Tax Hikes on the Horizon: What Happens When the TCJA Expires?

The 2017 Tax Cuts and Jobs Act (TCJA) brought significant tax relief to many Americans. However, these benefits are set to expire after 2025. If Congress doesn’t act, taxpayers could face a substantial tax increase in 2026. Let’s break down the potential changes.

Higher Tax Rates and Narrower Brackets

One of the most significant changes brought by the TCJA was the reduction of tax rates and the expansion of tax brackets. If these provisions expire, we’ll see a return to higher rates and narrower brackets.

Table 1: How 2026 Tax Rates Will Increase

Bracket	Rates Under TCJA	Rates if TCJA Expires
1	10%	10%
2	12%	15%
3	22%	25%
4	24%	28%
5	32%	33%
6	35%	35%
7	37%	39.6%

Table 2. How Single Filer Tax Brackets Will Adjust if the TCJA Expires

	Single Filers Thresholds if TCJA Continues	Single Filer Thresholds if TCJA Expires
First rate begins at	$0	$0
Second rate begins at	$12,250	$12,200
Third rate begins at	$49,750	$49,600
Fourth rate begins at	$106,100	$120,100
Fifth rate begins at	$202,550	$250,450
Sixth rate begins at	$257,200	$544,550
Seventh rate begins at	$642,950	$546,750

Table 3. How Joint Filer Tax Brackets Will Adjust if the TCJA Expires

	Joint Filers Thresholds if TCJA Continues	Joint Filer Thresholds if TCJA Expires
First rate begins at	$0	$0
Second rate begins at	$24,500	$24,400
Third rate begins at	$99,550	$99,200
Fourth rate begins at	$212,200	$200,100
Fifth rate begins at	$405,050	$304,950
Sixth rate begins at	$514,400	$544,550
Seventh rate begins at	$771,550	$615,100

Table 4. How Head of Household Filer Tax Brackets Will Adjust if the TCJA Expires

	Head of Household Filers Thresholds if TCJA Continues	Head of Household Filer Thresholds if TCJA Expires
First rate begins at	$0	$0
Second rate begins at	$17,500	$17,450
Third rate begins at	$66,600	$66,400
Fourth rate begins at	$106,100	$171,500
Fifth rate begins at	$202,550	$277,700
Sixth rate begins at	$257,200	$544,550
Seventh rate begins at	$642,950	$580,950

Smaller Standard Deduction, Fewer Exemptions

The TCJA nearly doubled the standard deduction and eliminated personal exemptions. If these changes revert, taxpayers will have a smaller standard deduction and can claim personal exemptions again.

Table 5: Changes to Family-Related Provisions

Provision	If TCJA Continues	If TCJA Expires
Standard Deduction	Increased	Decreased
Personal Exemption	Eliminated	Restored
Child Tax Credit	Increased	Decreased
Other Dependent Credit	Introduced	Eliminated

Itemized Deductions, Pease Limitation, and AMT

The TCJA also made changes to itemized deductions, the Pease limitation, and the Alternative Minimum Tax (AMT). If these changes expire, taxpayers may see less favorable rules for these provisions.

Table 6. How Itemized Deductions, Pease, and the AMT Will Adjust if the TCJA Expires

	If the TCJA Continues	If the TCJA Expires
Itemized Deductions	$10,000 limit on SALT	Uncapped SALT
	$750,000 principal limit on HMID	$1 million principal limit on HMID
	Miscellaneous Itemized Deductions eliminated	Miscellaneous Itemized Deductions restored
Pease Limitation	Eliminated	Restored
AMT Exemption	$90,400 single filers	$70,900 single filers
AMT Exemption	$140,700 joint filers	$110,400 joint filers
AMT Exemption Phaseout	$642,950 single filers	$157,700 single filers
AMT Exemption Phaseout	$1,285,950 joint filers	$210,300 joint filers

The Bottom Line

The expiration of the TCJA could lead to significant tax increases for many Americans. It’s crucial to stay informed about these potential changes and plan accordingly.

Note: This article is intended for informational purposes only and does not constitute tax advice. Please consult with a tax professional for personalized guidance.