption rules
Failing to adapt prior to 2026 raises exposure to estate taxation for estates exceeding lower thresholds.
🔁 Final Tax Timing Techniques: Income, Deductions, and Withholding
To ease the transition to new tax realities:
- Defer income beyond December 2025 when possible
- Accelerate eligible deductions into 2025 (charity, SALT, retirement contributions)
- Reassess W-4 withholding levels or estimated tax payments based on future liability projections
Prior planning prevents overpayment or underpayment scenarios when new models kick in.
🎯 Bullet List: Pre‑2026 Action Checklist
- Max out deductions and credits now (e.g., Saver’s Credit, dependent care)
- Prepay high-tax liabilities (property, state tax) before cap lift
- Make large charitable contributions or donations via donor-advised funds
- Complete capital purchases to utilize 2025 depreciation limits
- Engage estate planning: trusts, gifts, GST strategies with expiring thresholds
- Model income timing across 2025–2026 using tax projection tools
- Update legal documents (wills, beneficiary forms) in advance
- Monitor proposed legislation—extensions or alternative reforms may surface
- Use top tax planning tools for projections, see here: Best Online Tax Tools for U.S. Filers This Year
- Consult a tax professional before TCJA provisions expire
✅ Conclusion: Preparing Strategically for a Post‑TCJA Era
Unless lawmakers intervene, the TCJA expirations at the end of 2025 will reshape the U.S. tax landscape in 2026. Every major deduction, credit, and threshold—especially for families, retirees, estates, and small businesses—faces a reduction or expiry.
Taking strategic action now—accelerating income or deductions, revising estate plans, and modeling multiple scenarios—can save you thousands down the road. Thoughtful planning can cushion the impact and ensure you remain tax-efficient and compliant.
The upcoming changes aren’t just legislative—they’re financial inflection points. Now is the time to build your adaptive strategy and work with trusted advisors to stay ahead.
❓ Frequently Asked Questions
Q: Will Congress definitely let the individual income tax cuts expire in 2025?
As of mid‑2025, no extension has passed. While proposals exist to renew parts of TCJA, uncertainty remains. Planning under the assumption of expiry is the most conservative approach.
Q: How should retirees prepare for reduced exemption thresholds and credits?
Retirees should review itemization benefits, itemize in pre-expiry years, and revise beneficiary designations. Gift planning and trust structures may need updating to prevent unnecessary tax exposure.
Q: Does the corporate tax rate change in 2026?
No. The corporate rate remains permanently at 21%. However, individual deductions like Section 199A will expire—this may influence pass-through owners to reassess their entity structure.
Q: Can I still benefit from the Saver’s Credit after 2025?
Yes—but the credit amount and eligibility limits will shrink. Max credits of 50% will likely decrease. Contributing and claiming before 2026 offers maximum advantage.
This content is for informational and educational purposes only. It does not constitute investment advice or a recommendation of any kind.
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