If you’ve checked your paycheck lately and noticed it’s a bit different than it was a decade ago, you’re likely feeling the ripples of the Trump tax cuts. Most people call them that, but on paper, the law is the Tax Cuts and Jobs Act (TCJA) of 2017. It was a massive overhaul. Probably the biggest since the eighties.
It changed everything from how much your boss pays the IRS to whether or not you can deduct that move across the country. But here is the thing: a lot of what we think we know about these cuts is actually a bit fuzzy. It isn't just one "cut." It's a messy, complex web of expiring provisions, permanent shifts, and now, in 2026, a whole new layer of legislation called the One Big Beautiful Bill Act (OBBBA) that just stepped in to keep the party going.
The Core of the Trump Tax Cuts
Basically, the 2017 law did two big things. It slashed the corporate tax rate from 35% down to 21%—permanently. Then, it gave individuals a "temporary" haircut on their tax rates.
Before this happened, there were seven tax brackets. After? Still seven, but almost all of them got lower. For example, the top rate dropped from 39.6% to 37%. If you’re a middle-class earner in the 15% bracket, you likely saw that move down to 12%. It sounds small, but it adds up.
But there was a catch. To pay for these lower rates, the law basically nuked "personal exemptions." You used to get a little deduction just for existing and for each dependent you had. That went away. In its place, the standard deduction nearly doubled. For 2024, it was around $14,600 for singles. Under the new 2026 rules (thanks to the OBBBA extension), it’s jumping to over $16,000.
The 2025 Cliff and the 2026 Rescue
You might have heard experts panicking about the "2025 cliff." See, most of the individual tax cuts were set to expire on December 31, 2025. If Congress had done nothing, your taxes would have spiked back to 2017 levels this morning.
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Honestly, it would have been a mess.
But the One Big Beautiful Bill Act, signed in mid-2025, basically took those expiring Trump tax cuts and made them permanent. It also threw in some new perks. If you’re a senior over 65, you’re now looking at an extra $6,000 deduction. If you live in a high-tax state like New York or California, the "SALT" cap—which limited your state and local tax deductions to $10,000—just got bumped to $40,000 for 2025 and 2026. That’s a massive win for homeowners in those spots.
What about the Child Tax Credit?
This is a big one. The original 2017 law doubled the credit from $1,000 to $2,000. It also made it available to way more people by raising the income limits.
The 2025 extension (OBBBA) actually pushed this further. For the 2026 tax year, the credit is hitting $2,200 per child. It's indexed for inflation now, too. So it won't just sit there while groceries get more expensive.
Why Corporations Got the Better Deal
While you and I have to worry about whether Congress will extend our tax cuts every few years, corporations don't. Their 21% rate is baked into the cake. It doesn't expire.
Critics like William Gale from the Brookings Institution have pointed out that this makes the tax code way more unequal over time. The idea was that lower corporate taxes would lead to "trickle-down" effects—higher wages and more jobs. Did it work? It’s a mixed bag. The Tax Foundation found it boosted GDP by about 1.7%, but the Congressional Research Service noted that a lot of that extra cash went toward stock buybacks rather than worker raises.
The "Hidden" Stuff: SALT and Pass-Throughs
If you own a small business, you probably love the Section 199A deduction. This was a "gift" in the Trump tax cuts that lets "pass-through" entities (like LLCs or S-corps) deduct up to 20% of their business income right off the top.
It's a huge deal for freelancers and local shop owners. Like the individual rates, this was supposed to die in 2025. But the OBBBA saved it.
On the flip side, the SALT cap remains the most hated part of the law for many. Even with the recent increase to $40,000, it still hurts people in "blue" states more than "red" ones. It was a political move, sorta. And it worked. It shifted the tax burden significantly.
Is the National Debt Screwed?
Here is the elephant in the room. All these cuts cost money. The CBO (Congressional Budget Office) originally estimated the 2017 law would add about $1.9 trillion to the deficit over ten years. With the 2025 extensions, that number is ballooning.
We’re basically betting that the economic growth from these cuts will eventually pay for the cuts themselves. But "dynamic scoring" is a controversial game. Most non-partisan groups say the growth helps, but it doesn't cover the whole bill.
Actionable Steps for Your 2026 Taxes
Since we are officially in the "post-cliff" era, here is what you need to do to stay ahead:
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- Check your withholding: The IRS didn't automatically adjust the tables for the OBBBA changes immediately. You might be overpaying (which means a big refund later) or underpaying. Use the IRS Tax Withholding Estimator.
- Re-evaluate Itemizing: With the SALT cap now at $40,000, you might actually save more by itemizing your deductions instead of taking the standard deduction, especially if you have a big mortgage or high property taxes.
- Max the Senior Deduction: If you’re 65 or older, make sure your tax preparer knows about the new $6,000 "bonus" deduction. It's a new "hidden" gem in the code.
- Watch the EV Credits: The new law actually killed off several electric vehicle credits early. If you were planning on buying a Tesla or Rivian for the tax break, check the new "made in America" requirements—they're much stricter now.
The Trump tax cuts aren't just a thing of the past; they are the foundation of our current tax system. Whether you think they are a boon for the economy or a handout to the rich, they are here to stay for the foreseeable future.