TCJA Tax Provisions: Rates, Deductions, and What’s Permanent

The Tax Cuts and Jobs Act of 2017 rewrote federal individual and business tax rules starting in 2018, and the One, Big, Beautiful Bill Act (OBBBA), signed on July 4, 2025, made nearly all of the TCJA tax provisions permanent, several of them with upward adjustments for 2026.¹ The reversion to pre-2018 rules that was scheduled to hit after December 31, 2025, is off the table. What follows is what the TCJA changed, how each change looks for the 2026 tax year, and where the OBBBA modified the original figures.

Individual Tax Rates

The TCJA replaced the previous seven-bracket structure, which topped out at 39.6 percent, with seven new rates: 10, 12, 22, 24, 32, 35, and 37 percent. The OBBBA locked these rates in permanently.¹ Income thresholds adjust each year for inflation. For 2026, the brackets for single filers and married couples filing jointly are:

10%: Up to $12,400 (single) or $24,800 (joint)
12%: $12,401–$50,400 (single) or $24,801–$100,800 (joint)
22%: $50,401–$105,700 (single) or $100,801–$211,400 (joint)
24%: $105,701–$201,775 (single) or $211,401–$403,550 (joint)
32%: $201,776–$256,225 (single) or $403,551–$512,450 (joint)
35%: $256,226–$640,600 (single) or $512,451–$768,700 (joint)
37%: Over $640,600 (single) or over $768,700 (joint)

The brackets are marginal. Only income within each range is taxed at that range’s rate.

Standard Deduction and the End of the Personal Exemption

The TCJA roughly doubled the standard deduction and zeroed out the personal exemption, which had been about $4,050 per person in 2017. Both moves are now permanent under the OBBBA, and the standard deduction continues to receive annual inflation adjustments.¹

For 2026, the standard deduction is:

Single or married filing separately: $16,100
Married filing jointly or surviving spouse: $32,200
Head of household: $24,150

These figures have climbed considerably from the initial 2018 amounts of $12,000 (single) and $24,000 (joint). With the deduction this large, most filers no longer benefit from itemizing. It’s still worth rechecking each year if you carry a mortgage, give substantially to charity, or pay high state and local taxes.

Itemized Deductions Under the TCJA Rules

If you do itemize, several TCJA limits still apply, some in modified form.

State and Local Tax Cap

Before the TCJA, state and local taxes (property plus either income or sales tax) were fully deductible. The TCJA capped the combined deduction at $10,000, or $5,000 for married filing separately.² The OBBBA raised the cap starting in 2025. For 2026, it sits at approximately $40,400 for most filers, with a lower amount for those filing separately. The higher cap phases down to $10,000 for single filers with income above $250,000 and married filers above $500,000, so high earners in high-tax states may still hit the original ceiling.

Mortgage Interest

The TCJA lowered the ceiling on deductible mortgage debt from $1 million to $750,000 for loans originated after December 15, 2017. Older mortgages remain grandfathered at the $1 million limit.³ The $750,000 cap for newer loans is now permanent. The deduction covers interest on your primary residence and one second home. Home equity loan interest is deductible only if the borrowed funds went toward improving the home securing the loan.

Miscellaneous Deductions and a New Cap for Top Earners

The TCJA suspended miscellaneous itemized deductions previously subject to the 2-percent-of-income floor. That category covered unreimbursed employee expenses, tax preparation fees, and investment management costs. The OBBBA made the suspension permanent, so those costs remain nondeductible for most taxpayers. The OBBBA also added a new limit for filers in the top 37 percent bracket: itemized deductions are worth 35 cents on the dollar rather than the full marginal rate.

Child Tax Credit

The TCJA doubled the Child Tax Credit from $1,000 to $2,000 per qualifying child under 17 and raised the phase-out thresholds sharply, moving the joint-filer threshold from $110,000 to $400,000. The OBBBA increased the credit to $2,200 per child starting in 2025 and indexed it for inflation going forward.⁴ For 2026:

Maximum credit: $2,200 per qualifying child under 17
Refundable portion: Up to $1,700 per child, calculated as 15 percent of earned income above $2,500
Phase-out begins at $200,000 (single) and $400,000 (joint)
Phase-out rate: $50 reduction per $1,000 of income over the threshold

The refundable portion matters most for lower-income families whose tax bill is smaller than the credit itself. Families with very low earnings may not receive the full refundable amount because the formula ties it to earned income.⁴

Corporate Rate: A Flat 21 Percent

The TCJA replaced the old graduated corporate rate structure, which peaked at 35 percent, with a flat 21 percent rate on all corporate taxable income.⁵ This rate was permanent from the start and did not need OBBBA extension. It remains 21 percent for 2026.

Qualified Business Income Deduction

Pass-through businesses (sole proprietorships, partnerships, S corporations) don’t pay corporate tax; their income flows to the owner’s individual return. The TCJA created the Section 199A deduction, which lets eligible owners deduct up to 20 percent of their qualified business income.⁶ The OBBBA made this deduction permanent.

The calculation gets complicated above certain income thresholds, where the deduction starts to depend on the business’s W-2 wages and depreciable property. Specified service businesses (law firms, medical practices, consulting, and similar fields) face a full phase-out above certain income levels. For 2026, the phase-in thresholds are approximately $201,750 for single filers and $403,500 for joint filers.⁷

The OBBBA added a minimum deduction of $400 for business owners whose qualified business income exceeds $1,000, provided they actively participate. Owners of specified service businesses don’t qualify for this minimum. For most small business owners with modest income, the 20 percent deduction applies without the additional wage or property tests.

