What is the Tax Cuts and Jobs Act (TCJA)?

The Tax Cuts and Jobs Act (TCJA) is the 2017 law that produced the structure of the current US federal tax code: today’s individual rate schedule (10% to 37%), the enlarged standard deduction, the cap on state and local tax (SALT) deductions, and the 21% corporate rate all come from it.

Most of its individual provisions were written to expire after December 31, 2025, which created a scheduled cliff that dominated tax planning for years. That cliff did not arrive. The One Big Beautiful Bill Act, enacted in July 2025, made the large majority of those provisions permanent, so the TCJA framework now describes ongoing law rather than a temporary arrangement.

What the TCJA Changed

For individuals, effective in 2018:

• Seven brackets at 10%, 12%, 22%, 24%, 32%, 35%, and 37%, replacing the prior 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%
• The standard deduction nearly doubled, and personal exemptions eliminated
• The SALT deduction capped at $10,000
• Mortgage interest limited to interest on $750,000 of acquisition debt for new loans
• Miscellaneous itemized deductions subject to the 2% floor suspended
• The alternative minimum tax (AMT) exemption and its phase-out thresholds raised sharply, removing most households from it
• The child tax credit doubled to $2,000
• The estate and gift tax exemption doubled
• A new 20% deduction for qualified business income from pass-through entities

For businesses, the corporate rate dropped from a graduated schedule topping out at 35% to a flat 21%. Unlike the individual changes, this was permanent from the outset and was never scheduled to expire.

The combined effect of a larger standard deduction and a capped SALT deduction was that far fewer taxpayers itemized.

What the One Big Beautiful Bill Act Made Permanent

The One Big Beautiful Bill Act permanently extended most of the expiring individual provisions:

• The seven-bracket rate structure
• The enlarged standard deduction, indexed annually. For 2026 it is $16,100 for single filers and $32,200 for married couples filing jointly
• The elimination of personal exemptions
• The child tax credit, set at $2,200 and indexed going forward
• The qualified business income deduction
• The $750,000 mortgage interest limit
• The elimination of miscellaneous itemized deductions
• The elevated estate and gift tax exemption, which is $15 million per individual for 2026

The AMT exemption amounts were also made permanent, but with less relief at the top. Starting in 2026, the exemption begins phasing out at $500,000 of alternative minimum taxable income for single filers and $1,000,000 for joint filers, and it phases out at 50 cents per dollar above those thresholds instead of 25 cents. Higher earners, particularly those exercising incentive stock options, may find AMT applies to them again.

Making the rate structure permanent ended a long stretch in which planning had to account for rates reverting in 2026. Strategies that depended on the cliff, particularly accelerating Roth conversions before rates rose, lost the deadline that motivated them. The case for conversions still exists on its own merits, but the specific argument that rates were about to increase by statute no longer applies.

What Is Still Temporary

The higher SALT cap. The cap itself is now permanent, but its size is not. It was raised from $10,000 to $40,000 beginning in 2025 ($40,400 in 2026), with 1% annual increases through 2029, and is scheduled to return to $10,000 in 2030. The higher cap also phases down for higher earners above a modified adjusted gross income (MAGI) threshold. Within that range, each additional dollar of MAGI removes $0.30 of the available deduction until the cap reaches its $10,000 floor, creating an extra marginal tax cost equal to 30% of the taxpayer’s marginal rate.

New deductions added by the 2025 law. Deductions for tips, overtime, seniors, and auto loan interest were not part of the TCJA. The One Big Beautiful Bill Act created them, and they apply from 2025 through 2028 only.

Households in high-tax states may be able to itemize through 2029 and not after, which makes the timing of charitable gifts, elective medical spending, and property tax payments worth planning across several years rather than filing by filing. Two charitable changes that start in 2026 affect that math. Itemizers can deduct only the portion of their gifts above 0.5% of adjusted gross income, while non-itemizers get a new deduction for up to $1,000 of cash gifts ($2,000 for joint filers). Taxpayers in the 37% bracket also face a new limit that reduces the tax value of their itemized deductions to roughly 35 cents per dollar. You can compare the SALT cap and your taxes year by year across scenarios in ProjectionLab’s tax analytics.

The Fiscal Debate

Supporters argued that lower corporate rates would raise investment, wages, and competitiveness, and that a larger standard deduction simplified filing for most households. Critics argued that benefits concentrated among corporations and higher-income taxpayers, and that revenue losses would raise federal debt.

Official scorekeepers, including the Congressional Budget Office and the Joint Committee on Taxation, projected substantial revenue reductions from both the original act and its 2025 extension. How much of that was offset by economic growth is the point on which credible estimates continue to differ.

Frequently Asked Questions

Did the Tax Cuts and Jobs Act expire in 2025? No. Most individual provisions were scheduled to expire after December 31, 2025, but the One Big Beautiful Bill Act, enacted in July 2025, made the majority of them permanent.

What are the tax brackets under the TCJA? Seven: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. The income thresholds are indexed for inflation each year, and this structure is now permanent.

Is the SALT cap permanent? Yes, the cap itself no longer expires. What is temporary is its higher level: $40,000 beginning in 2025, with 1% annual increases through 2029, before it returns to $10,000 in 2030. The higher cap also phases down for high earners.

How did the TCJA change the standard deduction? It nearly doubled it and eliminated personal exemptions at the same time. The increase is now permanent and indexed, reaching $16,100 for single filers and $32,200 for joint filers in 2026.

What did the TCJA do to the corporate tax rate? It replaced a graduated schedule topping out at 35% with a flat 21% rate. That change was permanent when enacted and was not part of the 2025 expiration.

Does the TCJA still affect my taxes? Yes. It defines the rate structure, standard deduction, and most deduction rules currently in force. Since the 2025 extension, those rules apply indefinitely rather than to a fixed window.