The TCJA Didn’t Sunset — Here’s What the One Big Beautiful Bill Act Actually Did to Your Taxes

Everyone braced for a massive tax increase on January 1, 2026. Congress stepped in. Here is exactly what changed, what became permanent, what is still temporary — and the deadlines hitting right now in June 2026 that most people have no idea about.

Quick Answer: The Tax Cuts and Jobs Act was scheduled to expire December 31, 2025. Congress prevented the sunset by passing the One Big Beautiful Bill Act (OBBBA), signed July 4, 2025. Most TCJA individual provisions are now permanent. Your brackets, standard deduction, child tax credit, QBI deduction, and estate tax exemption are not reverting. The law also added new temporary deductions for tips, overtime, seniors, and auto loans — and removed the EV credit and most clean energy credits. The 2026 filing season is already reflecting these changes: average refunds are up 11.1% compared to last year. This post covers what changed, what it means for you, and two deadlines hitting in the next three weeks.

Why This Was the Biggest Tax Story of the Last Decade BACKGROUND

When the Tax Cuts and Jobs Act passed in December 2017, most individual tax provisions were written with a built-in expiration date of December 31, 2025. That expiration was a budget maneuver, not policy intention. Congress assumed a future majority would extend them before they lapsed. For years, that assumption sat in the background. Then 2025 arrived and the deadline became urgent.

If nothing had passed, nearly every American taxpayer would have seen a tax increase on January 1, 2026. The top marginal rate would have risen from 37% to 39.6%. The standard deduction would have been cut roughly in half. The child tax credit would have dropped from $2,000 to $1,000 per child. The 20% QBI deduction for small business owners would have expired entirely. The estate tax exemption would have dropped from $13.99 million to approximately $7 million per person.

Congress acted. The House passed the One Big Beautiful Bill Act on May 22, 2025. The Senate approved it on July 1, 2025. President Trump signed it on July 4, 2025. The TCJA did not sunset. But the new law was not a simple extension — it modified provisions, made some permanent, kept others temporary with new sunset dates, added four entirely new deductions, and reversed most of the Inflation Reduction Act’s clean energy credits.

We are now six months into the first tax year fully governed by the OBBBA. Here is where things stand as of June 13, 2026.

⚠ Warning: “The TCJA was extended” oversimplifies what happened. The OBBBA made some provisions permanent, modified several amounts upward, kept certain provisions temporary with new expiration dates, and added provisions that never existed in TCJA. Understanding which category your situation falls into is the entire game.

What the Numbers Actually Show in 2026 2026 DATA

The OBBBA is no longer theoretical — it is showing up in real numbers:

• The average federal tax refund as of April 3, 2026 was $3,462 — up 11.1% compared to the same point in 2025. The 2026 filing season was the first to reflect OBBBA changes including the tip deduction, overtime deduction, senior deduction, and larger child tax credit.
• The OBBBA’s individual tax cuts reduced revenue by an estimated $129 billion in 2025 alone. Because the IRS did not adjust withholding tables fast enough to reflect those cuts, most of that $129 billion showed up as larger refunds rather than higher take-home pay during the year.
• The Tax Foundation estimates average after-tax incomes rose approximately 0.8% in 2025 as a direct result of OBBBA provisions, with an average tax cut of $611 per filer.
• The OBBBA is projected to reduce federal tax revenue by nearly $5.2 trillion between 2025 and 2034, adding significantly to the federal deficit. This is the trade-off that funded the permanence.
• 62% of tax filers avoided what would have been a tax increase had the TCJA been allowed to expire, according to the Tax Foundation.

⚠ Warning: Larger refunds are not necessarily a good thing. A bigger refund means you overwitheld during the year — you gave the government an interest-free loan. If your refund jumped significantly, consider adjusting your W-4 withholding for 2026 so you keep more money in each paycheck rather than waiting for a lump sum next April.

What Is Now Permanent — No More Sunset Risk PERMANENT

1

Tax Brackets — 10% Through 37%, Permanent

The seven TCJA rates — 10%, 12%, 22%, 24%, 32%, 35%, and 37% — are now permanent. The 2026 reversion to pre-TCJA rates (which would have raised the top rate to 39.6% and increased nearly every bracket) is permanently off the table. The OBBBA also provided a one-time extra inflation adjustment for the 10% and 12% bracket thresholds in 2026, giving lower-bracket taxpayers a slightly wider margin.

What this means: Your 2026 bracket is the same as your 2025 bracket, adjusted for normal inflation. No surprise rate increase. Roth conversion planning no longer needs to assume rates will jump in 2026.