Bonus Depreciation Back to 100 Percent

The TCJA originally allowed businesses to immediately deduct 100 percent of the cost of qualifying new and used equipment, vehicles, and other depreciable property placed in service after September 27, 2017. Full expensing was scheduled to phase down 20 percentage points per year starting in 2023. The OBBBA restored and permanently locked in 100 percent bonus depreciation for qualifying property acquired after January 19, 2025.⁸ The rule applies to tangible property with a recovery period of 20 years or less, certain computer software, and qualified film or television productions.

Estate and Gift Tax Exemption

The TCJA doubled the estate and gift tax exemption from $5 million to $10 million per person (inflation-adjusted). The OBBBA went further, raising the base exclusion to $15 million per individual starting in 2026, with inflation adjustments beginning in 2027.⁹ Married couples using portability can shelter up to $30 million from federal estate and gift taxes.¹⁰ The 40 percent top rate on amounts above the exemption is unchanged.

State-level estate and inheritance taxes are separate. Roughly a dozen states impose their own, often with thresholds between $1 million and $8 million, so state exposure can exist even when no federal tax is due.

Alternative Minimum Tax

The individual AMT is a parallel calculation that limits certain deductions and exemptions. Before the TCJA, the AMT increasingly caught upper-middle-income households. The TCJA sharply raised both the exemption amount and the income level at which it phases out. The OBBBA made those higher thresholds permanent. For 2026:¹

Single: $90,100 exemption, phasing out at $500,000
Married filing jointly: $140,200 exemption, phasing out at $1,000,000

The exemption now phases out at 50 percent of income above the threshold, up from 25 percent under pre-TCJA rules. The higher starting thresholds still mean far fewer filers reach the AMT.

International Tax: GILTI and BEAT

The TCJA moved the U.S. toward a territorial system for corporate foreign earnings while adding two backstops. Global Intangible Low-Taxed Income (GILTI) requires U.S. shareholders of controlled foreign corporations to include a minimum amount of foreign income each year, whether or not it’s brought home. A Section 250 deduction lowers the effective rate below the 21 percent corporate rate. For 2026, the effective GILTI rate rises to approximately 16.4 percent as a scheduled Section 250 reduction takes effect.

The Base Erosion and Anti-Abuse Tax (BEAT) applies to large corporations (generally, average annual gross receipts of at least $500 million over three years) making significant deductible payments to foreign related parties. It works as a minimum tax against those payments.¹¹ The BEAT rate rises to 12.5 percent starting in 2026. The OBBBA preserved the pre-2026 rules for which tax credits count as BEAT-favorable.

Alimony and Moving Expenses

Two smaller TCJA changes still trip people up. For divorce or separation agreements executed after December 31, 2018, alimony is no longer deductible for the payer and no longer taxable to the recipient. Agreements finalized before 2019 keep the old treatment unless the parties modify the agreement and specifically opt in to the new rules. The OBBBA made this change permanent.

The moving expense deduction is suspended for most taxpayers. Only active-duty members of the Armed Forces moving because of a permanent change of station qualify, along with a narrow exception for certain intelligence community members. For everyone else, employer-provided moving reimbursements count as taxable income.

What’s Permanent, and What Got Bigger

When the TCJA passed, its individual provisions were written to expire after December 31, 2025. The corporate rate cut, the international tax provisions, and the alimony change were permanent from the start. Everything else on the individual side had a sunset date.

The OBBBA removed that sunset for the individual provisions. The seven rates, the higher standard deduction, the zeroed-out personal exemption, the suspension of miscellaneous itemized deductions, the higher AMT exemptions, the Section 199A deduction, and the expanded estate tax exemption are all now permanent.¹ Several were modified upward in the process: the Child Tax Credit went to $2,200, the estate exemption jumped to $15 million, the SALT cap climbed to roughly $40,000 (subject to income phase-down), and bonus depreciation returned to 100 percent.

Permanent in tax law never means untouchable. Congress can amend any of it. But for planning through 2026 and beyond, the combined TCJA-OBBBA framework is the working baseline, and the reversion to pre-2018 rules that filers were bracing for is no longer coming.

1
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
2
Internal Revenue Service. Rev. Proc. 2019-12
3
Internal Revenue Service. Publication 936 – Home Mortgage Interest Deduction
4
Congressional Research Service. The Child Tax Credit – How It Works and Who Receives It
5
Office of the Law Revision Counsel. 26 USC 11 – Tax Imposed
6
Internal Revenue Service. Qualified Business Income Deduction
7
Office of the Law Revision Counsel. 26 U.S. Code 199A – Qualified Business Income
8
Internal Revenue Service. Treasury, IRS Issue Guidance on the Additional First Year Depreciation Deduction Amended as Part of the One Big Beautiful Bill
9
Office of the Law Revision Counsel. 26 USC 2010 – Unified Credit Against Estate Tax
10
Internal Revenue Service. Whats New – Estate and Gift Tax
11
Joint Committee on Taxation. Overview of the Base Erosion and Anti-Abuse Tax – Section 59A