The TCJA: Key Facts on the 2017 Tax Cuts and What's Next for 2025

The Tax Cuts and Jobs Act (TCJA) became effective more than seven years ago as a major Trump administration tax code overhaul, making it the biggest change to tax law and policy in recent decades. (That's why the TCJA is also known as the "Trump tax cuts.")

The law affects millions of taxpayers across the U.S. since its provisions cover everything from changes to the standard deduction and the child tax credit to income tax rates and even the availability and amounts of other popular tax credits and deductions.

And while many key TCJA provisions are set to expire at the end of 2025 in what some call the “tax cliff” or sunset, the Republican-led Congress is working to make permanent or extend many expiring provisions.

For instance, in a move to bring Trump's “One, big, beautiful [reconciliation] bill” to fruition, the House Ways and Means Committee released a 389-page plan to extend and increase the estate and gift tax exemption and permanently end other tax cuts, like the personal and dependency exemption.

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Though the House plan is just a starting point (the full House of Representatives and U.S. Senate will have to weigh in), there's a lot you need to know.

So, we’ll cover what the TCJA is, which provisions impact your household, and what changes you might see go away or change with the House GOP’s proposed tax bill.

TCJA Explained

What is the TCJA?

The TCJA (Tax Cuts and Jobs Act) is a sweeping tax overhaul that reduced tax rates, changed processes, and restructured individual and corporate tax frameworks.

As mentioned, the law, enacted in 2017, is also known as the "Trump tax cuts" because it was a signature piece of legislation in Donald Trump's first term as president.

Several significant tax changes are in the TCJA, but one major one is a temporary reduction in individual federal income tax rates.

Tax Rates

TCJA income tax changes

Almost every U.S. taxpayer was affected in some way by the TCJA. Below are a few highlights from the new tax rates and the bracket changes tied to them. We’ll use this data to illustrate examples of the law’s impact.

Source: Tax Policy Center. The tax bracket income thresholds here compare 2018 prior and post-TCJA amounts to show the immediate impact of the TCJA on tax brackets.

Federal income tax brackets are adjusted annually for inflation, so these comparisons do not reflect current federal income tax brackets for the 2024 tax year.

As shown above, a single filer with income over $38,700 before the TCJA was enacted would have been subject to a 25% federal tax rate. The year following the TCJA's enactment, that same income level was instead subject to a 22% tax.

Another example from above is a married filing joint couple with income over $80,050 before the TCJA was enacted would have been subject to a 39.6% marginal federal tax rate. The year after the TCJA was signed into law, those earnings were instead subject to a 35% tax.

Note: Remember that the above examples merely illustrate the immediate impact of the change in tax rates from 2017 to 2018. Since federal tax brackets are adjusted yearly for inflation, the income tax brackets for 2025 are not reflected in that chart. For more information, see 2025 Federal Tax Brackets and Income Tax Rates.

Most tax rates were reduced under TCJA. However, the lowest tax rate of 10% was not. Taxpayers in the lowest bracket before and after the TCJA could be subject to a 10% tax.

Households earning $450,000 or more receive about 45% of benefits from the TCJA. As you can see from the above examples, under the TCJA, those with higher incomes generally save more on taxes than taxpayers with lower incomes.

Update: Under the newly proposed House GOP tax bill, the post-TCJA federal income tax bracket schedule and lower rates would be made permanent.

Additionally, all the income tax brackets (excluding the top 37% bracket) would get an additional year of inflation adjustments, starting in 2026, if the House version of the bill were approved.

Child Tax Credit

TCJA child credit changes

The TCJA also cut personal exemptions and expanded the federal child tax credit (CTC). Families can no longer take the personal and dependent exemption, which was $4,150 (indexed for inflation).

Under the new House GOP tax bill, the personal and dependent exemption could go away permanently.

Before the TCJA, 292.7 million people claimed personal and dependent exemptions. Total taxpayer savings were in the billions, so individuals could potentially see a reduction in savings with permanent termination.

However, the higher $2,000 CTC amount, which used to be $1,000 pre-TCJA, would become permanent if the House GOP tax bill is made law. The tax provision would also index the credit amount for inflation after 2026.

The qualifying child’s age for this credit would also remain at 17 and under (pre-TCJA allowed a credit for children 16 and under). As Kiplinger previously reported, data shows that poverty levels can decrease when families benefit from an expanded CTC. But it hasn’t ended there.

The House GOP tax bill would also maintain the increased income phase-out thresholds, the nonrefundable, non-child dependent credit, and leave the refundable part of the child tax credit unchanged under the TCJA. Additionally, the provision would temporarily increase the child tax credit to $2,500 per child for tax years 2025 through 2028.

