🕷️ Crawler Inspector

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Raw Queries and Responses

1. Shard Calculation

Query:

Response:

Calculated Shard: 148 (from laksa163)

2. Crawled Status Check

Query:

curl -X POST \
  'http://laksa148.int.ahrefs:8124/' \
  -H 'Content-Type: text/plain' \
  -H 'X-ClickHouse-Database: crawler3' \
  -H 'Authorization: Basic YXBpOg==' \
  -d 'SELECT getAhrefsURLFromUnparsed(src_unparsed) AS found_url, ifNull(toUnixTimestamp(download_stamp), 0) AS crawl_time, ifNull(toUnixTimestamp(props_url_first_seen), 0) AS first_indexed_time, download_http_code AS http_code, src_unparsed AS src_unparsed, src_root_hash AS src_root_hash, history_drop_reason AS history_drop_reason, meta_title AS meta_title, meta_descriptions AS meta_descriptions, attrs_boilerpipe_text AS attrs_boilerpipe_text, attrs_markdown AS attrs_markdown, attrs_readable_markdown AS attrs_readable_markdown, meta_canonical AS meta_canonical FROM crawler3.page_info_local FINAL PREWHERE (src_root_hash, src_unparsed) IN ((getAhrefsRootHashFromUnparsed(getAhrefsUnparsedNoserviceFromURL(\'https://www.investopedia.com/taxes/trumps-tax-reform-plan-explained/\')), getAhrefsUnparsedNoserviceFromURL(\'https://www.investopedia.com/taxes/trumps-tax-reform-plan-explained/\'))) FORMAT JSONEachRow'

Response:

{"found_url":"https:\/\/www.investopedia.com\/taxes\/trumps-tax-reform-plan-explained\/","crawl_time":1775999212,"first_indexed_time":1540911418,"http_code":200,"src_unparsed":"com,investopedia!www,\/taxes\/trumps-tax-reform-plan-explained\/ s443","src_root_hash":"7273739457760125548","history_drop_reason":null,"meta_title":"What Is the Tax Cuts and Jobs Act (TCJA)?","meta_descriptions":["Learn what the Tax Cuts and Jobs Act is, when it was passed, the major tax changes it introduced, and how it continues to affect individuals and businesses."],"attrs_boilerpipe_text":"Key Takeaways\nThe Tax Cuts and Jobs Act (TCJA) was the most significant tax code overhaul in three decades, creating a single flat corporate tax rate of 21%.\nMany tax benefits that helped individuals and families were initially set to expire in 2025.\nThe One Big Beautiful Bill Act (OBBBA, 2025) permanently establishes many individual provisions, such as lower tax brackets, a bigger standard deduction, and a Qualified Business Income (QBI) deduction.\nOBBBA also raises the SALT deduction cap, boosts the Child Tax Credit, and permanently enhances the standard deduction.\nNew provisions include special reliefs—like deductions for tips, overtime pay, and U.S. auto-loan interest—while maintaining TCJA’s broad corporate reforms.\nThe Tax Cuts and Jobs Act (TCJA) was a major overhaul of the tax code, signed into law by President Donald Trump in his first term on Jan. 1, 2018. The Senate passed it on Dec. 2, 2017, by a party-line vote of 51 to 49.\n1\nThe House passed its version by a vote of 224 to 201. No House Democrats supported the bill, and 12 Republicans voted against it.\n2\nThe reform impacted\ntaxpayers\nand\nbusiness owners\n, particularly through tax cuts. Many of the benefits for individuals were set to expire in 2025.\n3\nHowever, passage of the \"One Big Beautiful Bill Act\" legislative package in July 2025 extended or made many of its provisions permanent.\nEffects on Individuals\nTCJA impacted taxpayers based on their income level, filing status, and deductions. It permanently removed the mandate requiring people to buy health insurance, a key provision of the Affordable Care Act (ACA).\n3\nThe highest earners were expected to benefit most from the law, while the lowest and middle earners were expected to pay more in taxes if the individual tax provisions were extended past 2025.\n4\nHere are the key provisions affecting individuals:\n5\nIncome tax rates\n: The law kept the seven individual income tax brackets. The top rate fell from 39.6% to 37%, while the 33% bracket dropped to 32%, the 28% bracket to 24%, the 25% bracket to 22%, and the 15% bracket to 12%. The lowest bracket remained at 10%, and the 35% was unchanged.\nStandard deduction\n: TCJA raised the standard deduction for all filers.\nPersonal exemption\n:\nThe law suspended the personal exemption through 2025.\nHealth coverage mandate\n: TCJA ended the individual mandate, a provision of the ACA that penalized people who didn't get\nhealth insurance\ncoverage.\nChild tax credit\n: The law raised the child tax credit and created a nonrefundable credit for non-child dependents. It can only be claimed if the taxpayer provides the child's Social Security number (SSN), who must be younger than 17. These changes were set to expire in 2025.\nEstate tax\n: The law temporarily raised the \nestate tax\n exemption. This change is expected to be reversed after 2025.\nStudent loans\n: It lets 529 plans fund K through 12 private school tuition—up to $10,000 per year, per child. Under the SECURE Act of 2019, the benefits of 529 plans were expanded, allowing plan holders to withdraw a maximum lifetime amount of $10,000 per beneficiary penalty-free to pay down qualified\nstudent debt\n.\n6\nRetirement savings\n: The law repealed the ability to retroactively designate a\nRoth\ncontribution as a traditional\nIRA\nor vice-versa. The SECURE Act lets people contribute to IRAs after age 70½.