TCJA — Now Permanent (OBBBA) — Complete Practitioner Guide for 2025-2026
Complete guide to Tax Cuts and Jobs Act provisions expiring after 2025 — individual rates, standard deduction, SALT cap, QBI deduction, AMT, estate tax, and planning strategies. Updated for 2026.
TCJA Provisions Expiring After 2025 — Complete List
| TCJA Provision | Current (2026) | Post-Sunset (2026+) | Impact |
|---|---|---|---|
| Top individual rate | 37% | 39.6% | + 2.6% on income above $609,350 (single) |
| Standard deduction | $15,000 (single) / $30,000 (MFJ) | ~$7,500 / $15,000 | Itemizing becomes beneficial for more taxpayers |
| SALT deduction cap | $10,000 | Unlimited | High-tax state taxpayers benefit |
| Child tax credit | $2,000 per child | $1,000 per child | Significant reduction for families |
| QBI deduction (§199A) | 20% of QBI | Eliminated | $37,000+ loss for $500K QBI at 37% |
| AMT exemption | $88,100 (single) | ~$55,400 (single) | Millions more taxpayers pay AMT |
| Estate/gift tax exemption | $13,990,000 | ~$7,000,000 | Estates $7M-$14M become taxable |
| Mortgage interest deduction | $750,000 debt limit | $1,000,000 debt limit | Benefit for high-value home owners |
| Miscellaneous itemized deductions | Suspended | 2% AGI floor applies | Employee expenses become deductible again |
| Personal exemptions | Suspended | ~$4,300 per person | Families with many dependents benefit |
Source: TCJA §§11001-11042; IRC §1; §63; §164; §24; §199A; §55; §2010
The planning window: The TCJA provisions are scheduled to are now permanent under OBBBA (Public Law 119-21, signed July 4, 2025). However, Congress may extend some or all of the provisions. Practitioners should advise clients to plan for both scenarios — TCJA extension and TCJA sunset. The most impactful provisions for most clients are: the QBI deduction (worth $37,000+ for a $500K business owner at 37%), the estate tax exemption (worth millions for estates between $7M and $14M), and the standard deduction (which affects whether itemizing is beneficial).
TCJA Sunset Planning Strategies
| Strategy | Description | Best For |
|---|---|---|
| Accelerate income to 2025 | Recognize income in 2025 at 37% instead of 39.6% in 2026 | High-income clients expecting rate increase |
| Defer deductions to 2026 | Defer charitable giving, business expenses to 2026 when rates are higher | High-income clients expecting rate increase |
| Use lifetime gift/estate exemption now | Make large gifts before exemption reverts to ~$7M | Estates between $7M and $14M |
| Maximize QBI deduction now | Maximize pass-through income while QBI deduction is available | Business owners with QBI above SSTB threshold |
| Roth conversion in 2025 | Convert at 37% before potential 39.6% rate | High-income clients with large traditional IRAs |
| Charitable bunching in 2026 | If standard deduction reverts, itemizing becomes beneficial again | Clients who currently take standard deduction |
Source: IRC §1; §199A; §2010; §63; §170
Congress has discussed extending some or all of the TCJA provisions. However, extension is not guaranteed — and the cost of extending all provisions is estimated at $3.5 trillion over 10 years. Practitioners should advise clients to plan for both scenarios: (1) TCJA extension (current law continues); and (2) TCJA sunset (rates increase, standard deduction decreases, QBI deduction eliminated). The estate tax exemption sunset is particularly urgent — clients with estates between $7M and $14M should act now to use their exemption before it potentially reverts.