Note: The TCJA also changed the child tax credit requirements regarding Social Security numbers. Before, a qualifying child didn’t have to have an SSN. After, children without eligible SSNs couldn’t qualify for the full credit. Under the GOP House bill, a child's and his or her parents' SSNs would be required to claim the credit. The SSNs provided must be work-eligible to claim the credit.

Related: Here's How the Child Tax Credit Could Increase Under Trump

Standard Deduction

TCJA doubled standard deduction

The TCJA almost doubled the baseline federal standard deduction.

When the TCJA was enacted, the standard deduction jumped from $6,500 to $12,000 (single filer). For married filing joint filers, the standard deduction increased from $13,000 to $24,000. The standard deduction is indexed annually for inflation.

Some bipartisan organizations suggest that the larger standard deduction offered by the TCJA leads to a progressive tax rate (a rate that increases as taxable income increases). This would mainly benefit middle-class and low-income households.

Sure enough, according to the Center for Economic and Policy Research (CEPR), studies have shown that more folks with $200k or less in income took the standard deduction when the TCJA was first enacted. However, it should also be noted that data show most people took the standard deduction before the TCJA.

Update: Under the proposed House GOP tax bill, the increased standard deduction amounts would be made permanent and further increased with an extra year of inflation adjustment.

Also, for tax years 2025 through 2028, the provision would increase the standard deduction by the following amounts:

• Single filers would get $1,000
• Married filing joint couples would receive $2,000
• Head of household filers would be raised by $1,500

For information about the current standard deduction, see How Does the Standard Deduction Work?

The TCJA also limits the amount of state and local tax (SALT) you can deduct. The SALT deduction includes property tax and other taxpayer liabilities already taken out for state and local services.

Before, the deduction was limitless; now, you can only deduct up to $10,000 of your state and local taxes. This mainly affects those with high-worth homes or state and local taxes in high-cost areas, like New York, New Jersey, or California.

For example, homeowners can no longer itemize the full amount they pay in state, local, and property taxes if they pay more than $10,000. This causes those taxpayers to gain less benefit.

The latest House GOP tax bill includes a provision raising the SALT cap to $30,000. However, House Republicans are split on whether the cap should remain. Rep. Nick Lalota (R-NY), an outspoken critic of the SALT cap, told Politico that the tax bill is "dead effectively on the floor." Other Republicans representing high-tax districts have argued that the $30,000 limit is still too low.

For more information, see Kiplinger's report: Will the SALT Deduction Cap Be Raised in 2025?

Additionally, the TCJA affected other miscellaneous itemized deductions in the following ways:

• It limited deductible medical expenses and deductible home equity loan interest. While the medical expense limit was later made permanent, the limit on home equity loan interest is set to expire at the end of 2025.
• Increased the charitable contribution deduction rate from 50% to 60%. The higher limit is set to expire at the end of this year.
• Repealed a “Pease” limitation which reduced itemized deductions based on taxable income above certain thresholds. Update: The House GOP tax bill has a provision that would permanently end the Pease limitation and replace it with a new limit on itemized deductions, which would apply mostly to taxpayers in the highest income tax bracket.

The TCJA also eliminated the deduction for unreimbursed employee expenses and tax prep fees, for alimony, hobby expenses, and moving expenses (unless you are military and the deduction for casualty and theft losses, except for certain losses in federally declared disaster areas).

Those "miscellaneous itemized deductions" would be permanently removed under the House GOP plan. However, it's important to note that the bill will go through many revisions in the House and Senate before any final legislation is passed.

Alternative Minimum Tax

How the TCJA affected AMT (Alternative Minimum Tax)

The Alternative Minimum Tax (AMT) places a floor on the amount higher-income taxpayers must pay, regardless of credits or deductions taken on their taxes.

The AMT’s income level and phase-out were raised under TCJA. This means fewer higher-income people qualify for AMT (which for 2025 applies to taxpayers earning above $239,100). If a taxpayer does qualify, they pay less in taxes.

For example, the Tax Policy Center estimates that the number of taxpayers who would have paid AMT the year TCJA was enacted fell by about 5 million people. This was big news for folks who were subject to what some call a "parallel tax system," which provided the government with about $34 billion in revenue the year before TCJA.

While a higher AMT threshold raises budgetary concerns for some, the House GOP tax bill seeks to make the TCJA changes to this tax provision permanent.

