For years, tax planning revolved around one question: what happens when the Tax Cuts and Jobs Act sunsets after 2025? On July 4, 2025, Congress answered it. The One Big Beautiful Bill Act (OBBBA) cancelled the sunset, made the TCJA framework permanent, and added a wave of new provisions. Here is what actually changed for your 2025 and 2026 taxes.
The Sunset That Never Happened
Most individual TCJA provisions were scheduled to expire after December 31, 2025 -- higher rates returning, the standard deduction shrinking, the child tax credit dropping back to $1,000. OBBBA made the core framework permanent instead: the seven-bracket rate structure stays (top rate 37%, not the 39.6% reversion), the enlarged standard deduction stays, and personal exemptions stay repealed. If you were holding off on decisions "until we see what happens in 2026" -- the answer arrived, and it is continuity.
Standard Deduction and Brackets
OBBBA bumped the 2025 standard deduction to $15,750 for single filers and $31,500 for married filing jointly. For 2026, the IRS inflation adjustments (Rev. Proc. 2025-32) set it at $16,100 single, $32,200 married filing jointly, and $24,150 head of household. Brackets continue to shift upward annually with inflation, preventing bracket creep. These are now permanent features, adjusted each year -- not provisions on a countdown clock.
SALT Cap: Quadrupled, With a Catch
The $10,000 SALT cap did not expire -- it was replaced. The cap is $40,000 for 2025 and $40,400 for 2026 (half for married filing separately), rising about 1% per year through 2029, then scheduled to revert to $10,000 in 2030. The catch: above roughly $500,000 of modified adjusted gross income (2025, indexed), the cap phases down -- but never below $10,000. If the old cap pushed you to the standard deduction, re-run the itemizing math for 2025 and 2026. See our dedicated SALT cap guide for the details and the pass-through entity workaround, which survived intact.
Child Tax Credit and Family Provisions
Instead of dropping to $1,000, the child tax credit rose to $2,200 per qualifying child starting in 2025, now indexed for inflation, with the refundable portion also indexed ($1,700 for 2025). The TCJA-era income phase-out thresholds ($200,000 single / $400,000 joint) are permanent.
New Temporary Deductions: Tips, Overtime, Seniors, Car Loans
OBBBA added four headline deductions, all effective 2025 through 2028 and all phasing out above $150,000 MAGI ($300,000 joint): qualified tips (up to $25,000 per year -- a deduction, not a payroll-tax exemption), the premium portion of overtime pay (up to $12,500 single / $25,000 joint), an extra $6,000 deduction per person age 65 and older (this is the "no tax on Social Security" headline -- benefits are still taxable under the normal rules; the deduction just offsets the tax for many), and interest on loans for new US-assembled personal vehicles (up to $10,000, with its own income limits). Each has fine print -- verify eligibility with the IRS or your tax advisor before counting on them.
Estates, Business Owners, and Side Hustles
The estate and gift tax exemption did not get cut in half. It is set at $15 million per person ($30 million per couple) starting in 2026, indexed thereafter -- so the "use it before you lose it" gifting rush is over. The 20% qualified business income deduction (Section 199A) is now permanent. Businesses got 100% bonus depreciation back permanently for property acquired after January 19, 2025, and the Section 179 expensing cap rose to $2.5 million for 2025 ($2.56 million for 2026). And for casual sellers: the 1099-K reporting threshold reverted to $20,000 and 200 transactions, ending the $600-threshold era (some states set lower thresholds).
What to Do Now
The uncertainty-driven playbook -- accelerate income, rush gifts, hedge every scenario -- is obsolete. Planning is now about using settled rules well: re-check whether itemizing beats the standard deduction under the new SALT cap, claim the temporary deductions you qualify for while they last (2025 to 2028), and revisit entity and depreciation decisions if you own a business. Every dollar figure here is year-labeled and most are inflation-indexed -- confirm the current year's amounts with the IRS or a tax professional before you file.