\nHSAs\nweren't affected by the law.\n6\nAlternative Minimum Tax (AMT)\n: The law temporarily raised the exemption amount and exemption phase-out threshold for the AMT, which was intended to curb tax avoidance among high earners.\nMortgage interest\n: TCJA limits the\nmortgage\ninterest deduction for married couples filing jointly to $750,000. The change was set to expire after 2025, but was extended as part of the OBBBA.\n7\nPease limitation\n: The law repealed the Pease limitation on itemized deductions and gradually reduced their value when adjusted gross income exceeds a certain threshold.\n8\nMiscellaneous itemized deductions\n: The suspended miscellaneous itemized deductions include deductions for moving expenses, except for active-duty military personnel, and union dues through 2025.\nImportant\nThe law cut\ncorporate tax rates\npermanently and individual tax rates temporarily, except for those extended or made permanent by the OBBBA.\n7\n5\nState and Local Tax (SALT)\nThe law capped the tax\ndeduction for state and local taxes\nat $10,000 through the 2025 tax year, but this generally affects only taxpayers who live in states with notably high tax rates and who itemize their deductions rather than claim the standard deduction.\n5\nThe cap was raised to $40,000 for tax years 2025 to 2028 under the OBBA, but will revert to $10,000 after 2028.\n7\nThe deduction covers property and income taxes or sales taxes, but not both. Taxpayers must choose between deducting one type of tax or the other. The TCJA further limited this deduction for those who are married but file separate returns.\n5\nBusinesses and the TCJA\nHere are the key provisions affecting businesses:\n5\nCorporate Tax Rate\n: The law created a single corporate tax rate of 21% and repealed the corporate AMT. These provisions do not expire. Supporters argued that lowering the corporate tax rate would reduce the need for companies to move their taxes to low- or no-tax countries, often through mergers with foreign firms.\nImmediate Expensing\n: TCJA allows full expensing of short-lived capital investments rather than requiring them to be depreciated over time. The section 179 deduction cap doubles to $1 million, and the phaseout begins after $2.5 million of equipment spending, up from the previous $2 million.\nPass-Through Income\n: Owners of pass-through businesses, which include sole proprietorships, partnerships, and S corporations, gained a 20% deduction for pass-through income. To discourage high earners from recharacterizing regular wages as pass-through income, the deduction is capped at 50% of wage income or 25% of wage income plus 2.5% of the cost of qualifying property.\nInterest\n: The net interest deduction is capped at 30% of earnings before interest and taxes (EBIT).\nCash Accounting\n: Businesses with up to $25 million in average annual gross receipts over the preceding three years can use\ncash accounting\n—up from the old tax code's $5 million.\nNet Operating Losses\n: The law scrapped net operating loss (NOL) carrybacks and caps carryforwards at 90% of taxable income, falling to 80%.\nSection 199\n: The law eliminated the section 199 (domestic production activities) deduction for businesses that engage in domestic manufacturing and other production work.\nForeign Earnings\n: The law introduced a territorial tax system under which only domestic earnings are subject to tax. Companies with over $500 million in annual gross receipts are subject to the base erosion anti-abuse tax, designed to counteract base erosion and profit shifting, a tax-planning strategy that involves moving taxable profits from one country to another with low or no taxes. BEAT is calculated by subtracting a company's regular corporate tax liability from 10% of its taxable income, ignoring base-eroding payments.\n9\nIntangible Property\nTCJA altered the treatment of intangible property held abroad, such as patents, trademarks, and copyrights.\n5\nFor example, Nike's (\nNKE\n) Swoosh trademark is house in an untaxed Dutch subsidiary.\n10\n \nWhen the foreign tax rate on foreign earnings above a 10% standard rate of return is below 13.125%, the law taxes these excess returns at 21%, after a 50% deduction and a deduction worth 37.5% of FDII. This excess income, which the law assumes to be derived from intangible assets, is called global intangible low-taxed income (GILTI). Credits can offset up to 80% of GILTI liability.\nForeign-derived intangible income is from the export of intangibles held domestically, which is taxed at a 13.125% effective rate, rising to 16.406% after 2025.\n5\nProjected Economic Growth\nFormer Treasury Secretary Steven Mnuchin claimed that the Republican tax plan would spur sufficient economic growth to pay for itself and more.\n11\nOn Dec. 11, 2017, the Treasury released a one-page analysis claiming that the law would increase revenues by $1.8 trillion over 10 years.\n12\nThe\nFederal Reserve\nprojected growth of 2.5% in 2018, 2.1% in 2019, 2.0% in 2020, and 1.8% over the longer run.