2

Standard Deduction — Permanent at ~$15,750 / $31,500

The higher TCJA standard deduction framework is now permanent and continues to be adjusted for inflation annually. For 2026: approximately $15,750 for single filers and $31,500 for married filing jointly. Without the OBBBA, it would have been cut roughly in half, forcing millions of taxpayers back to itemizing.

What this means: Roughly 90% of taxpayers take the standard deduction. For them, nothing changes. But see the new charitable contribution floor below — it affects itemizers.

3

Child Tax Credit — Permanent at $2,200 Per Child

The Child Tax Credit is now permanently set at $2,200 per qualifying child (up from TCJA’s $2,000), with the refundable portion now indexed to inflation annually. Phaseout thresholds remain at $200,000 (single) and $400,000 (married filing jointly). Without OBBBA: $1,000 per child with phaseout starting at $75,000.

What this means: Families get a slightly larger credit permanently. The expanded phaseout thresholds from TCJA also remain, protecting middle-income families from losing the credit as income grows.

4

QBI Deduction (Sec. 199A) — Permanent, Enhanced

The 20% Qualified Business Income deduction for pass-through owners — S-corps, partnerships, sole proprietors, and REITs — is now permanent. The OBBBA also expanded phase-in ranges (from $50,000 to $75,000 single; $100,000 to $150,000 married) and added a $400 minimum deduction for taxpayers with at least $1,000 in QBI. Section 179 expensing is raised to $2.5 million.

What this means: Pass-through business owners keep their 20% deduction permanently. The effective top rate on qualified pass-through income stays at 29.6% rather than reverting toward 37%+. For REIT investors, QBI also effectively caps the top rate on REIT dividends at 29.6%.

5

Estate & Gift Tax Exemption — Permanent at $15 Million Per Person

The federal estate, gift, and generation-skipping transfer tax exemption is now permanently set at $15 million per person ($30 million for married couples), indexed to inflation starting in 2027. Without OBBBA, it would have dropped from $13.99 million to approximately $7 million per person on January 1, 2026. The OBBBA’s exemption is higher than TCJA’s and carries no sunset.

What this means: The urgency around year-end gifting to “use the exemption before sunset” has passed. The estate planning crisis is resolved. Focus now shifts to growth assets, trust structures, and tax-efficient wealth transfer rather than rushing to use exemption before a deadline.

6

Bonus Depreciation — 100% Permanently Restored

Bonus depreciation had been phasing down under TCJA (80%, 60%, 40% in 2025). The OBBBA permanently restores 100% first-year expensing for qualified property acquired and placed in service after January 19, 2025. Domestic R&D expensing is also permanently restored. Section 174 R&E capitalization — which forced businesses to capitalize and amortize research costs over five years starting in 2022 — is repealed going forward, and a special small business election allows retroactive correction of 2022–2024 returns.

What this means: Buy qualifying business equipment or property, deduct 100% in year one — permanently. The Section 174 retroactive election has a deadline: July 6, 2026. See the urgent deadlines section below.

⚠ Warning: “Permanent” in tax law means permanent until Congress changes it. These provisions carry no built-in sunset date, which is significantly better than the TCJA’s temporary structure. But a future Congress can always legislate new changes. Permanent reduces planning risk — it does not eliminate it.

What Is Temporary — New Sunset Dates to Watch EXPIRES 2028–2030

SALT Cap$40,400 for 2026 — reverts to $10,000 in 2030

The SALT deduction cap is temporarily raised to $40,400 for 2026 (indexed at 101% per year through 2029) for taxpayers earning under $500,000. This is major relief for homeowners in New Jersey, New York, California, and Illinois who have been locked at $10,000 since 2017. However it phases down for high earners and reverts to $10,000 after 2029. For 2026: if your state and local taxes exceed $10,000 and your income is under $500,000, revisit whether itemizing now makes sense for the first time in years.

No Tax on TipsUp to $25,000 deduction, 2025–2028

Workers in occupations that customarily receive tips can deduct up to $25,000 in qualifying tip income from federal taxable income. Phases out above $150,000 MAGI (single) or $300,000 (married). Tips must be properly reported. Expires after 2028. Claimed on the new IRS Schedule 1-A.

No Tax on Overtime2025–2028

Qualifying overtime pay is deductible from federal taxable income, subject to income phase-outs. Expires after 2028. Also claimed on Schedule 1-A. Both the tip and overtime deductions were retroactive to 2025 — if you did not account for them on your 2025 return, you may have overpaid.

