TCJA Sunset 2026: What Tax Changes Are Coming and How to Prepare

The Tax Cuts and Jobs Act (TCJA) of 2017 made sweeping changes to the individual tax code, but most of those changes were written with an expiration date. Unless Congress acts, key provisions sunset after December 31, 2025, meaning the 2026 tax year will look very different for most filers. This guide covers exactly what is changing, what stays, and how you can prepare.

Key Takeaways

• Most individual TCJA provisions expire after 2025 -- rates, brackets, and deductions revert to pre-2018 rules adjusted for inflation.
• The top marginal rate rises from 37% back to 39.6%; most other brackets increase as well.
• The $10,000 SALT cap is scheduled to expire, restoring unlimited state and local tax deductions.
• The estate tax exemption drops from roughly $14 million to approximately $7 million per person.
• Corporate tax cuts (21% rate) are permanent and are NOT sunsetting.

What Is the TCJA Sunset?

When Congress passed the Tax Cuts and Jobs Act in December 2017, budget rules required that many individual provisions be temporary. The law included a “sunset” clause: most individual tax changes expire after tax year 2025. Starting January 1, 2026, the tax code reverts to pre-TCJA rules, indexed for inflation, unless new legislation is enacted.

This affects nearly every individual taxpayer. Corporate provisions — including the 21% corporate tax rate — were made permanent and are not sunsetting.

Individual Tax Rates: Before and After

The TCJA lowered most individual income tax rates. When it sunsets, rates revert to the pre-2018 structure:

The bracket thresholds also change, so even if your income stays the same, more of it may be taxed at a higher rate.

Standard Deduction Changes

The TCJA nearly doubled the standard deduction. After sunset, it reverts to a much lower base amount (adjusted for inflation):

However, personal exemptions return. Under pre-TCJA rules, each taxpayer and dependent claimed a personal exemption (approximately $5,300 per person in 2026, estimated). For a family of four, that could add roughly $21,200 in exemptions — partially offsetting the lower standard deduction.

Key Provisions That Are Sunsetting

1. Lower Tax Rates

All seven individual rate brackets revert to pre-TCJA levels (10%, 15%, 25%, 28%, 33%, 35%, 39.6%).

2. Doubled Standard Deduction

The standard deduction drops back to approximately half of current levels, though personal exemptions return to compensate.

3. $10,000 SALT Deduction Cap

The cap on state and local tax (SALT) deductions is scheduled to expire, restoring unlimited SALT deductions. This is significant for filers in high-tax states like California, New York, and New Jersey.

4. Doubled Child Tax Credit

The TCJA increased the child tax credit from $1,000 to $2,000 per child. After sunset, it reverts to $1,000 per child with a lower phase-out threshold.

5. Doubled Estate Tax Exemption

The current exemption of approximately $13.99 million per person (2025) drops to roughly $7 million. Read more in our estate tax planning guide.

6. Eliminated Personal Exemptions

Personal exemptions were zeroed out under the TCJA. They return at approximately $5,300 per person (estimated for 2026).

7. 20% QBI Deduction (Section 199A)

The qualified business income deduction for pass-through entities expires, increasing effective tax rates for sole proprietors, partnerships, and S corporations.

8. Reduced AMT Exemption

The Alternative Minimum Tax exemption reverts to lower levels, pulling more filers back into AMT territory. See our AMT guide for details.

9. Miscellaneous Itemized Deductions Return

Pre-TCJA, you could deduct unreimbursed employee expenses, tax preparation fees, and investment expenses above 2% of AGI. These itemized deductions come back after sunset.

What Is NOT Sunsetting

Several TCJA changes were made permanent or have separate timelines:

• 21% corporate tax rate — permanent
• Elimination of the Affordable Care Act individual mandate penalty — permanent (penalty was zeroed, not repealed)
• 529 plan expansion for K-12 tuition ($10,000/year) — permanent
• Alimony deduction changes for agreements executed after 2018 — permanent
• Roth conversion rules — unaffected by TCJA sunset

Planning Strategies Before the Sunset

Accelerate Income into 2025

If you expect to be in a higher bracket in 2026, consider realizing income now while rates are lower. Options include:

• Roth conversions at the current lower rates
• Exercising stock options
• Accelerating freelance or bonus income

Maximize Roth Conversions

Converting traditional IRA or 401(k) balances to Roth accounts while in the lower TCJA brackets can save significant taxes long-term. See our Roth conversion ladder guide.

Use the Higher Estate Tax Exemption

If your estate may exceed $7 million, the 2025 exemption of $13.99 million per person creates a window to make large gifts or fund irrevocable trusts before the exemption drops.

Defer Deductions to 2026

If the SALT cap expires and rates increase, deductions become more valuable in 2026. Consider deferring charitable contributions, property tax payments, or other deductible expenses into 2026 when they may offset income taxed at higher rates. See our guide on charitable bunching for more.

Review Withholding and Estimated Payments

Your current W-4 withholding is calibrated for TCJA rates. If rates increase in 2026, you may need to adjust withholding or increase estimated tax payments to avoid underpayment penalties.

Reassess Business Structure

The expiration of the 20% QBI deduction changes the math on S corporation elections and other pass-through structures. Business owners should model their tax liability under both scenarios.

A Worked Example: Single Filer, $100,000 Income

This simplified example shows a potential increase of roughly $3,000 in federal income tax for a single filer. Actual impacts depend on your deductions, credits, and state taxes.

What Congress Might Do

As of early 2026, Congress is actively debating whether to extend, modify, or let TCJA provisions expire. Possible outcomes include:

• Full extension of all individual provisions
• Partial extension (e.g., keeping lower rates but modifying the SALT cap)
• Full sunset with no new legislation
• New reform that reshapes the tax code entirely

Planning for the current law (full sunset) while staying flexible is the safest approach.

How sharper.tax Helps

Upload your tax return to sharper.tax and we will model your tax liability under both TCJA and post-sunset scenarios. Our platform identifies which strategies — Roth conversions, charitable bunching, retirement contributions — save you the most based on your actual numbers, not generic advice.

Related guides:

• Year-end tax checklist — action items before December 31
• Multi-year tax planning — optimize across years, not just one
• Standard vs itemized deduction — which makes sense under new rules
• Marriage tax penalty and bonus — how the sunset changes couples’ math
• Tax planning for W-2 earners — strategies for employees

Sources

• IRS Summary of TCJA Provisions
• Congressional Research Service: TCJA Expiring Provisions
• Tax Foundation: TCJA Expiration Analysis
• Joint Committee on Taxation: Overview of TCJA

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The information above is educational and not tax advice.