\n12\nReal GDP data for the years after the TCJA showed the following growth rates:\n13\n0.6% in 2018\n2.8% in 2019\n4.6% in 2020\n7.0% in 2021\n2.8% in 2022\n3.4% in 2023\n1.9% in 2024\nWho Benefited From TCJA?\nThe TCJA cut the corporate tax rate to benefit shareholders, who tend to be higher earners. It only originally cut individuals' taxes for a limited period, though the OBBA extended or made permanent many of the cuts. It scaled back the AMT and estate tax and reduced the taxes levied on pass-through income. It did not close the\ncarried interest\nloophole, which benefited professional investors.\nThe Tax Policy Center originally estimated that the majority of taxpayers (53.4%) would face a tax increase when the individual tax cuts were set to expire after 2025, while 69.7% of those in the middle quintile (40th to 60th percentile) were expected to pay more, compared to just 8% of the highest-earning 0.1%.\n14\nChange in after-tax income by income percentile\nUpdates Under the One Big Beautiful Bill Act (2025)\nThe OBBBA, signed into law on July 4, 2025, changes the outlook for taxpayers by making permanent many TCJA provisions as well as adding several new benefits:\n7\nPermanent lower individual tax rates:\nKeeps the seven-bracket system (10%, 12%, 22%, 24%, 32%, 35%, 37%) beyond 2025, adjusted for inflation.\nStandard deduction increase and permanence:\n$15,750 for single filers and $31,500 for married couples filing jointly in 2025; indexed for inflation.\nChild Tax Credit raised and permanent:\nIncreased to $2,200 per child, with inflation adjustments and stronger refundability.\nSALT deduction cap raised:\nFrom $10,000 to $40,000 (married filing jointly) for 2025 to 2028, phasing out for high earners; scheduled to revert afterward.\nQualified Business Income (QBI) deduction:\nMade permanent, providing certainty for small business owners and pass-through entities.\nNew targeted deductions:\nNo tax on tips\n(up to an annual threshold).\nNo tax on the overtime pay portion of wages.\nAuto-loan interest deduction for qualifying U.S.-assembled vehicles.\nU.S. Tax Law Comparison: Pre-TCJA vs. TCJA vs. OBBBA (2025)\nProvision\nPre-TCJA (2017 rules)\nTCJA (2018–2024)\nOBBBA (2025– )\nCorporate Tax Rate\nUp to 35%\nFlat 21% (permanent)\n21% (permanent, unchanged)\nIndividual Tax Brackets\n7 brackets, top rate 39.6%\n7 brackets, top rate 37% (set to expire 2025)\n7 brackets (10%, 12%, 22%, 24%, 32%, 35%, 37%) made permanent; indexed\nStandard Deduction\n$6,350 (single), $12,700 (married joint)\n~$12,000 (single), ~$24,000 (joint), indexed (expiring 2025)\n$15,750 (single), $31,500 (joint) in 2025, indexed; permanent\nPersonal Exemptions\n$4,050 per person\nEliminated\nRemains eliminated\nChild Tax Credit\n$1,000 per child (partially refundable)\n$2,000 per child (<17), phase-outs; scheduled to drop post-2025\n$2,200 per child, indexed for inflation, permanent; refundable portion expanded\nState & Local Tax (SALT) Deduction\nUnlimited\nCapped at $10,000 (through 2025)\nRaised to $40,000 (2025–2028, phase-outs for high earners), reverts to $10,000 afterward\nMortgage Interest Deduction\nInterest on up to $1M mortgage\nLimited to $750k (through 2025)\nContinues at $750k (no major change)\nPass-Through Business Deduction (QBI)\nNone\nUp to 20% deduction on qualified income (expiring 2025)\nMade permanent\nEstate Tax Exemption\n~$5.49M per person\nDoubled (~$11.2M per person, expiring 2025)\nPermanently extended at higher level (indexed for inflation)\nHealth Insurance Mandate (ACA)\nPenalty for no coverage\nPenalty reduced to $0 (effective 2019)\nRemains $0\nDepreciation \/ Expensing\nSection 179, more limited\n100% bonus depreciation (phased down 2023–2026)\nMade permanent under OBBBA\nNew Provisions (not in TCJA)\nN\/A\nN\/A\nDeductions for reported tips (limited), overtime pay, auto-loan interest (U.S. vehicles)\nThe Bottom Line\nThe Tax Cuts and Jobs Act reshaped the U.S. tax code in 2018, and many of its temporary individual provisions were due to expire at the end of 2025. With the passage of the One Big Beautiful Bill Act on July 4, 2025, however, many of those provisions are now permanent. Taxpayers can expect continued lower rates, bigger deductions, and new reliefs, though some benefits (like the expanded SALT cap) will remain temporary or revert to previous levels after 2028.","attrs_markdown":"\n\n[Skip to content](https:\/\/www.investopedia.com\/taxes\/trumps-tax-reform-plan-explained\/#main)\n\n[Investopedia](https:\/\/www.investopedia.com\/)\n\n[Trade](https:\/\/www.investopedia.com\/simulator\/?inv_to_sim=global_nav)\n\n- Please fill out this field.\n- [Newsletters](https:\/\/www.investopedia.com\/taxes\/trumps-tax-reform-plan-explained\/)\n\nPlease fill out this field.