What expired in the TCJA sunset and what did OBBBA make permanent?
Last reviewed: July 2026
Most of the 2017 Tax Cuts and Jobs Act was written to expire at the end of 2025. That deadline was the TCJA sunset, and it would have raised taxes for nearly every household in 2026. Then the One Big Beautiful Bill Act, known as OBBBA, changed the story. Signed in July 2025, OBBBA made the core TCJA tax cuts permanent, locked in the higher estate exemption, and added a handful of brand-new deductions that run only through 2028. In short: the cliff most planners feared did not arrive.
On This Page
- Key Takeaways
- What was the TCJA sunset, and why did it matter?
- What did OBBBA make permanent?
- How did OBBBA change the estate and gift tax exemption?
- What new deductions did OBBBA create through 2028?
- Did OBBBA change the SALT deduction cap?
- What should pre-retirees actually do about these changes?
- Frequently Asked Questions
- Disclosures
Key Takeaways
- OBBBA made the TCJA individual framework permanent, so the lower rates, larger standard deduction, and 20% pass-through deduction did not revert in 2026.
- The top federal rate stays 37% instead of climbing back to 39.6% under the old sunset rules.
- The estate and gift exemption is locked at $15 million per person, not the $7 million the sunset would have forced.
- OBBBA added new deductions for 2025 through 2028, including a $6,000 deduction for taxpayers 65 and older.
- Most of OBBBA is permanent, but the new bonus deductions expire after 2028, so timing still matters.
About the Author: Jeff Judge, CFP®, AEP®, ChFC®, CLU® is Managing Partner of Chesapeake Financial Planners in Forest Hill, Maryland. He has guided families and business owners across Harford County and the Baltimore metro area through tax-law change since earning his CFP® certification in 2013, using Chesapeake's signature process, the R.U.D.D.E.R. Method™. "For two years clients asked me whether they should rush gifts and Roth conversions before the sunset," Jeff says. "The ones who panicked and the ones who froze both made the same mistake: they planned around a headline instead of their own numbers."
What was the TCJA sunset, and why did it matter?
The TCJA sunset was the scheduled expiration of most individual provisions in the 2017 Tax Cuts and Jobs Act, set for December 31, 2025. The 2017 law lowered income tax rates, nearly doubled the standard deduction, roughly doubled the estate tax exemption, capped state and local tax deductions at $10,000, and created the 20% deduction for pass-through business income. Almost all of it was temporary. Without action, 2026 brackets, deductions, and exemptions would have snapped back to their pre-2018 shape, and the top rate would have returned to 39.6%. That scheduled TCJA expiration is what made planners and business owners nervous for the better part of two years.
Here is the part most people miss. The sunset was not about one tax. It touched rates, deductions, the child tax credit, the estate exemption, and pass-through income all at once, which is why a single piece of legislation could move so many numbers.
What did OBBBA make permanent?
OBBBA made the heart of the TCJA permanent. The Internal Revenue Service puts it plainly: the "One, Big, Beautiful Bill Act significantly affects federal taxes, credits and deductions. It was signed into law on July 4, 2025, as Public Law 119-21." For individuals, that meant the lower rate structure, the larger standard deduction, and the pass-through deduction all became permanent rather than expiring.
The table below shows the provisions pre-retirees ask about most, what the sunset would have done, and where OBBBA landed them.
| TCJA provision | If the sunset had happened (2026) | What OBBBA locked in |
|---|---|---|
| Top income tax rate | Back to 39.6% | Stays 37%, made permanent |
| Standard deduction (2026) | Roughly cut in half | Permanent: $32,200 joint, $16,100 single |
| Estate and gift exemption | Drops to about $7 million | $15 million per person, made permanent |
| 20% QBI pass-through deduction | Disappears | Made permanent, plus a new $400 floor |
| SALT deduction cap | Stays $10,000 | Raised to $40,000 through 2029 |
The standard deduction for 2026 is set at $32,200 for joint filers and $16,100 for single filers. The 20% qualified business income deduction survived too, and OBBBA added a $400 minimum deduction for owners with at least $1,000 of active pass-through income. For a business owner who feared losing that 20% break, this was the headline win.
