Most TCJA individual tax cuts expire after Dec. 31, 2025. In 2026, rates likely rise, the standard deduction shrinks, personal exemptions return, the Child Tax Credit drops to $1,000 with lower phaseouts, the SALT cap disappears but Pease returns, 199A ends, and the estate exclusion halves. Details and action steps below.
Quick answer: what actually changes in 2026?
- Tax rates & brackets: 37% top rate replaced by 39.6%; TCJA bracket structure reverts to pre-2017 10/15/25/28/33/35/39.6 (with 2026 inflation indexing).
- Standard deduction: Drops toward pre-TCJA levels (then indexed).
- Personal exemptions: Return (inflation-adjusted).
- Child Tax Credit: Falls to $1,000/child; phaseouts drop to $75k single / $110k MFJ; $500 other-dependent credit ends.
- SALT: $10,000 cap ends; SALT itemizing uncapped again (subject to other limitations).
- Pease limitation: Returns, trimming itemized deductions for higher-income households.
- Section 199A (QBI) 20% deduction: Ends after 2025.
- Estate & gift: Basic exclusion roughly halves from TCJA-elevated level starting 2026 (inflation-adjusted).
- AMT: Exemption/phaseout relief expires; reverts to lower pre-TCJA parameters.
- Medical expense threshold: Stays 7.5% of AGI (permanent).
Bottom line: 2026 likely raises tax liability for many, especially single parents (CTC cut) and retirees with investment income (AMT/Pease/SALT interplay).
What seniors should expect in 2026
Standard deduction vs. personal exemptions
The bigger TCJA standard deduction shrinks in 2026, but personal exemptions return. Seniors still get an additional standard deduction for age 65+; that rule was not a TCJA temporary. Net effect varies: smaller households may see higher taxable income; larger households may benefit more from restored exemptions.
Bottom line: Don’t assume the returning exemption fully offsets the smaller standard deduction—run both itemizing and standard with 2026 parameters.
Medical expense deduction stays at 7.5% of AGI
Helpful for retirees with high out-of-pocket costs: the threshold remains 7.5% of AGI (permanent under separate law).
Bottom line: If you itemize, bunch elective medical/dental into a single year to clear the 7.5% hurdle.
SALT, Pease, and mortgage interest
- SALT cap ends: Itemizers in high-tax states may deduct full eligible state income/sales/property taxes starting 2026.
- Pease returns: Higher-income seniors see a reduction of itemized deductions above income thresholds.
- Mortgage interest rules revert: Deductibility limits ease vs. TCJA rules (e.g., $1M cap restores; HELOC interest again deductible when used to buy/build/improve).
Bottom line: Some seniors win from uncapped SALT but lose part of it back via Pease.
AMT exposure may tick up
TCJA’s higher AMT exemption/phaseouts expire; with SALT back, some higher-income retirees with significant state taxes may re-enter AMT.
Bottom line: Check AMT in your 2026 projections—especially if you pay high state taxes.
Estate & gift planning
The basic exclusion amount (estate/gift/GST) drops by roughly half in 2026 vs. TCJA-era levels (still indexed). Consider lifetime gifting before year-end 2025; Treasury has confirmed no “clawback” for gifts made under the higher exemption. (Exclusion reversion: CRS.)
Bottom line: If your estate is near the line, coordinate with counsel on gifting, SLATs, and portability before the lower 2026 exclusion applies.
What single parents (Head of Household) should expect
The Child Tax Credit shrinks—and phaseouts drop
In 2026, CTC reverts to $1,000/child, with phaseouts plunging to $75k (single) / $110k (MFJ); partial refundability rules change; $500 ODC ends (hits families with 17-year-olds and other dependents).
Bottom line: Many HOH filers will see a meaningful net tax increase from a smaller CTC and lower phaseout thresholds.
HOH standard deduction reversion vs. exemptions
Head of Household’s standard deduction drops from TCJA-elevated amounts; personal exemptions (for you and your dependents) return. Net effect depends on income, number/ages of children, and whether you itemize.
Bottom line: Model both: HOH standard deduction + exemptions vs. itemizing (with SALT uncapped).
AMT & SALT interplay
Uncapped SALT helps itemizers, but Pease trims deductions at higher incomes, and AMT can neutralize some SALT benefit.
Bottom line: For HOH in high-tax states, AMT check is essential when projecting 2026.