\n\n- [News](https:\/\/www.investopedia.com\/news-4427706)\n  News\n  \n  - [Markets](https:\/\/www.investopedia.com\/markets-news-4427704)\n  - [Companies](https:\/\/www.investopedia.com\/company-news-4427705)\n  - [Earnings](https:\/\/www.investopedia.com\/earnings-reports-5218419)\n  - [CD Rates](https:\/\/www.investopedia.com\/certificates-deposit-news-7111770)\n  - [Mortgage Rates](https:\/\/www.investopedia.com\/mortgage-rates-5184598)\n  - 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[Best Life Insurance](https:\/\/www.investopedia.com\/the-best-life-insurance-companies-8763666)\n  - [Best Mortgage Rates](https:\/\/www.investopedia.com\/mortgage-rates-5094943)\n  - [Best Robo-Advisors](https:\/\/www.investopedia.com\/the-best-robo-advisors-8764849)\n  - [Best Personal Loans](https:\/\/www.investopedia.com\/the-best-personal-loans-8761582)\n  - [Best Debt Relief Companies](https:\/\/www.investopedia.com\/the-best-debt-relief-companies-8763179)\n  - [View All](https:\/\/www.investopedia.com\/financial-product-reviews-7110783)\n\n- Top Stories\n- [This Social Security Mistake Could Cost Your Spouse for Years](https:\/\/www.investopedia.com\/a-common-social-security-mistake-could-cost-your-spouse-for-years-11947182)\n- [Gen Z Admits Faking Finances to Impress Partners](https:\/\/www.investopedia.com\/gen-zers-admit-faking-their-finances-to-impress-partners-and-risk-falling-into-debt-11947157)\n- [Are You Spending More Than Average in Your 50s?](https:\/\/www.investopedia.com\/are-you-spending-more-than-average-in-your-50s-here-s-the-benchmark-11946973)\n- [Warren Buffett's Investing Rule That Could Change Your Future](https:\/\/www.investopedia.com\/warren-buffett-s-investing-rule-that-could-change-your-financial-future-11947169)\n\nTable of Contents\n\nExpand\n\nTable of Contents\n\n- [Effects on Individuals](https:\/\/www.investopedia.com\/taxes\/trumps-tax-reform-plan-explained\/#toc-effects-on-individuals)\n- [State and Local Tax (SALT)](https:\/\/www.investopedia.com\/taxes\/trumps-tax-reform-plan-explained\/#toc-state-and-local-tax-salt)\n- [Businesses and the TCJA](https:\/\/www.investopedia.com\/taxes\/trumps-tax-reform-plan-explained\/#toc-businesses-and-the-tcja)\n- [Intangible Property](https:\/\/www.investopedia.com\/taxes\/trumps-tax-reform-plan-explained\/#toc-intangible-property)\n- [Projected Economic Growth](https:\/\/www.investopedia.com\/taxes\/trumps-tax-reform-plan-explained\/#toc-projected-economic-growth)\n- [Who Benefited From TCJA?](https:\/\/www.investopedia.com\/taxes\/trumps-tax-reform-plan-explained\/#toc-who-benefited-from-tcja)\n- [Updates Under the One Big Beautiful Bill Act (2025)](https:\/\/www.investopedia.com\/taxes\/trumps-tax-reform-plan-explained\/#toc-updates-under-the-one-big-beautiful-bill-act-2025)\n- [The Bottom Line](https:\/\/www.investopedia.com\/taxes\/trumps-tax-reform-plan-explained\/#toc-the-bottom-line)\n\n# What Is the Tax Cuts and Jobs Act (TCJA)?\nTrump's Tax Reform Plan Explained (Updated for 2025)\n\nBy\n\n[David Floyd](https:\/\/www.investopedia.com\/contributors\/54375\/)\n\n![]()\n\n![](https:\/\/www.investopedia.com\/thmb\/aDpxwnSB8xoXBttLHxNeP8Wouro=\/200x200\/filters:no_upscale\$\$:max_bytes\$150000\$:strip_icc\$\$\/floyd_bio_pic_final-5bfc2a7f46e0fb0051bdb022.jpg)\n\n[Full Bio](https:\/\/www.investopedia.com\/contributors\/54375\/)\n\nDavid Floyd is a reporter for Coindesk with 5+ years of experience as a financial writer. He is a former staff writer for Investopedia.\n\nLearn about our  [editorial policies](https:\/\/www.investopedia.com\/legal-4768893#editorial-policy)\n\nUpdated December 11, 2025\n\nReviewed by\n\n[Khadija Khartit](https:\/\/www.investopedia.com\/khadija-khartit-4799776)\n\n![Khadija Khartit]()\n\n![Khadija Khartit](https:\/\/www.investopedia.com\/thmb\/W2re2_rNx_MIW9RPQv9BMFNHVH4=\/200x200\/filters:no_upscale\$\$:max_bytes\$150000\$:strip_icc\$\$\/Pic1-KhadijaKhartit-cc5b57fba2bd46ed87bdb3ddbcd2ef69.jpg)\n\nReviewed by Khadija Khartit\n\n[Full Bio](https:\/\/www.investopedia.com\/khadija-khartit-4799776)\n\nKhadija Khartit is a strategy, investment, and funding expert, and an educator of fintech and strategic finance in top universities. She has been an investor, entrepreneur, and advisor for more than 25 years. She is a FINRA Series 7, 63, and 66 license holder.\n\nLearn about our  [Financial Review Board](https:\/\/www.investopedia.com\/investopedia-financial-review-board-5076269)\n\nFact checked by\n\n[Vikki Velasquez](https:\/\/www.investopedia.com\/vikki-velasquez-5198872)\n\n![Vikkie Velasquez]()\n\n![Vikkie Velasquez](https:\/\/www.investopedia.com\/thmb\/qsiqwN4603qvBBcEmwBBFAZ7h-8=\/200x200\/filters:no_upscale\$\$:max_bytes\$150000\$:strip_icc\$\$\/vikki-velasquez-investopedia-portrait-1-18b989d75f1f4d6d9b5b3a47cb3ffc5f.jpg)\n\nFact checked by Vikki Velasquez\n\n[Full Bio](https:\/\/www.investopedia.com\/vikki-velasquez-5198872)\n\nVikki Velasquez is a researcher and writer who has managed, coordinated, and directed various community and nonprofit organizations. She has conducted in-depth research on social and economic issues and has also revised and edited educational materials for the Greater Richmond area.\n\nLearn about our  [editorial policies](https:\/\/www.investopedia.com\/legal-4768893#editorial-policy)\n\n![Three people in a business meeting one speaking and the other two seated and listening](https:\/\/www.investopedia.com\/thmb\/cVx7cM7UjtMdrwAGO_RtRwmJc_Q=\/1500x0\/filters:no_upscale\$\$:max_bytes\$150000\$:strip_icc\$\$\/taxcutsandjobsact-ca17c835fc864a70b5392e3a304d1ccf.jpg)\n\n![Three people in a business meeting one speaking and the other two seated and listening](https:\/\/www.investopedia.com\/thmb\/cVx7cM7UjtMdrwAGO_RtRwmJc_Q=\/1500x0\/filters:no_upscale\$\$:max_bytes\$150000\$:strip_icc\$\$\/taxcutsandjobsact-ca17c835fc864a70b5392e3a304d1ccf.jpg)\n\nThe Tax Cuts and Job Act prompted a significant overhaul of the tax code, affecting millions of Americans.