How did OBBBA change the estate and gift tax exemption?
OBBBA raised the federal estate and gift tax exemption to $15 million per person, or $30 million for a married couple, and made that level permanent starting in 2026. Under the TCJA sunset, the exemption was scheduled to fall to roughly $7 million per person. The estate tax exemption did not drop. The top estate and gift tax rate stays 40%, and the annual gift exclusion holds at $19,000 per recipient.
Does the $15 million estate exemption expire again? No. Unlike the TCJA exemption, the $15 million baseline has no built-in sunset, and it begins adjusting for inflation in 2027. That removes the "use it or lose it" deadline that drove a wave of rushed gifting in 2024 and 2025. Families with estates near or above the old threshold now have room to plan deliberately instead of racing a calendar, a shift we cover in estate tax planning for high-net-worth families.
What new deductions did OBBBA create through 2028?
OBBBA added four temporary deductions that run from 2025 through 2028, separate from anything in the original TCJA. These are new, they phase out at higher incomes, and they are scheduled to end after 2028 unless Congress extends them. According to the IRS, the four are:
- A $6,000 deduction for individuals age 65 and older ($12,000 for a couple if both qualify), phasing out above $75,000 of income ($150,000 joint).
- A deduction for qualified tips, up to $25,000 per year.
- A deduction for qualified overtime pay, up to $12,500 ($25,000 joint).
- A deduction for interest on a U.S.-assembled car loan, up to $10,000.
For pre-retirees, the senior deduction is the one to watch. It stacks on top of the standard deduction and is available whether or not you itemize. Jeff Judge has already seen the confusion it creates. "Clients hear 'no tax for seniors' and assume their Social Security is suddenly untaxed," he says. "It is a $6,000 deduction with an income phase-out, not a blanket exemption, and reading it the wrong way leads to a bad withholding decision." Business owners over 65 have a narrower planning window here, which we walk through in the OBBBA senior deduction guide.
Did OBBBA change the SALT deduction cap?
Yes. OBBBA raised the cap on state and local tax deductions from $10,000 to $40,000 for tax years 2025 through 2029, then it reverts to $10,000 in 2030. The higher cap phases down for taxpayers with income above $500,000. The original $10,000 TCJA cap had been one of the most criticized parts of the 2017 law, especially for homeowners in higher-tax states.
Does the bigger SALT cap help if I take the standard deduction? No. The SALT deduction only matters if you itemize, and OBBBA's larger standard deduction means most households still come out ahead taking the standard amount. The raised cap mostly helps people whose mortgage interest, charitable gifts, and state taxes already push them past the standard deduction. If you are not itemizing, the $40,000 cap changes nothing for you.
What should pre-retirees actually do about these changes?
Start by separating what is permanent from what is temporary. The lower rates, the larger standard deduction, the $15 million estate exemption, and the QBI deduction are now permanent, so there is no deadline forcing your hand. The new senior, tips, overtime, and car loan deductions expire after 2028, so those are the ones with a clock. Build your plan around that distinction instead of around the next headline.
This is where a repeatable process beats reacting to each new law. The R.U.D.D.E.R. Method™ is Chesapeake Financial Planners' six-step planning process: Review and Recognize, Uncover and Understand, Design and Develop, Discuss and Decide, Execute and Empower, and Reassess and Refine. For a tax-law change like OBBBA, it forces the order most people skip: understand which of your provisions actually moved before you change a single account.
"The biggest mistake I see now is people assuming permanent means forever," Jeff Judge says. "A future Congress can change any of this. Permanent just means there is no automatic expiration, so you plan with the law you have and stay ready to adjust." For pre-retirees, the practical levers did not vanish with the sunset. Bracket-aware Roth conversions in the gap years before required minimum distributions still matter, and so does coordinating income against the new deduction phase-outs.
Related Topics Worth Reading
These pieces go deeper on the decisions the One Big Beautiful Bill Act affects.
