Last Updated: April 2026
The Tax Cuts and Jobs Act of 2017 was the most significant overhaul of the US tax code in three decades. For individuals, many of its provisions were set with a sunset clause — expiring after December 31, 2025 — creating what tax professionals called the 'TCJA cliff.' Without legislative action, individual tax rates, the standard deduction, the SALT cap, the pass-through deduction, and the estate tax exemption would all revert to pre-2017 levels in 2026. The political stakes were enormous.
The 'One Big Beautiful Bill' — the 2025 reconciliation legislation — extended the core TCJA individual provisions, averting the cliff for most taxpayers. This guide explains what was in the TCJA, what the extension preserves, where changes were made, and what it all means for your 2026 take-home pay. Whether you're an employee, business owner, or high-net-worth individual planning your estate, the TCJA extension has material implications.
The Tax Cuts and Jobs Act (Public Law 115-97) was signed by President Trump on December 22, 2017. For individuals and pass-through businesses, most provisions were temporary, set to expire after December 31, 2025. For corporations, the TCJA provisions were permanent — including the flat 21% corporate income tax rate (down from 35%).
Key TCJA individual provisions that were set to expire:
The reconciliation bill extended the following core TCJA provisions for individual taxpayers:
| Provision | Pre-TCJA (pre-2018) | TCJA (2018-2025) | Extended (2026+) |
|---|---|---|---|
| Top income tax rate | 39.6% | 37% | 37% |
| Standard deduction (single) | ~$6,350 | ~$14,600 (2024) | ~$15,000 (2026) |
| Standard deduction (MFJ) | ~$12,700 | ~$29,200 (2024) | ~$30,000 (2026) |
| Child tax credit | $1,000 | $2,000 | $2,000 |
| SALT cap | Unlimited | $10,000 | $10,000 |
| Section 199A deduction | None | 20% of QBI | 20% of QBI |
| Estate tax exemption | ~$5.5M per person | ~$13.99M (2025) | Maintained/indexed |
The extension largely maintains the tax landscape that US taxpayers have known since 2018, providing certainty for financial planning decisions that had been in limbo as the TCJA sunset approached.
The TCJA restructured individual tax brackets, and the extension maintains this structure with annual inflation adjustments. For 2026, the estimated brackets for single filers are:
| Taxable Income (Single) | Rate |
|---|---|
| $0 – $11,925 | 10% |
| $11,926 – $48,475 | 12% |
| $48,476 – $103,350 | 22% |
| $103,351 – $197,300 | 24% |
| $197,301 – $250,525 | 32% |
| $250,526 – $626,350 | 35% |
| Over $626,350 | 37% |
Under pre-TCJA rates, a high earner at $500,000 income would have faced a 39.6% marginal rate. Under the extended TCJA, they face 35%. The tax saving on income above $418,000 is 4.6 cents per dollar — meaningful for high earners, but the TCJA's biggest tax cuts were for middle-income earners who benefited most from the bracket restructuring and expanded standard deduction.
One of the TCJA's most impactful changes was the near-doubling of the standard deduction, which dramatically reduced the number of Americans who benefit from itemising. The TCJA extension maintains this structure:
High-value itemised deductions include:
The $10,000 State and Local Tax (SALT) deduction cap is one of the most politically contentious TCJA provisions, particularly for residents of high-tax states like California, New York, New Jersey, Illinois, and Massachusetts.
How the SALT cap affects high earners:
The SALT cap was widely viewed as a political move penalising states that typically vote Democrat. Congressional representatives from New York, New Jersey, and California repeatedly attempted to repeal or increase the cap. The extension legislation maintained the $10,000 cap, meaning residents of high-tax states continue to bear this relative disadvantage.
One planning strategy: for those who itemise significantly above the SALT cap — primarily upper-income residents of high-tax states — considering relocation to a no-income-tax state (Texas, Florida, Nevada, Wyoming) can generate both state tax savings and improved federal deductibility of remaining SALT amounts.
Section 199A — the 20% deduction on Qualified Business Income (QBI) for pass-through businesses — is one of the most valuable provisions in the TCJA for business owners, and the extension preserves it.