\n\nNick White and Fiona Jackson-Downes \/ Getty Images\n\nClose\n\n### Key Takeaways\n- The Tax Cuts and Jobs Act (TCJA) was the most significant tax code overhaul in three decades, creating a single flat corporate tax rate of 21%.\n- Many tax benefits that helped individuals and families were initially set to expire in 2025.\n- The One Big Beautiful Bill Act (OBBBA, 2025) permanently establishes many individual provisions, such as lower tax brackets, a bigger standard deduction, and a Qualified Business Income (QBI) deduction.\n- OBBBA also raises the SALT deduction cap, boosts the Child Tax Credit, and permanently enhances the standard deduction.\n- New provisions include special reliefs—like deductions for tips, overtime pay, and U.S. auto-loan interest—while maintaining TCJA’s broad corporate reforms.\n\nThe Tax Cuts and Jobs Act (TCJA) was a major overhaul of the tax code, signed into law by President Donald Trump in his first term on Jan. 1, 2018. The Senate passed it on Dec. 2, 2017, by a party-line vote of 51 to 49.1 The House passed its version by a vote of 224 to 201. No House Democrats supported the bill, and 12 Republicans voted against it.2\n\nThe reform impacted [taxpayers](https:\/\/www.investopedia.com\/the-best-tax-software-8780098) and [business owners](https:\/\/www.investopedia.com\/the-best-tax-software-for-small-business-8780637), particularly through tax cuts. Many of the benefits for individuals were set to expire in 2025.3 However, passage of the \"One Big Beautiful Bill Act\" legislative package in July 2025 extended or made many of its provisions permanent.\n\n## Effects on Individuals\nTCJA impacted taxpayers based on their income level, filing status, and deductions. It permanently removed the mandate requiring people to buy health insurance, a key provision of the Affordable Care Act (ACA).3 The highest earners were expected to benefit most from the law, while the lowest and middle earners were expected to pay more in taxes if the individual tax provisions were extended past 2025.4\n\nHere are the key provisions affecting individuals:5\n\n- **Income tax rates**: The law kept the seven individual income tax brackets. The top rate fell from 39.6% to 37%, while the 33% bracket dropped to 32%, the 28% bracket to 24%, the 25% bracket to 22%, and the 15% bracket to 12%. The lowest bracket remained at 10%, and the 35% was unchanged.\n- **Standard deduction**: TCJA raised the standard deduction for all filers.\n- **Personal exemption**:The law suspended the personal exemption through 2025.\n- **Health coverage mandate**: TCJA ended the individual mandate, a provision of the ACA that penalized people who didn't get [health insurance](https:\/\/www.investopedia.com\/the-best-health-insurance-companies-8762191) coverage.\n- **Child tax credit**: The law raised the child tax credit and created a nonrefundable credit for non-child dependents. It can only be claimed if the taxpayer provides the child's Social Security number (SSN), who must be younger than 17. These changes were set to expire in 2025.\n- **Estate tax**: The law temporarily raised the [estate tax](https:\/\/www.investopedia.com\/terms\/e\/estatetax.asp) exemption. This change is expected to be reversed after 2025.\n- **Student loans**: It lets 529 plans fund K through 12 private school tuition—up to \\$10,000 per year, per child. Under the SECURE Act of 2019, the benefits of 529 plans were expanded, allowing plan holders to withdraw a maximum lifetime amount of \\$10,000 per beneficiary penalty-free to pay down qualified [student debt](https:\/\/www.investopedia.com\/terms\/s\/student-debt.asp).6\n- **Retirement savings**: The law repealed the ability to retroactively designate a [Roth](https:\/\/www.investopedia.com\/the-best-roth-ira-brokers-8764132) contribution as a traditional [IRA](https:\/\/www.investopedia.com\/the-best-ira-brokers-8764115) or vice-versa. The SECURE Act lets people contribute to IRAs after age 70½. [HSAs](https:\/\/www.investopedia.com\/the-best-health-savings-account-providers-11687235) weren't affected by the law.6\n- **Alternative Minimum Tax (AMT)**: The law temporarily raised the exemption amount and exemption phase-out threshold for the AMT, which was intended to curb tax avoidance among high earners.\n- **Mortgage interest**: TCJA limits the [mortgage](https:\/\/www.investopedia.com\/the-best-mortgage-lenders-11714101) interest deduction for married couples filing jointly to \\$750,000. The change was set to expire after 2025, but was extended as part of the OBBBA.7\n- **Pease limitation**: The law repealed the Pease limitation on itemized deductions and gradually reduced their value when adjusted gross income exceeds a certain threshold.8\n- **Miscellaneous itemized deductions**: The suspended miscellaneous itemized deductions include deductions for moving expenses, except for active-duty military personnel, and union dues through 2025.