2025 vs. 2026: side-by-side (high-level)
| Item (individual) | 2025 (TCJA rules) | 2026 (post-sunset) |
|---|---|---|
| Rates & top bracket | 7 brackets, top 37% | Pre-TCJA brackets, top 39.6% |
| Standard deduction | Higher TCJA amounts | Lower pre-TCJA baseline (inflation-adj.) |
| Personal exemptions | Suspended (=$0) | Restored (inflation-adj.) |
| Child Tax Credit | $2,000/child; $200k/$400k phaseouts; ACTC up to indexed cap; $500 ODC | $1,000/child; $75k/$110k phaseouts; different refund rules; ODC ends |
| SALT | $10k cap | No cap (subject to other limits) |
| Pease limit | Suspended | Returns (cuts itemized for high-income) |
| Mortgage interest | Post-TCJA limits (e.g., $750k) | Pre-TCJA rules (e.g., $1M; HELOC rules restored) |
| AMT | Higher exemptions/phaseouts | Lower exemptions/phaseouts (pre-TCJA) |
| Section 199A (QBI) | 20% deduction allowed | Ends |
| Estate & gift exclusion | Elevated (TCJA-doubled) | ~Half (inflation-adj.) |
Sources: CRS TCJA Expiring Provisions (Congress.gov) and IRS publications; last checked Jan 16, 2026.
Bottom line: 2026 brings higher marginal rates, less generous family credits, and structural shifts that can swing liabilities up or down depending on SALT/Pease and exemptions.
Planning moves (2025–2026): checklist to blunt the hit
- Run a dual-year projection (2025 vs. 2026) with your preparer to see the delta from rates, CTC, Pease, AMT, SALT, exemptions. (Framework from CRS/IRS.)
- Estate: If your estate could exceed the lower 2026 exclusion, evaluate lifetime gifts in 2025; coordinate spousal planning/portability.
- Bunch deductions if you’ll itemize in 2026 (SALT back; big medical years still at 7.5% AGI).
- Withholding & estimates: Update for 2026 brackets/credits to avoid surprises.
- Pass-through owners: If you rely on 199A, plan for its ending (entity choice, compensation mix, retirement contributions).
- Single parents: Expect CTC cuts; consider flexible spending accounts, dependent-care benefits, and timing income to stay under phaseouts where possible.
- Mortgage/HELOC: 2026 rules may improve deductibility—coordinate any refi/HELOC used to improve your home.
- AMT check: Especially for high-SALT households; model before executing SALT-heavy strategies.
Bottom line: The biggest levers are timing income/deductions, estate moves before 2026, and anticipating loss of 199A/CTC generosity.
Worked examples (simplified, illustrative, not tax advice)
Example A: Senior couple, higher SALT, modest mortgage
- 2026: Smaller standard deduction vs. 2025, personal exemptions return, SALT uncapped, but Pease reduces itemized; AMT risk rises. Depending on income mix, their net itemized benefit may be partially clawed back. (Mechanics per CRS.)
Takeaway: This couple should project AMT and may benefit from bunching medical/taxes or paying certain bills in the year with the larger itemized total.
Example B: Single parent (HOH) with two kids, W-2 income ~$95k
- 2026: CTC drops to $1,000 per child and phaseouts bite earlier; HOH standard deduction falls, exemptions return. Net: often a higher tax bill vs. 2025, partially offset if SALT itemizing is sizable.
Takeaway: Consider dependent-care benefits, FSA use, and keeping income below phaseout thresholds where feasible.
Disclaimer
This article is educational and not individualized tax, legal, or financial advice. Tax law can change; numbers here reflect current federal law and reputable summaries at the time of publication. Confirm with a qualified professional and the IRS before acting.
Sensitive facts: source notes
- CRS Reference Table—TCJA Expiring Provisions (rates, standard deduction reversion, personal exemptions, CTC reversion, SALT cap end, Pease return, mortgage interest, AMT, QBI, estate exclusion): Source: CRS R47846 (Congress.gov), last checked Jan 16, 2026.
- Medical expense 7.5% AGI threshold permanence: Source: IRS Pub. 502 / Topic No. 502, last checked Jan 16, 2026.
FAQ section
Q1. Do income tax rates go up in 2026 when TCJA sunsets?
Yes. The TCJA rate schedule ends after 2025; 2026 reverts to pre-TCJA rates with a 39.6% top rate (brackets also revert, inflation-adjusted).
Q2. What happens to the standard deduction and personal exemptions in 2026?
The standard deduction shrinks toward pre-TCJA levels, while personal exemptions return (inflation-adjusted).
Q3. How does the Child Tax Credit change in 2026?
It reverts to $1,000/child with lower phaseouts ($75k single / $110k MFJ), and the $500 other-dependent credit expires.
Q4. Is the $10,000 SALT cap still in effect for 2026?
No. The cap ends after 2025; 2026 returns can deduct eligible SALT without the $10k cap (subject to other limits like Pease and AMT).
Q5. Does the 20% QBI (199A) deduction for pass-throughs continue in 2026?
No. Section 199A expires after 2025 under current law.
Q6. Will AMT hit more people in 2026?
Possibly. TCJA’s AMT relief expires, so lower exemptions/phaseouts + restored SALT can increase exposure.
Q7. What happens to the estate tax exemption in 2026?
It drops to about half of the TCJA-elevated level (inflation-adjusted), increasing the number of taxable estates.
Q8. Is the medical expense deduction still 7.5% of AGI in 2026?
Yes. The 7.5% AGI threshold is permanent under separate law.