It's been six years since the
As the planned TCJA sunset nears, consider reviewing your financial strategy to see if you need to make any adjustments.
What did the TCJA do?
Crafted in part to simplify the tax filing process for many Americans, the TCJA raised the standard deduction while introducing new limits on itemized deductions. The act also reduced marginal tax rates, eliminated the personal exemption, expanded the
The TCJA also raised the lifetime estate and gift tax exemption. This increased the total value of assets people can give during their life and/or upon their death without incurring estate or gift taxes.
In addition, while the corporate tax rate of 21% was made permanent, the qualified business income deduction, which lets eligible self-employed and small-business owners deduct up to 20% of their qualified business income, is also scheduled to sunset.
When does the TCJA sunset?
On Dec. 31, 2025, most of the TCJA's changes are scheduled to expire. They were made temporary to allow for faster approval and limit impacts on the federal deficit. It's possible Congress could extend TCJA provisions past 2025, but that possibility is still unresolved.
Given the uncertainty, now's a good time to assess how a 2025
4 expected 2026 tax law changes
If the TCJA sunsets on schedule, several of its changes that have affected tax bills since 2018 may no longer be in effect as of 2026. Here are the changes you can expect to take place.
1. Income tax rates
The TCJA lowered marginal rates for most
Taxable income (2023, single taxpayer) | Current marginal rate (2018–2025 per TCJA) | Pre- and post-TCJA marginal rate (scheduled to resume in 2026) |
$11,000 or less | 10% | 10% |
$11,001 to $44,725 | 12% | 15% |
$44,726 to $95,375 | 22% | 25% |
$95,376 to $182,100 | 24% | 28% |
$182,101 to $231,250 | 32% | 33% |
$231,251 to $578,125 | 35% | 35% |
$578,126 or more | 37% | 39.60% |
2. Deductions & tax credits
The TCJA nearly doubled the standard deduction. It also eliminated the personal exemption, doubled the child tax credit, capped state and local tax deductions at $10,000 and tightened limits on mortgage and home equity interest deductions. All those changes will expire if the TCJA sunsets.
| 2017 | 2018 | 2024 | 2026 |
Single taxpayer | $6,350 | $12,000 | $14,600 | All revert to approximate pre-TCJA levels |
Married filing jointly | $12,700 | $24,000 | $29,200 | |
Head of household | $9,350 | $18,000 | $21,900 |
3. Charitable giving deductions
The TCJA raised the ceiling for charitable contribution deductions from 50% to 60% of adjusted gross income (AGI). If the act sunsets, those deductions may again be capped at 50% of AGI.
| 2017 (pre-TCJA) | 2018-2025 (TCJA in effect) | 2026 (after TCJA sunset) |
Maximum allowed portion of adjusted gross income |
50% |
60% |
50% |
4. Estate & gift tax exemptions
The TCJA roughly doubled the lifetime estate and gift tax exemption. If the act sunsets in 2025, the 2026 exemption may return to 2017 levels, adjusted for inflation.
| 2017 (pre-TCJA) | 2018 | 2024 | 2026 (projected, after TCJA sunset) |
Individual | $5.49 million | $11.18 million | $13.61 million | $7 million |
Married couple | $10.98 million | $22.36 million | $27.22 million | $14 million |
Options to consider with a financial advisor
If the TCJA sunsets, you can take steps to mitigate potential negative impacts. And, as the following examples show, it might benefit you to act soon while the TCJA's provisions remain in place.
Roth conversion
You might consider
When you convert a traditional IRA to a Roth IRA, you pay income taxes on the money you move. So, if you expect to be subject to a higher marginal tax rate after the TCJA sunsets, it might make sense to pay taxes on your IRA money sooner—while TCJA rates remain in effect—rather than after rates revert to pre-TCJA levels.
Gift & estate planning
After 2025, the individual lifetime estate and gift tax exemption is slated to drop dramatically—from roughly $14 million to $7 million. So it might be worthwhile to
Say, for example, you expect to transfer $12 million to family members upon your death. If that occurs in 2026, about $7 million would be exempt from federal estate taxes, but the remaining $5 million wouldn't. However, if you were to give $10 million before the end of 2025, all of it (plus the remaining $2 million you transfer through your estate after TCJA provisions expire) may be exempt from gift and estate taxes.
Charitable giving
You can deduct
Review your financial strategy ahead of the TCJA sunset
As the TCJA's scheduled sunset approaches, don't hesitate to connect with a