\n\n### Important\nThe law cut [corporate tax rates](https:\/\/www.investopedia.com\/terms\/c\/corporatetax.asp) permanently and individual tax rates temporarily, except for those extended or made permanent by the OBBBA.75\n## State and Local Tax (SALT)\nThe law capped the tax [deduction for state and local taxes](https:\/\/www.investopedia.com\/trumps-tax-bill-makes-a-big-change-that-could-impact-high-earners-especially-those-in-new-york-and-california-11779390) at \\$10,000 through the 2025 tax year, but this generally affects only taxpayers who live in states with notably high tax rates and who itemize their deductions rather than claim the standard deduction.5 The cap was raised to \\$40,000 for tax years 2025 to 2028 under the OBBA, but will revert to \\$10,000 after 2028.7\n\nThe deduction covers property and income taxes or sales taxes, but not both. Taxpayers must choose between deducting one type of tax or the other. The TCJA further limited this deduction for those who are married but file separate returns.5\n\n## Businesses and the TCJA\nHere are the key provisions affecting businesses:5\n\n- **Corporate Tax Rate**: The law created a single corporate tax rate of 21% and repealed the corporate AMT. These provisions do not expire. Supporters argued that lowering the corporate tax rate would reduce the need for companies to move their taxes to low- or no-tax countries, often through mergers with foreign firms.\n- **Immediate Expensing**: TCJA allows full expensing of short-lived capital investments rather than requiring them to be depreciated over time. The section 179 deduction cap doubles to \\$1 million, and the phaseout begins after \\$2.5 million of equipment spending, up from the previous \\$2 million.\n- **Pass-Through Income**: Owners of pass-through businesses, which include sole proprietorships, partnerships, and S corporations, gained a 20% deduction for pass-through income. To discourage high earners from recharacterizing regular wages as pass-through income, the deduction is capped at 50% of wage income or 25% of wage income plus 2.5% of the cost of qualifying property.\n- **Interest**: The net interest deduction is capped at 30% of earnings before interest and taxes (EBIT).\n- **Cash Accounting**: Businesses with up to \\$25 million in average annual gross receipts over the preceding three years can use [cash accounting](https:\/\/www.investopedia.com\/terms\/c\/cashaccounting.asp)—up from the old tax code's \\$5 million.\n- **Net Operating Losses**: The law scrapped net operating loss (NOL) carrybacks and caps carryforwards at 90% of taxable income, falling to 80%.\n- **Section 199**: The law eliminated the section 199 (domestic production activities) deduction for businesses that engage in domestic manufacturing and other production work.\n- **Foreign Earnings**: The law introduced a territorial tax system under which only domestic earnings are subject to tax. Companies with over \\$500 million in annual gross receipts are subject to the base erosion anti-abuse tax, designed to counteract base erosion and profit shifting, a tax-planning strategy that involves moving taxable profits from one country to another with low or no taxes. BEAT is calculated by subtracting a company's regular corporate tax liability from 10% of its taxable income, ignoring base-eroding payments.9\n## Intangible Property\nTCJA altered the treatment of intangible property held abroad, such as patents, trademarks, and copyrights.5 For example, Nike's ([NKE](https:\/\/www.investopedia.com\/markets\/quote?tvwidgetsymbol=nke)) Swoosh trademark is house in an untaxed Dutch subsidiary.10\n\nWhen the foreign tax rate on foreign earnings above a 10% standard rate of return is below 13.125%, the law taxes these excess returns at 21%, after a 50% deduction and a deduction worth 37.5% of FDII. This excess income, which the law assumes to be derived from intangible assets, is called global intangible low-taxed income (GILTI). Credits can offset up to 80% of GILTI liability.\n\nForeign-derived intangible income is from the export of intangibles held domestically, which is taxed at a 13.125% effective rate, rising to 16.406% after 2025.5\n\n## Projected Economic Growth\nFormer Treasury Secretary Steven Mnuchin claimed that the Republican tax plan would spur sufficient economic growth to pay for itself and more.11 On Dec. 11, 2017, the Treasury released a one-page analysis claiming that the law would increase revenues by \\$1.8 trillion over 10 years.12\n\nThe [Federal Reserve](https:\/\/www.investopedia.com\/terms\/f\/federalreservebank.asp) projected growth of 2.5% in 2018, 2.1% in 2019, 2.0% in 2020, and 1.8% over the longer run.12 Real GDP data for the years after the TCJA showed the following growth rates:13\n\n- 0\\.6% in 2018\n- 2\\.8% in 2019\n- 4\\.6% in 2020\n- 7\\.0% in 2021\n- 2\\.8% in 2022\n- 3\\.4% in 2023\n- 1\\.9% in 2024\n## Who Benefited From TCJA?