The permanent extension of the 2017 tax cuts became law on July 4, 2025, when the One Big Beautiful Bill Act locked in most of the individual provisions from the Tax Cuts and Jobs Act that had been scheduled to expire after 2025. The seven-bracket rate structure, the higher standard deduction, the expanded child tax credit, the pass-through business deduction, and the enlarged estate and gift tax exemption are now permanent federal law. The same legislation raised several thresholds, temporarily increased the state and local tax deduction cap, and added new short-term deductions for tips, overtime, auto loan interest, and seniors.
Income Tax Brackets That Stayed
The seven brackets set by the 2017 law (10, 12, 22, 24, 32, 35, and 37 percent) would have snapped back to the pre-2017 structure after this year, with a top rate of 39.6 percent. That cliff is gone. For 2026, the IRS has published these inflation-adjusted thresholds for single filers and married couples filing jointly:1Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026, Including Amendments From the One, Big, Beautiful Bill
- 10%: income up to $12,400 single ($24,800 joint)
- 12%: over $12,400 ($24,800 joint)
- 22%: over $50,400 ($100,800 joint)
- 24%: over $105,700 ($211,400 joint)
- 32%: over $201,775 ($403,550 joint)
- 35%: over $256,225 ($512,450 joint)
- 37%: over $640,600 ($768,700 joint)
Because the extension is permanent, the IRS will continue using the post-2017 inflation adjustment formula rather than reverting to the older baseline. Your marginal bracket in 2026 is the one you would have expected under current rules, not the higher rate that was scheduled to take over.
Standard Deduction and the Lost Personal Exemption
The roughly doubled standard deduction stays. For 2026, it is $16,100 for single filers, $32,200 for married couples filing jointly, and $24,150 for heads of household, with inflation adjustments each year going forward.1Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026, Including Amendments From the One, Big, Beautiful Bill
The personal exemption, worth $4,050 per person in 2017, remains permanently at zero.2Office of the Law Revision Counsel. 26 USC 63 – Taxable Income Defined It had been scheduled to return after 2025; the extension keeps it eliminated. For most households, the larger standard deduction more than makes up the difference. Families with several dependents may still come out slightly behind compared to the pre-2017 system, since exemptions used to stack per person.
Child Tax Credit
The child tax credit was doubled to $2,000 in 2017, and the extension both preserved it and raised it. Starting in 2025, the credit is $2,200 per qualifying child, indexed for inflation going forward.3Internal Revenue Service. Refundable Tax Credits Without the extension, it would have dropped back to $1,000 with tighter income phaseouts.
Up to $1,700 per child is refundable for 2025, meaning families who owe little or no tax can still receive that portion as a payment. To qualify, a child must be under 17 at year-end, claimed as a dependent, and have a valid Social Security number. The separate $500 nonrefundable credit for other dependents (a college-age child, an elderly parent) is also permanent.
SALT Deduction Cap
The state and local tax deduction is the one big piece where the numbers are temporarily better and then get worse. The $10,000 cap was raised to $40,000 for the 2025 tax year, with inflation adjustments through 2029.4Internal Revenue Service. Topic No. 503, Deductible Taxes Married filing separately is half that. In 2030, the cap is scheduled to revert to $10,000 permanently unless Congress acts again.
The higher cap phases down for higher earners. Once modified adjusted gross income exceeds roughly $500,000 ($505,000 for 2026), the $40,000 amount begins to shrink, and at the bottom of the phasedown you are back to $10,000. The bigger cap primarily helps middle- and upper-middle-income households in high-tax states, not the highest earners.
Estate and Gift Tax Exemption
The extension raised the basic exclusion amount to $15,000,000 per individual for 2026, with inflation adjustments starting in 2027, and this provision does not sunset.5Office of the Law Revision Counsel. 26 USC 2010 – Unified Credit Against Estate Tax With portability, a married couple can effectively shelter $30 million from federal estate and gift tax.
Had the provision been allowed to sunset, the exclusion would have fallen back to about $7 million per person adjusted for inflation, putting estates between roughly $7 million and $13 million back into range of the 40 percent federal estate tax. IRS anti-clawback regulations still confirm that estates can calculate their credit using the higher of the exemption in effect at the time of the gift or the exemption at death, which continues to matter for gifts made during the 2018 to 2025 window.6Internal Revenue Service. Final Regulations Confirm: Making Large Gifts Now Won’t Harm Estates After 2025
Pass-Through Business Deduction
The Section 199A deduction, which lets owners of sole proprietorships, partnerships, and S corporations deduct up to 20 percent of qualified business income, is permanent.7Internal Revenue Service. Qualified Business Income Deduction Without the extension, pass-through owners would have paid full individual rates on all business income while C corporations kept their permanent 21 percent rate.
The phase-in ranges where the deduction starts getting limited were widened. For 2026, the phase-in begins at $201,750 for single filers and $403,500 for joint filers, and the deduction fully phases out at $276,750 and $553,500 respectively. A new minimum deduction of $400 was added for taxpayers with qualified active business income.
Owners of specified service trades or businesses (law firms, medical practices, consulting firms, and similar fields) still face stricter treatment. Above the phase-in threshold their deduction shrinks and eventually disappears entirely.8Office of the Law Revision Counsel. 26 US Code 199A – Qualified Business Income The wider ranges give a bit more breathing room, but a high-earning service professional still gets less benefit than a non-service business owner at the same income.
Alternative Minimum Tax
The higher AMT exemption and phaseout thresholds from 2017 are permanent. For 2026, the AMT exemption is $90,100 for single filers and $140,200 for joint filers, phasing out starting at $500,000 single and $1,000,000 joint. Between the higher exemption and the continued SALT cap, the AMT reaches far fewer households than it did before 2018. If it has not touched your return since then, that is unlikely to change.
Mortgage Interest and Other Itemized Deductions
The mortgage debt cap of $750,000 for loans originated after December 15, 2017 is now permanent. Mortgages that existed before that date remain grandfathered under the old $1 million limit.9Internal Revenue Service. Publication 936 (2025), Home Mortgage Interest Deduction Married filing separately uses half those amounts.
Home equity loan interest remains deductible only when the borrowed funds are used to buy, build, or substantially improve the home securing the loan. Interest on home equity debt used for other purposes is not deductible, and that restriction is permanent.
Two other 2017 changes were locked in as well. Miscellaneous itemized deductions that used to be subject to the 2 percent floor (unreimbursed employee business expenses, tax preparation fees, investment management fees) are permanently gone. The itemized deduction for personal casualty and theft losses remains limited to federally declared disasters.
New Temporary Deductions Added in 2025
Alongside the permanent extensions, the legislation added several new deductions that were not part of the 2017 law. These generally run from 2025 through 2028 and each has its own income phaseout:
- Tips: up to $25,000 of qualified tip income is deductible. Phases out above $150,000 single ($300,000 joint).
- Overtime pay: up to $12,500 of qualified overtime pay is deductible for single filers ($25,000 joint), limited to overtime required by the Fair Labor Standards Act. Same $150,000/$300,000 phaseout.
- Auto loan interest: up to $10,000 in interest on loans for new vehicles assembled in the United States is deductible. Used vehicles do not qualify. Phases out above $100,000 single ($200,000 joint).
- Senior deduction: taxpayers age 65 and older get an additional deduction of up to $6,000 ($12,000 for married couples where both spouses qualify) on top of the standard deduction. Phases out starting at $75,000 single ($150,000 joint).
Each of these expires after 2028 unless Congress extends them, following the same sunset pattern that shaped the 2017 law and delayed the permanent extension for eight years.