It's been the elephant in the room for years, but now the clock is actually ticking. If you feel like your paycheck or your business finances are about to hit a wall, you're not imagining things. Most of the signature changes from the Tax Cuts and Jobs Act (TCJA)—the massive tax overhaul passed back in 2017—are on a collision course with a hard deadline.
Honestly, the term "tax cut" is a bit of a misnomer when you look at the fine print. While the corporate rate was made permanent, the stuff that affects your actual life is mostly temporary. We’re staring down a "tax cliff" that could fundamentally change how much money stays in your pocket starting in 2026.
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When Do Trump’s Tax Cuts Expire for Real?
Basically, the magic date is December 31, 2025.
Most people think these changes are just "the way taxes are now," but they were written with a "sunset" provision. This was a legislative trick used to pass the bill under specific budget rules. If Congress doesn't step in and pass new legislation (like the recently debated One Big Beautiful Bill or similar extensions), the rules revert back to what they were in 2017.
When you wake up on January 1, 2026, the tax code essentially travels back in time.
The Big Reversion: What Changes in 2026?
It’s not just one thing. It’s a cascade. Here is the breakdown of what is actually on the chopping block:
- Individual Tax Rates: The current brackets—10%, 12%, 22%, 24%, 32%, 35%, and 37%—will likely jump back to their old, higher levels. That 37% top rate? It goes back to 39.6%. The 12% bracket? It goes back to 15%.
- The Standard Deduction: This is the big one. The TCJA nearly doubled the standard deduction, which is why most people stopped itemizing. In 2026, that deduction is expected to be cut roughly in half.
- Child Tax Credit (CTC): Currently, it’s $2,000 per child. Unless extended, it drops back to **$1,000**. Plus, the income thresholds where you start losing the credit will plummet, meaning fewer families will qualify.
- Personal Exemptions: Remember those? They’ve been $0 since 2018. They are scheduled to return, which sounds good, but they usually don't make up for the massive loss in the standard deduction for most middle-class families.
Why the SALT Cap Flip-Flop Matters
If you live in a high-tax state like New York, California, or New Jersey, you’ve probably spent the last few years grumbling about the $10,000 SALT cap. This capped how much you could deduct for state and local taxes.
When do Trump's tax cuts expire, this cap actually disappears.
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It’s one of the few instances where the expiration might actually help certain high-income earners in specific states. Without the cap, you could theoretically deduct the full amount of your state income and property taxes again. However, the Alternative Minimum Tax (AMT)—which the TCJA mostly neutralized—is also coming back in a big way. The AMT often "claws back" those benefits, so don't start celebrating just yet.
Small Business Owners and the 199A Deduction
If you run a freelance business, a partnership, or an S-Corp, you’ve likely been taking the 20% Qualified Business Income (QBI) deduction.
This has been a massive win for "pass-through" entities. But here’s the kicker: this deduction is also tied to the 2025 sunset. If it expires, small business owners could see their effective tax rate jump by several percentage points overnight.
While the 21% corporate tax rate for big "C-Corps" is permanent, the break for the "little guy" is not. It’s a weird disparity that has tax professionals like those at the Brookings Institution and Tax Foundation sounding the alarm.
What about the "One Big Beautiful Bill"?
You might have heard headlines about the "One Big Beautiful Bill" (OBBB) or the Working Families Tax Cut. As we've moved into 2026, there has been a frantic push in Washington to make the "good parts" of the TCJA permanent.
Recent legislative efforts have tried to:
- Keep the higher standard deduction so people don't have to go back to digging through shoeboxes of receipts.
- Raise the SALT cap to something like $40,000 instead of letting it vanish or stay at $10,000.
- Restore 100% bonus depreciation for businesses buying equipment.
The problem? It costs trillions. The Congressional Budget Office (CBO) estimates that extending these cuts could add $4.6 trillion to the deficit over a decade. That’s a lot of zeros, and it’s why the debate is so heated.
Actionable Steps: How to Prepare for the Cliff
Don't just sit there and wait for your 2026 tax return to punch you in the gut. You've got a window of time to move the needle.
- Accelerate Income (If Possible): If you’re a business owner or have control over your bonuses, it might make sense to pull that income into 2025 while the rates are lower. Why pay 39.6% later if you can pay 37% now?
- Re-evaluate Itemization: Start tracking your potential deductions now (medical, charitable, mortgage interest). If the standard deduction drops in 2026, you might find that itemizing suddenly makes sense again for the first time in eight years.
- Review Your Estate Plan: The TCJA doubled the estate tax exemption (it's over $13 million for individuals right now). In 2026, that is scheduled to be cut in half. If you have a high net worth, you need to be talking to an estate lawyer yesterday to "lock in" those higher limits.
- Check Your Withholding: Once the rules change, your HR department's payroll software will update, but it’s notorious for being a bit "clunky" during transitions. Be ready to file a new W-4 in early 2026 to ensure you aren't under-withholding.
The reality is that "when do Trump's tax cuts expire" isn't just a political question—it's a math problem for your household. Whether Congress passes a last-minute extension or lets the cliff happen, the tax landscape of 2026 will look nothing like today.
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Next Steps for You:
Look at your 2024 tax return. Find the line for "Standard Deduction." Cut that number in half and look at the 2017 tax brackets. That will give you a "worst-case scenario" preview of what your 2026 might look like if Washington stays in a deadlock.