Who benefits from Section 199A:
How it works: If you have $200,000 of qualified business income, you can deduct $40,000 (20%) — reducing your federal taxable income by $40,000. At the 24% marginal rate, this saves $9,600 in federal tax.
Limitations and phase-outs:
For most salaried employees, the TCJA extension means no change in withholding or take-home pay relative to 2025 — the same rates, same standard deduction, same AMT thresholds. The extension was designed to preserve continuity rather than create new tax changes.
However, there are important nuances:
The TCJA extension removes the largest source of tax uncertainty for 2026 planning. The focus for most individuals now shifts back to income management, retirement contributions, and state-level tax optimisation rather than navigating TCJA cliff scenarios.
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Get Matched with a CPA →The individual provisions of the TCJA were set to expire after December 31, 2025. The 'One Big Beautiful Bill' reconciliation legislation extended the core individual provisions — lower rates, higher standard deduction, SALT cap, Section 199A, and doubled estate tax exemption — preventing the sunset. Corporate TCJA provisions (flat 21% corporate rate) were always permanent and were not affected by the sunset. The extension provides planning certainty for individuals and business owners through at least 2034 or beyond, depending on the specific legislative terms.
With the TCJA extension, the standard deduction for 2026 is approximately $15,000 for single filers and $30,000 for married filing jointly. These figures reflect inflation adjustments from the TCJA base amounts and are confirmed by IRS Rev. Proc. inflation guidance each fall. Additional standard deduction amounts apply for those aged 65+ or blind: $1,600 per qualifying factor (single) or $1,300 (MFJ).
The $10,000 SALT cap continues to penalise residents of high-tax states significantly. A California resident earning $300,000 who pays $35,000 in combined state income and property taxes can only deduct $10,000 federally — meaning $25,000 in taxes paid receives no federal deduction. At the 35% marginal rate, this translates to approximately $8,750 in extra federal tax compared to a taxpayer paying the same total tax in a no-income-tax state like Texas. High earners in NYC face even higher effective rates due to the combined impact of New York State and NYC taxes.
The Section 199A deduction (20% of QBI) is available to sole proprietors, partners, S corporation shareholders, and qualifying rental property owners. The full deduction is available up to taxable income thresholds (approximately $197,300 single / $394,600 MFJ in 2026, indexed). Above these thresholds, the deduction phases out for Specified Service Trades or Businesses (SSBTs): doctors, lawyers, consultants, financial advisors, athletes, performers. Non-SSTB businesses (manufacturing, retail, real estate) can still claim the deduction above the threshold, subject to W-2 wages and qualified property limitations.
With the TCJA extension, the federal estate tax basic exclusion amount remains at approximately $14 million per person (2026, indexed) — or roughly $28 million for married couples using portability. This is a critical preservation for families with significant assets. Without extension, the exemption would have reverted to approximately $7 million (roughly half), potentially subjecting many more estates to the 40% federal estate tax. The extension means only the very largest US estates — those above $14+ million — will face federal estate tax in 2026.
The TCJA substantially raised the AMT exemption and phase-out thresholds, and these are maintained under the extension. For 2026, the AMT exemption is approximately $140,300 for single filers and $220,700 for married filing jointly (indexed from 2024 amounts). The phase-out begins at much higher income levels than pre-TCJA. As a result, the number of taxpayers subject to AMT has fallen dramatically from over 5 million pre-TCJA to roughly 200,000 — primarily very high earners. Most middle and upper-middle income taxpayers are no longer affected by AMT.
Nothing material changed for corporations under the extension — because the corporate TCJA provisions were always permanent (not subject to the 2025 sunset). The flat 21% corporate income tax rate (reduced from 35% under pre-TCJA law) remains in place for C corporations. The Section 179 expensing and bonus depreciation provisions have their own schedules, with bonus depreciation phasing down (80% in 2023, 60% in 2024, 40% in 2025, 20% in 2026) unless renewed. The GILTI (Global Intangible Low-Taxed Income) and BEAT provisions for multinationals are also permanent TCJA features.