- OBBBA touched Social Security taxation too, and the reality is narrower than the headlines: Did the New Tax Law Eliminate Social Security Taxes?.
- For households between $1M and $3M weighing the permanent exemption: High-Net-Worth Financial Planning for the $1M to $3M Investor.
- A standard-deduction strategy that pairs well with the new permanent amounts: Donor-Advised Funds: The Flexible Way to Give and Save on Taxes.
Frequently Asked Questions
Did the TCJA actually expire?
No. The Tax Cuts and Jobs Act individual provisions were scheduled to expire on December 31, 2025, but OBBBA made most of them permanent before that happened. The lower rates, larger standard deduction, and pass-through deduction continue in 2026 rather than reverting to their pre-2018 levels.
What is OBBBA in simple terms?
OBBBA is the One Big Beautiful Bill Act, a federal tax law signed on July 4, 2025, as Public Law 119-21. It made the core 2017 Tax Cuts and Jobs Act provisions permanent, raised the estate exemption to $15 million per person, lifted the SALT cap to $40,000 through 2029, and created several new temporary deductions.
Is the top tax rate still 37%?
Yes. OBBBA made the TCJA rate structure permanent, so the top federal income tax rate stays 37% rather than returning to the 39.6% that the sunset would have restored. For 2026, that top rate applies to taxable income above $640,600 for single filers and $768,700 for married couples filing jointly.
How long does the new senior deduction last?
The $6,000 senior deduction is available for tax years 2025 through 2028 for individuals age 65 and older. It phases out for income above $75,000 ($150,000 for joint filers) and is scheduled to end after 2028 unless Congress extends it. It is a deduction, not a full exemption from tax on Social Security.
Did OBBBA make the estate tax exemption permanent?
Yes. OBBBA set the federal estate and gift tax exemption at $15 million per person, or $30 million per couple, and made that level permanent beginning in 2026, with inflation adjustments starting in 2027. The scheduled TCJA sunset to roughly $7 million did not take effect, so there is no longer a hard deadline forcing large lifetime gifts.
Does OBBBA help me if I am not a business owner or a senior?
Yes. The most universal OBBBA benefits are the permanent lower tax rates and the larger permanent standard deduction, which apply to nearly every household. Wage earners may also use the new tips, overtime, and car loan interest deductions through 2028 if they qualify under the income limits.
Where can pre-retirees get help mapping OBBBA to their own plan?
The TCJA sunset is over, but OBBBA left pre-retirees with a new set of choices rather than fewer of them. At Chesapeake Financial Planners we work through tax-law changes like this with clients every week, separating the permanent provisions from the deductions that expire after 2028. If you are weighing how OBBBA reshapes your retirement and tax plan, a second opinion costs you nothing. Visit chesapeakefp.com to learn more.
Want to go deeper? Our Tax Strategies in Retirement Checklist walks through this step by step.
Disclosures
The information provided is for educational purposes only and should not be construed as investment advice. Investment strategies should be tailored to individual circumstances, risk tolerance, and goals. Past performance doesn't guarantee future results. Consult with qualified financial professionals regarding your specific situation.
Traditional IRA account owners have considerations to make before performing a Roth IRA conversion. These primarily include income tax consequences on the converted amount in the year of conversion, withdrawal limitations from a Roth IRA, and income limitations for future contributions to a Roth IRA. In addition, if you are required to take a required minimum distribution (RMD) in the year you convert, you must do so before converting to a Roth IRA.
This information is not intended to be a substitute for specific individualized tax, investment or legal advice. We suggest that you discuss your specific situation with a qualified tax, legal or financial advisor.
Advisors associated with Chesapeake Financial Planners may be either (1) LPL Financial Registered Representatives offering securities through LPL Financial, Member FINRA and SIPC, and investment advisor representatives offering investment advice through Great Valley Advisor Group; or (2) solely investment advisor representatives offering investment advice through Great Valley Advisor Group and not affiliated with LPL Financial. Great Valley Advisor Group, and Chesapeake Financial Planners are separate entities from LPL Financial.
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