Senior Deduction$6,000 additional deduction, 2025–2028

Taxpayers age 65 and older receive a $6,000 above-the-line deduction in addition to the standard deduction or itemized deductions. Phases out above $75,000 MAGI (single) or $150,000 (joint). Requires a valid Social Security number. Not available for Married Filing Separately. Expires after 2028.

Auto Loan Interest2025–2028, U.S.-assembled vehicles only

Interest paid on auto loans for vehicles assembled in the United States is deductible, subject to income limits. Expires after 2028. Another deduction on Schedule 1-A that is available to standard-deduction takers.

⚠ Warning: All four new deductions — tips, overtime, senior, auto loan — expire after 2028. A future Congress will face the same sunset debate all over again. Plan your finances as if they disappear in 2029 and treat any extension as a bonus.

Two New Limits That Hurt High-Earning Itemizers WATCH OUT

The OBBBA was not all give. Two provisions specifically limit the tax benefit of itemized deductions for higher-income taxpayers that were not widely covered in initial reporting:

1Cap on Itemized Deduction Value for Top Bracket Taxpayers

Beginning in 2026, the OBBBA limits the overall tax benefit of itemized deductions for individuals in the highest tax bracket (37%). Effectively, the value of itemized deductions is capped for top earners, reducing the tax savings generated by mortgage interest, charitable contributions, and other itemizable expenses. If you are a high earner who itemizes, your deductions may produce less tax savings in 2026 than they did in 2025.

2New Charitable Contribution Floor — 0.5% of AGI

The OBBBA introduces a new rule requiring charitable contributions to exceed 0.5% of adjusted gross income before the excess becomes deductible. On a $500,000 AGI, that means the first $2,500 in charitable donations generates zero deduction — only contributions above that floor are deductible. This reduces the tax benefit of charitable giving for high-income itemizers and will change the math for donor-advised fund strategies and bunching strategies.

⚠ Warning: If you are a high-income taxpayer who relies on charitable deductions to reduce your tax bill, these two provisions deserve a close look with your CPA before year end. The interaction between the itemized deduction cap, the charitable floor, and the higher SALT ceiling can produce unexpected results for 2026 taxable income.

What Got Eliminated — Clean Energy and EV Credits Are Gone ENDED

ENDED 9/30/2025EV Credits — $7,500 new / $4,000 used

Both the new EV credit ($7,500) and used EV credit ($4,000) ended September 30, 2025. If you purchased before that date, you still claim the credit on your 2025 return. Purchases after September 30, 2025 — no credit available.

ENDED 12/31/2025Residential Clean Energy Credit (Solar, Wind, Battery Storage)

The 30% credit for solar panels, wind turbines, geothermal systems, and battery storage (Section 25D) ended December 31, 2025. Systems installed in 2026 or later receive no credit. If you were planning a solar installation, this window has closed.

ENDED 12/31/2025Energy-Efficient Home Improvement Credit (Insulation, Windows, HVAC)

The 30% credit for insulation, windows, doors, and HVAC systems (Section 25C) also ended December 31, 2025. Home improvement projects completed in 2026 do not qualify.

ENDING SOONNew Energy Efficient Home Credit (Builders) — Ends June 30, 2026

The credit for builders of energy-efficient new homes (Section 45L) terminates for properties acquired after June 30, 2026. If you are a homebuilder or developer, this deadline is two weeks away.

Two Deadlines Hitting Right Now — Act Before July 6, 2026 URGENT

Most articles written about the OBBBA focused on the July 4, 2025 signing. What they did not cover: the law created specific action windows that close in the coming weeks. If either of these applies to you, call your CPA before July 6.

DEADLINE: JULY 6, 2026Section 174 Small Business R&E Election — Up to 3 Years of Refunds

Starting in 2022, the TCJA required businesses to capitalize and amortize domestic research and development expenses over five years instead of deducting them immediately. This forced thousands of small businesses — especially tech, engineering, and software companies — to pay significantly higher taxes on 2022, 2023, and 2024 returns. The OBBBA repealed this requirement and created a 12-month window for qualified small businesses to file an election on their 2025 return to retroactively deduct those unamortized balances — and claim refunds for the taxes overpaid across those three prior years. That 12-month window closes July 6, 2026 (July 4 falls on a Saturday). If your business capitalized R&E expenses under Section 174 in 2022–2024, this election could represent a substantial refund. Do not miss this deadline.

DEADLINE: JUNE 30, 2026New Energy Efficient Home Credit for Builders

The Section 45L new energy efficient home credit terminates for properties acquired after June 30, 2026 — just 17 days away. Homebuilders and developers who have energy-efficient homes nearing completion should consult their tax advisor immediately about whether qualifying these properties before June 30 is feasible.