\nThe TCJA cut the corporate tax rate to benefit shareholders, who tend to be higher earners. It only originally cut individuals' taxes for a limited period, though the OBBA extended or made permanent many of the cuts. It scaled back the AMT and estate tax and reduced the taxes levied on pass-through income. It did not close the [carried interest](https:\/\/www.investopedia.com\/terms\/c\/carriedinterest.asp) loophole, which benefited professional investors.\n\nThe Tax Policy Center originally estimated that the majority of taxpayers (53.4%) would face a tax increase when the individual tax cuts were set to expire after 2025, while 69.7% of those in the middle quintile (40th to 60th percentile) were expected to pay more, compared to just 8% of the highest-earning 0.1%.14\n\nChange in after-tax income by income percentile\n\n## Updates Under the One Big Beautiful Bill Act (2025)\nThe OBBBA, signed into law on July 4, 2025, changes the outlook for taxpayers by making permanent many TCJA provisions as well as adding several new benefits:7\n\n- **Permanent lower individual tax rates:** Keeps the seven-bracket system (10%, 12%, 22%, 24%, 32%, 35%, 37%) beyond 2025, adjusted for inflation.\n- **Standard deduction increase and permanence:** \\$15,750 for single filers and \\$31,500 for married couples filing jointly in 2025; indexed for inflation.\n- **Child Tax Credit raised and permanent:** Increased to \\$2,200 per child, with inflation adjustments and stronger refundability.\n- **SALT deduction cap raised:** From \\$10,000 to \\$40,000 (married filing jointly) for 2025 to 2028, phasing out for high earners; scheduled to revert afterward.\n- **Qualified Business Income (QBI) deduction:** Made permanent, providing certainty for small business owners and pass-through entities.\n- **New targeted deductions:**\n- [No tax on tips](https:\/\/www.investopedia.com\/how-the-new-tax-bill-could-boost-your-refund-next-year-11830394) (up to an annual threshold).\n- No tax on the overtime pay portion of wages.\n- Auto-loan interest deduction for qualifying U.S.-assembled vehicles.\n\n| U.S. Tax Law Comparison: Pre-TCJA vs. TCJA vs. OBBBA (2025) |   |   |   |\n|---|---|---|---|\n| Provision | Pre-TCJA (2017 rules) | TCJA (2018–2024) | OBBBA (2025– ) |\n| **Corporate Tax Rate** | Up to 35% | Flat 21% (permanent) | 21% (permanent, unchanged) |\n| **Individual Tax Brackets** | 7 brackets, top rate 39.6% | 7 brackets, top rate 37% (set to expire 2025) | 7 brackets (10%, 12%, 22%, 24%, 32%, 35%, 37%) made permanent; indexed |\n| **Standard Deduction** | \\$6,350 (single), \\$12,700 (married joint) | ~\\$12,000 (single), ~\\$24,000 (joint), indexed (expiring 2025) | \\$15,750 (single), \\$31,500 (joint) in 2025, indexed; permanent |\n| **Personal Exemptions** | \\$4,050 per person | Eliminated | Remains eliminated |\n| **Child Tax Credit** | \\$1,000 per child (partially refundable) | \\$2,000 per child (\\<17), phase-outs; scheduled to drop post-2025 | \\$2,200 per child, indexed for inflation, permanent; refundable portion expanded |\n| **State & Local Tax (SALT) Deduction** | Unlimited | Capped at \\$10,000 (through 2025) | Raised to \\$40,000 (2025–2028, phase-outs for high earners), reverts to \\$10,000 afterward |\n| **Mortgage Interest Deduction** | Interest on up to \\$1M mortgage | Limited to \\$750k (through 2025) | Continues at \\$750k (no major change) |\n| **Pass-Through Business Deduction (QBI)** | None | Up to 20% deduction on qualified income (expiring 2025) | Made permanent |\n| **Estate Tax Exemption** | ~\\$5.49M per person | Doubled (~\\$11.2M per person, expiring 2025) | Permanently extended at higher level (indexed for inflation) |\n| **Health Insurance Mandate (ACA)** | Penalty for no coverage | Penalty reduced to \\$0 (effective 2019) | Remains \\$0 |\n| **Depreciation \/ Expensing** | Section 179, more limited | 100% bonus depreciation (phased down 2023–2026) | Made permanent under OBBBA |\n| **New Provisions (not in TCJA)** | N\/A | N\/A | Deductions for reported tips (limited), overtime pay, auto-loan interest (U.S. vehicles) |\n## The Bottom Line\nThe Tax Cuts and Jobs Act reshaped the U.S. tax code in 2018, and many of its temporary individual provisions were due to expire at the end of 2025. With the passage of the One Big Beautiful Bill Act on July 4, 2025, however, many of those provisions are now permanent. Taxpayers can expect continued lower rates, bigger deductions, and new reliefs, though some benefits (like the expanded SALT cap) will remain temporary or revert to previous levels after 2028.\n\nArticle Sources\n\nInvestopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our [editorial policy.](https:\/\/www.investopedia.com\/legal-4768893#EditorialPolicy)\n\n1. U.S. Congress. \"[H.R.1 - An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018: Actions](https:\/\/www.congress.gov\/bill\/115th-congress\/house-bill\/1\/actions).\"\n2. U.S. House of Representatives, Office of the Clerk. \"[Roll Call 699 \\| Bill Number: H. R. 1](https:\/\/clerk.house.gov\/Votes\/2017699).\"\n3. U.S. Congress. \"[H.R.1 - An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018: Summary](https:\/\/www.congress.gov\/bill\/115th-congress\/house-bill\/1).