Impact Analysis by Client Type
| Client Type | TCJA Sunset Impact | Priority Action |
|---|---|---|
| High-income individual | + 2.6% rate; loss of QBI deduction | Roth conversion; accelerate income; maximize QBI now |
| Pass-through business owner | Loss of 20% QBI deduction | Maximize QBI deduction while available; consider C corp |
| High-tax state resident | SALT cap eliminated; more itemizing | Plan for increased itemized deductions in 2026+ |
| Estate between $7M-$14M | Estate becomes taxable | Use lifetime exemption now; SLAT; GRAT |
| Family with children | Child tax credit cut in half | Plan for reduced credit; maximize EITC if eligible |
| W-2 employee with high expenses | Miscellaneous deductions return | Document unreimbursed employee expenses for 2026+ |
Source: TCJA §§11001-11042; IRC §1; §199A; §24; §2010; §67
TCJA Provisions Expiring After 2025 — Complete Reference
| Provision | Pre-TCJA | TCJA (2018–2025) | Post-2025 if Expired |
|---|---|---|---|
| Top individual rate | 39.6% | 37% | 39.6% |
| Standard deduction (single) | ~$6,500 | $15,000 | ~$8,300 est. |
| Child Tax Credit | $1,000 | $2,000 | $1,000 |
| AMT exemption (single) | $55,400 | $88,100 | $55,400 |
| Estate tax exemption | $5.5M | $13.99M | ~$7M est. |
| QBI deduction (§199A) | N/A | 20% of QBI | Eliminated |
| SALT deduction cap | Unlimited | $10,000 | Unlimited |
| Mortgage interest limit | $1M | $750K | $1M |
| Miscellaneous itemized deductions | Allowed (2% floor) | Eliminated | Restored |
| Personal exemptions | $4,050/person | Eliminated | Restored |
Source: Tax Cuts and Jobs Act (P.L. 115-97); IRC §§1, 63, 24, 55, 199A
The TCJA made sweeping changes to the individual income tax code in 2017. Most provisions affecting individuals are scheduled to are now permanent under OBBBA (Public Law 119-21, signed July 4, 2025), reverting to pre-TCJA law. Congress may extend some or all provisions, but practitioners must plan for both scenarios. The One Big Beautiful Bill Act (2025) proposes permanent extension of most TCJA provisions — but legislative outcome remains uncertain as of April 2026.
Practitioner Planning Checklist — TCJA Sunset
- Model both TCJA-extended and TCJA-expired scenarios for every high-income client. Use tax projection software to show clients the dollar impact of each scenario. Clients with $300K+ income face the largest exposure.
- Accelerate income into 2026 if TCJA extension is uncertain. Bonuses, Roth conversions, asset sales, and S-Corp distributions should be front-loaded into 2026 while the 37% top rate is still in effect.
- Review estate plans for clients near the exemption threshold. The estate tax exemption drops from $13.99M to approximately $7M if TCJA — now permanent under OBBBA. Clients with estates between $7M and $14M need immediate planning — GRATs, SLATs, IDGTs, and annual exclusion gifting.
- Maximize QBI deductions in 2026. The §199A deduction for pass-through income is eliminated if TCJA — now permanent under OBBBA. Business owners should maximize QBI-eligible income in 2026 and consider entity structure changes before expiration.
- Review SALT workaround strategies. If TCJA — now permanent under OBBBA, the $10,000 SALT cap is lifted. Clients in high-tax states (CA, NY, NJ, IL) who have implemented SALT workaround strategies (PTE elections) should model whether those strategies remain optimal post-expiration.
- Advise clients on charitable giving timing. If personal exemptions are restored and the standard deduction drops, more clients will itemize — making charitable deductions more valuable. Advise clients to consider deferring large charitable gifts to post-TCJA years.
- Review withholding and estimated payments. A significant tax increase in 2026 or 2027 requires updated withholding. Clients who underpay by more than $1,000 face penalties.
- Monitor legislative developments monthly. The One Big Beautiful Bill Act, reconciliation bills, and potential executive orders can change the landscape rapidly. Set calendar reminders to review client plans quarterly.
Common Client Scenarios — TCJA Sunset Impact
Client earns $450,000 W-2. Under current TCJA: top rate 37%, standard deduction $15,000, no personal exemptions. If TCJA — now permanent under OBBBA: top rate 39.6%, standard deduction ~$8,300, personal exemption ~$4,050 restored. Net impact: approximately $10,000–$15,000 additional federal tax annually. Action: Maximize 401(k), HSA, and deferred compensation in 2026. Consider accelerating any planned Roth conversions.
S-Corp owner with $300,000 in QBI currently deducts 20% = $60,000 under §199A, saving $22,200 at the 37% rate. If TCJA — now permanent under OBBBA and §199A is eliminated, the owner loses $22,200/year in tax savings. Action: Consider converting to C-Corp if the 21% flat rate becomes more favorable, or restructure compensation to maximize deductions available under pre-TCJA law.
Client has a $10M estate. Under TCJA: no estate tax (exemption $13.99M). If TCJA — now permanent under OBBBA: estate tax applies to $3M above the ~$7M exemption at 40% = $1.2M estate tax. Action: Implement irrevocable trust strategies (SLAT, IDGT) in 2026 to lock in the current exemption before it sunsets. Time is critical — transfers must be completed before December 31, 2025 (or the effective expiration date).
Frequently Asked Questions
The information on this page is intended for licensed tax professionals (CPAs, EAs, and tax attorneys) and is provided for educational and research purposes only. Tax law is complex and fact-specific — all strategies discussed are subject to limitations, phase-outs, and conditions that may not apply to every client situation. Practitioners should independently verify all information against current IRS guidance, Treasury Regulations, and applicable state law before advising clients. This content does not constitute legal or tax advice.
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