The State Tax Wild Card — Not Every State Follows Federal Rules STATE TAXES

Here is what most national coverage of the OBBBA missed: federal law and state law are separate. Just because the OBBBA made provisions permanent at the federal level does not mean your state follows suit. States actively conform to or decouple from federal changes based on their own legislative agendas and revenue needs.

As of June 13, 2026, here is where state conformity stands:

• Arizona enacted HB 4168 on June 13, 2026, synchronizing with OBBBA provisions including the tip, overtime, senior, and auto loan deductions — retroactively to tax years beginning after December 31, 2024.
• New York has enacted budget legislation decoupling from OBBBA’s immediate expensing for R&E expenditures — meaning New York businesses must still amortize R&E over 60 months for state purposes even though the federal deduction is now immediate. A federal R&E refund does not automatically mean a New York refund.
• California historically decouples from most federal bonus depreciation and expensing provisions. Expect California to largely decouple from OBBBA’s 100% bonus depreciation as well.
• Other states are still actively considering OBBBA-related conformity bills. Positions may change mid-year as legislative sessions continue through 2026.

⚠ Warning: If you live in a high-tax state, calculate your federal and state tax liability separately. A provision that saves you $5,000 federally might save you nothing at the state level if your state has decoupled. This is especially important for businesses claiming R&E deductions, bonus depreciation, and the new Schedule 1-A deductions.

 CPA Insight: What to Do Right Now in June 2026

Revisit whether itemizing makes sense for 2026. The SALT cap increase to $40,400 is the most underappreciated change in the OBBBA for middle and upper-middle income taxpayers in high-tax states. If you own a home in New Jersey, New York, California, or Illinois and your state and local taxes exceed $10,000, run the numbers on itemizing for the first time since 2017. The math may have flipped.

If your 2026 refund was unusually large, adjust your W-4. The OBBBA’s 2025 tax cuts were not reflected in IRS withholding tables fast enough. Many taxpayers massively overwitheld in 2025 and received large 2026 refunds. That is your money sitting with the IRS interest-free. Go to IRS.gov and use the Tax Withholding Estimator to recalculate and update your W-4 for the rest of 2026.

Roth conversion strategy has changed. The core case for Roth conversions was “convert now before tax rates rise.” With rates now permanent at TCJA levels, that urgency is reduced. Roth conversions still make sense when your current bracket is lower than your expected retirement bracket, when you want to eliminate future RMDs, or when you are managing estate planning. But the “convert everything before the sunset” calculation is gone.

Schedule 1-A is new and your tax software may not default to asking about it. The four new OBBBA deductions — tips, overtime, senior, auto loan interest — are claimed on the IRS’s new Schedule 1-A. These are above-the-line deductions available even to taxpayers who take the standard deduction. If any of these apply to you or a family member, confirm your tax preparer or software has included them on your 2025 return. Many people who filed early may have missed them.

Quick Reference: Before vs. After OBBBA AT A GLANCE

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Provision	Without OBBBA	Under OBBBA
Tax Brackets	Top rate 39.6%; most brackets higher	PERMANENT 10%–37%
Standard Deduction	Roughly cut in half	PERMANENT ~$15,750 / $31,500
Child Tax Credit	$1,000/child; phaseout at $75K	PERMANENT $2,200/child
QBI Deduction	Expired entirely	PERMANENT 20% stays
Estate Tax Exemption	Dropped to ~$7M/person	PERMANENT $15M/person
Bonus Depreciation	Phasing to 0%	PERMANENT 100% restored
SALT Cap	Stayed at $10,000	TEMP to 2029 $40,400 in 2026
Tip / Overtime Deductions	Did not exist	TEMP 2025–2028 Schedule 1-A
EV Tax Credits	$7,500 new / $4,000 used	ENDED Sept 30, 2025
Solar / Clean Energy Credit	30% credit in place	ENDED Dec 31, 2025

Based on OBBBA as signed July 4, 2025 and current IRS guidance as of June 13, 2026. State conformity varies — consult a tax professional for your specific situation.

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About the author: Jenny is a CPA with experience in the wealth and asset management industry, valuation, and financial reporting. She writes about practical investing strategies, tax optimization, and long-term wealth building for average earners.

Disclaimer: This content is for educational purposes only and not tax or legal advice. The author is a CPA and not a registered investment adviser or tax attorney. Information is based on the One Big Beautiful Bill Act (P.L. 119-21) as signed July 4, 2025, current IRS guidance, and publicly available state conformity information as of June 13, 2026. Tax law is complex and individual situations vary significantly. Always consult a qualified tax professional before making decisions based on this content.