Estate Tax

Estate tax exemption sunset

Another benefit for wealthier taxpayers under the TCJA is the doubling of the federal estate tax exemption.

In 2017, instead of paying taxes on estates above $5.6 million, higher-income individuals were not taxed until $11.2 million. The threshold is inflation-adjusted annually, with the current exemption level at $13.99 million.

Update: The new House GOP tax bill seeks to make the higher exemption for the estate tax permanent. Not only that, but the bill also has a provision to index the estate exemption for inflation and raise the 2026 amounts to $15 million for single filers and $30 million for married couples.

With a GOP-controlled House and Senate, and Republicans generally in favor of raising or repealing the estate tax entirely, this provision could go unchallenged in the Senate.

Corporate Tax

Trump corporate tax rate

The TCJA changed taxes for businesses, too. For example, the TCJA cut the corporate income tax (CIT) from 35% to 21%. This provision is not set to expire.

Though the effect of lower corporate tax rates is debated in economic circles, the Tax Foundation reports that the burden of the CIT falls on consumers. Consequently, a lower CIT might entice companies to raise wages and lower prices for buyers.

Other changes to the law enacted for businesses include:

• Created a 20% deduction on qualified business income for some business owners (pass-through entities). While set to expire, the House GOP tax bill seeks to make this deduction permanent, increase the rate to 23%, and adjust the phase-in and threshold amounts.
• Limited deduction for meals and entertainment expenses (the latter are generally not deductible). This provision is set to expire in 2025.
• Largely eliminated tax deductibility of net operating losses (NOL) for businesses. (The TCJA limited the NOL deduction to 80% of taxable income and eliminated most carrybacks.) This provision is permanent.
• Limited business interest expenses. (The House GOP tax bill proposes to increase the amount of business interest expense companies can deduct through tax years 2025 through 2029.)
• Allowed 100% expensing on some business property for specific tax years. (This provision was set to phase out gradually after 2022.) The new House GOP tax bill has a provision that would allow taxpayers to immediately expense 100% of qualified property again, from January 20, 2025, through January 1, 2030.

That last point, on expensing business property, concerns depreciation. Normally, business assets are depreciated over their useful life (typically 5, 10, or 15 years). Before the TCJA, tax law generally allowed some equipment to be partially expensed, but it was only 40% of qualifying assets.

The proposed House GOP tax bill would extend the TCJA provision allowing businesses to fully and immediately expense their qualifying short-lived assets.

Accelerated depreciation creates a greater tax difference between reportable income (what the stockholders see) and taxable income (what the IRS sees). But this difference is temporary. In later years, when the asset has been fully expensed for tax purposes, but not for reportable income purposes, the business will pay more tax on that asset.

That is why accelerated depreciation may be called a "deferred tax liability." Businesses pay less in taxes now for greater tax liability in the future.

Effectively, immediate expensing allows companies to invest more in the short term. This may create more jobs, boost productivity, and raise wages. According to the Tax Foundation, some proponents of this part of the TCJA have argued for the policy to be made permanent because it is a built-in mechanism of the tax code and wouldn't require additional spending provisions to be made.

TCJA Sunset

What Trump tax cuts expire after 2025?

The TCJA is just one major issue that may come to a head this year. While some of its provisions don't sunset after 2025, others do.

Expiring provisions that will need to see action include:

• Federal income tax rates
• The standard deduction
• The personal and dependent exemption
• Various itemized deductions
• Thresholds for AMT and the estate tax

TCJA Proposed Changes

TCJA 2.0? How will the Trump tax cuts change after 2025?

There have been several TCJA proposals to either modify or extend the Trump tax cuts under the House of Representatives' version of Trump's "one, big, beautiful bill," including:

• Raising the SALT Deduction Cap, which would allow taxpayers in higher-tax states to deduct more of these taxes on their federal tax returns.
• Making the higher child tax credit amount permanent, and raising the credit amount for tax years 2025 through 2028.
• Restoring 100% expensing on some business property, which currently faces a gradual phaseout of 20% annually until the end of 2026.

However, making the TCJA cuts permanent could cost about $4.6 trillion over ten years, according to Congressional Budget Office (CBO) estimates. This significant federal deficit impact could affect tax negotiations on the Hill.

Either way, you may want to get a head start on your 2026 tax planning. Consult with a tax planner to look at your financial situation to see whether any looming tax changes apply to you. And stay tuned for more updates.

Read More

• Trump's ‘One Big, Beautiful Bill’ With Trillions in Tax Cuts
• Here's How the Child Tax Credit Could Increase Under Trump
• Is the EV Tax Credit Going Away?