Who Stands to Lose if the Tax Cuts and Jobs Act Expires After 2025?
The Tax Cuts and Jobs Act (TCJA) of 2017 brought sweeping tax changes—but many of them are temporary. If Congress does not act to extend key provisions, most individual tax cuts will expire on December 31, 2025, and revert to 2017 law starting in 2026.
Here’s what’s changing—and who’s most at risk of paying more.
1. 📈 Higher Individual Income Tax Rates
What changes:
The current seven tax brackets—10%, 12%, 22%, 24%, 32%, 35%, and 37%—will revert to:
10%, 15%, 25%, 28%, 33%, 35%, and 39.6%.
Who’s affected the most:
Married Filing Jointly (MFJ): $200,000–$600,000 will see their marginal rate rise from 24% to 28%.
Single filers: $160,000–$400,000 will be pushed into higher brackets.
High earners ($600,000+ MFJ / $400,000+ Single): Will return to the top 39.6% bracket.
💡 Nearly all taxpayers earning over $100,000 will face higher marginal tax rates.
2. 🧾 Reduction in Standard Deduction and Return of Personal Exemptions
What changes:
The standard deduction will drop by about half:
MFJ: From ~$30,000 → ~$16,700
Single: From ~$15,000 → ~$8,350
Personal exemptions will return for all taxpayers — estimated at ~$5,300 per person in 2026 (adjusted for inflation).
Who’s affected the most:
Households earning $40,000–$150,000: Especially those who don’t itemize and rely on the standard deduction.
Fixed-income retirees and younger filers: Who benefited from the increased deduction under TCJA.
📌 This change will shrink deductions for millions of taxpayers, especially those in the middle-income bracket.
3. 👶 Child Tax Credit Cuts & Loss of “Other Dependent” Credit
What changes:
Child Tax Credit (CTC): Drops from $2,000 → $1,000 per qualifying child
$500 credit for other dependents disappears
Phaseout thresholds fall:
MFJ: From $400,000 → $110,000
Single: From $200,000 → $75,000
Who’s affected the most:
Families with children earning $110,000–$400,000 (MFJ) or $75,000–$200,000 (Single)
Households with multiple dependents who will lose thousands in credits.
🎯 Middle- and upper-middle-income families stand to lose valuable tax benefits.
4. ⚰️ Estate and Gift Tax Exemption Will Be Cut in Half
What changes:
The federal estate and gift tax exemption drops from ~$13.99M → ~$7M per person
Effective for deaths and gifts made in 2026 and beyond
Who’s affected the most:
High-net-worth individuals with estates above $7 million
Business owners and real estate investors planning to pass assets generationally
🧑💼 Estates that were previously shielded may now face significant tax exposure.
5. 💼 Elimination of the 20% Qualified Business Income (QBI) Deduction
What changes:
The Section 199A QBI deduction—worth up to 20% of qualified business income—will expire.
Who’s affected the most:
Pass-through business owners (S Corps, partnerships, sole props) earning $100,000–$500,000
High-income service providers who benefited from complex QBI planning
🏢 This will increase taxable income and effective rates for millions of small business owners.
6. 📉 Return of the Pease Limitation & Miscellaneous Itemized Deductions
What changes:
The Pease limitation returns, phasing out itemized deductions for high-income taxpayers
Miscellaneous itemized deductions (e.g., unreimbursed job expenses, tax prep fees) return
Who’s affected the most:
Taxpayers earning $250,000+ (Single) / $313,000+ (MFJ): Subject to deduction limits
W-2 employees with large unreimbursed business expenses may regain some deductions—but will need to itemize to benefit.
📌 This impacts higher earners who rely on deductions and professional expenses to lower their tax burden.
🧮 Conclusion
If the TCJA expires after 2025, nearly all taxpayers will see their taxes increase—some more than others.
Middle-income families will lose valuable credits and deductions
High earners will face higher rates and deduction limits
Business owners will lose the powerful QBI deduction
High-net-worth estates may face estate tax exposure for the first time
🔍 Now is the time to evaluate strategies like Roth conversions, income timing, estate planning, and charitable giving to take advantage of current laws while they last.
📅 Need help modeling your tax position in 2026?
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