This article was originally published in December 2017 when the Tax Cuts and Jobs Act (TCJA) was signed into law. It has been updated to reflect current law, including provisions extended by the One Big Beautiful Bill Act (signed July 2025).
The Tax Cuts and Jobs Act of 2017 was the most significant federal tax overhaul in three decades. It changed tax brackets, nearly doubled the standard deduction, doubled the estate tax exemption, cut the corporate tax rate, and created a new deduction for pass-through business income.
Many of the individual provisions were originally set to expire at the end of 2025. The One Big Beautiful Bill Act, signed in July 2025, extended and made permanent most of the individual tax provisions. Here is what the TCJA changed and where things stand today.
Individual Tax Brackets
The TCJA reduced most individual tax rates. The seven-bracket structure remained, but the rates shifted from 10%, 15%, 25%, 28%, 33%, 35%, and 39.6% to 10%, 12%, 22%, 24%, 32%, 35%, and 37%.
These rates have been made permanent. The bracket thresholds adjust annually for inflation.
2026 Federal Tax Brackets (Married Filing Jointly):
| Rate | Taxable Income |
|---|---|
| 10% | Up to $24,800 |
| 12% | $24,801 - $100,800 |
| 22% | $100,801 - $211,400 |
| 24% | $211,401 - $403,550 |
| 32% | $403,551 - $512,450 |
| 35% | $512,451 - $768,700 |
| 37% | Over $768,700 |
For current contribution limits and income thresholds across all retirement accounts, see our tax and retirement savings changes reference.
Standard Deduction
The TCJA nearly doubled the standard deduction. Before the law, the standard deduction was $6,350 for single filers and $12,700 for married couples filing jointly.
Current Standard Deduction (2026):
| Filing Status | Amount |
|---|---|
| Single | $16,100 |
| Married Filing Jointly | $32,200 |
The larger standard deduction means fewer taxpayers benefit from itemizing. Before the TCJA, roughly 30% of filers itemized. After, that dropped to about 10%. This is one of the law's most significant practical effects on individual tax planning.
Personal Exemptions Eliminated
The TCJA eliminated personal exemptions entirely. Before the law, you could claim a $4,050 exemption for yourself, your spouse, and each dependent, reducing your adjusted gross income. To partially offset this, the law expanded the child tax credit and standard deduction.
Child Tax Credit
The TCJA doubled the child tax credit from $1,000 to $2,000 per child under 17 and significantly raised the income phaseout thresholds. The credit begins phasing out at $200,000 for single filers and $400,000 for married couples filing jointly (up from $75,000 and $110,000).
The first $1,600 of the credit is refundable (meaning families with little or no tax liability can receive it as a refund). A $500 credit is available for non-child dependents, such as an elderly parent or an adult child with a disability.
Estate Tax Exemption
The TCJA doubled the federal estate tax exemption. Before the law, the exemption was approximately $5.49 million per individual ($10.98 million per married couple).
The One Big Beautiful Bill Act made the higher exemption permanent. For 2026, the exemption is $15,000,000 per individual ($30,000,000 for a married couple). These figures continue to adjust for inflation annually.
Estates below the exemption owe no federal estate tax. For those near or above the threshold, the exemption interacts with lifetime gifts, portability elections, and trust planning. See our guide on financial considerations after the death of a spouse for details on portability.
State and Local Tax (SALT) Deduction
The TCJA capped the deduction for state and local taxes (property tax, income tax, or sales tax) at $10,000 for itemizers. Before the law, this deduction was unlimited. This cap significantly increased the effective federal tax burden for residents of high-tax states.
The SALT cap was a major factor in the shift away from itemizing for many taxpayers. Combined with the higher standard deduction, it changed the math on charitable giving strategies, mortgage interest planning, and overall itemization decisions.
Mortgage Interest Deduction
For mortgages taken out after December 15, 2017, the deductible interest is limited to debt up to $750,000 (down from $1,000,000). Mortgages in place before that date are grandfathered at the $1,000,000 limit. The deduction for home equity loan interest was eliminated unless the loan is used to substantially improve the home.
Pass-Through Business Deduction (Section 199A)
The TCJA created a 20% deduction on qualified business income for owners of pass-through entities (S corporations, partnerships, LLCs, and sole proprietorships). This deduction is subject to income limits and restrictions for specified service businesses.
The deduction was extended and made permanent under the One Big Beautiful Bill Act. For taxpayers below the income threshold, the deduction effectively reduces the top marginal tax rate on pass-through income from 37% to 29.6%.
Corporate Tax Rate
The TCJA permanently reduced the corporate tax rate from 35% to 21%. It also repealed the corporate alternative minimum tax. These provisions were permanent from the start and were not subject to the 2025 sunset.
What Was Extended vs. What Expired
The One Big Beautiful Bill Act (July 2025) extended most TCJA individual provisions that were set to sunset at the end of 2025. Key provisions made permanent include the lower individual tax rates, the higher standard deduction, the doubled estate tax exemption, the expanded child tax credit, the SALT cap, and the Section 199A pass-through deduction.
The individual mandate penalty (which the TCJA zeroed out in 2019) remains at $0.
Planning Implications
The TCJA fundamentally changed several areas of financial planning.
Tax bracket management. The lower rates and wider brackets create more room for strategies like Roth conversions, capital gains harvesting, and income timing. Understanding where you fall in the bracket structure is essential. See our guide on retirement tax hazards and tax-centric retirement planning.
Itemization decisions. With the higher standard deduction and SALT cap, charitable giving strategies like bunching donations or using donor-advised funds become more valuable for those who want to deduct charitable contributions.
Estate planning. The $15 million per-person exemption means far fewer estates face federal estate tax, but state estate taxes (in states that have them) may still apply at much lower thresholds. Florida has no state estate tax.
Roth conversions. The permanent lower tax rates make Roth conversions attractive for retirees in the 12% and 22% brackets. Converting pre-tax retirement assets to Roth at today's rates locks in the lower rates permanently. See our guide on Roth conversion strategies in retirement.
For the latest retirement account limits and income thresholds, see our annual tax and savings changes reference.
For personalized guidance on how these tax provisions affect your financial plan, start a conversation with us.