\"\n4. The Tax Policy Center. \"[Unpacking the TCJA: Who Benefits and Who Loses from Extending Major Provisions](https:\/\/taxpolicycenter.org\/taxvox\/unpacking-tcja-who-benefits-and-who-loses-extending-major-provisions).\"\n5. U.S. Congress. \"[H.R.1 - An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018](https:\/\/www.congress.gov\/bill\/115th-congress\/house-bill\/1\/text).\"\n6. U.S. Congress. \"[H.R.1994 - Setting Every Community Up for Retirement Enhancement Act of 2019](https:\/\/www.congress.gov\/bill\/116th-congress\/house-bill\/1994\/text).\"\n7. U.S. Congress. \"[H.R.1 - One Big Beautiful Bill Act](https:\/\/www.congress.gov\/bill\/119th-congress\/house-bill\/1\/text).\"\n8. Urban Institute & Brookings Institution. \"[Effects of The Tax Cuts and Jobs Act: A Preliminary Analysis](https:\/\/www.brookings.edu\/wp-content\/uploads\/2018\/06\/ES_20180608_tcja_summary_paper_final.pdf).\" Page 3.\n9. The Tax Foundation. \"[Base Erosion and Anti-Abuse Tax (BEAT)](https:\/\/taxfoundation.org\/taxedu\/glossary\/base-erosion-anti-abuse-tax-beat\/).\"\n10. Reuters. \"[Nike Urges Court to Throw Out EU Probe Into Dutch Tax Deal](https:\/\/www.reuters.com\/business\/nike-urges-court-throw-out-eu-probe-into-dutch-tax-deal-2021-01-25\/).\"\n11. NBC News. \"[Mnuchin Says FEMA Doing 'A Terrific Job' in Puerto Rico](https:\/\/www.nbcnews.com\/politics\/politics-news\/mnuchin-says-fema-doing-terrific-job-puerto-rico-n806356).\"\n12. U.S. Department of the Treasury. \"[Analysis of Growth and Revenue Estimates Based on the U.S. Senate Committee on Finance Tax Reform Plan, December 11, 2017](https:\/\/www.crapo.senate.gov\/imo\/media\/doc\/2017DEC_TreasuryGrowthMemo.pdf).\"\n13. Federal Reserve Bank of St. Louis, FRED. \"[Real Gross Domestic Product (Percent Change From Preceding Period)](https:\/\/fred.stlouisfed.org\/series\/A191RL1Q225SBEA#0).\" Adjust for Annual and End of Period.\n14. The Tax Policy Center. \"[Distributional Analysis of the Conference Agreement for the Tax Cuts and Jobs Act](https:\/\/taxpolicycenter.org\/sites\/default\/files\/publication\/150816\/2001641_distributional_analysis_of_the_conference_agreement_for_the_tax_cuts_and_jobs_act_0.pdf).\" Page 8.\n\nCompare Accounts\n\nAdvertiser Disclosure\n\n×\n\nThe offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.\n\nRead more\n\n- [Personal Finance](https:\/\/www.investopedia.com\/personal-finance-4427760)\n- [Taxes](https:\/\/www.investopedia.com\/taxes-4427724)\n- [Tax Laws & Regulations](https:\/\/www.investopedia.com\/tax-laws-and-regulations-4689688)\n\nPartner Links\n\n## Related Articles\n[![Limited Partnership (LP)](https:\/\/www.investopedia.com\/thmb\/LAz4eZ4ZPUGCwWU5p-KC3NiSHHc=\/282x188\/filters:no_upscale\$\$:max_bytes\$150000\$:strip_icc\$\$\/Limited-partnership-4193607-4d28563ecfe348229857be6d9c2f059d.jpg) ![Limited Partnership (LP)](https:\/\/www.investopedia.com\/thmb\/LAz4eZ4ZPUGCwWU5p-KC3NiSHHc=\/282x188\/filters:no_upscale\$\$:max_bytes\$150000\$:strip_icc\$\$\/Limited-partnership-4193607-4d28563ecfe348229857be6d9c2f059d.jpg) Limited Partnership (LP): What It Is, Pros and Cons, How to Form One](https:\/\/www.investopedia.com\/terms\/l\/limitedpartnership.asp)\n\n[![Not for Profit: An organization or enterprise that does not earn profits for its owners.](https:\/\/www.investopedia.com\/thmb\/9rFh22Upg9rEUn_O8Wc9OHg5Jdw=\/282x188\/filters:no_upscale\$\$:max_bytes\$150000\$:strip_icc\$\$\/not-for-profit.asp-FINAL-1-39398aa9faa74c25b1328311050ea87f.png) ![Not for Profit: An organization or enterprise that does not earn profits for its owners.](https:\/\/www.investopedia.com\/thmb\/9rFh22Upg9rEUn_O8Wc9OHg5Jdw=\/282x188\/filters:no_upscale\$\$:max_bytes\$150000\$:strip_icc\$\$\/not-for-profit.asp-FINAL-1-39398aa9faa74c25b1328311050ea87f.png) Understanding Not-for-Profit Organizations and Their Tax Implications](https:\/\/www.investopedia.com\/terms\/n\/not-for-profit.asp)\n\n[![Hands holding receipts with more receipts, a calculator and glasses on the desk](https:\/\/www.investopedia.com\/thmb\/sz_cnYYum8GEb2QQE5KJ5LLjBxM=\/282x188\/filters:no_upscale\$\$:max_bytes\$150000\$:strip_icc\$\$\/GettyImages-1520995081-a16700d5f6834e8ea0ee843bca7219ac.jpg) ![Hands holding receipts with more receipts, a calculator and glasses on the desk](https:\/\/www.investopedia.com\/thmb\/sz_cnYYum8GEb2QQE5KJ5LLjBxM=\/282x188\/filters:no_upscale\$\$:max_bytes\$150000\$:strip_icc\$\$\/GettyImages-1520995081-a16700d5f6834e8ea0ee843bca7219ac.jpg) 5 IRS Audit Red Flags to Avoid on Your Tax Return](https:\/\/www.investopedia.com\/red-flags-trigger-an-audit-8787649)\n\n[![Young businesswoman using digital tablet in financial district, against illuminated corporate skyscrapers at night](https:\/\/www.investopedia.com\/thmb\/H1m8Ztpbs5mvGKOPUbXOejHE_2k=\/282x188\/filters:no_upscale\$\$:max_bytes\$150000\$:strip_icc\$\$\/young-businesswoman-using-digital-tablet-in-financial-district--against-illuminated-corporate-skyscrapers-at-night-990909558-e378a7eb649a4fc188d613fe55d9e9c9.jpg) ![Young businesswoman using digital tablet in financial district, against illuminated corporate skyscrapers at night](https:\/\/www.investopedia.com\/thmb\/H1m8Ztpbs5mvGKOPUbXOejHE_2k=\/282x188\/filters:no_upscale\$\$:max_bytes\$150000\$:strip_icc\$\$\/young-businesswoman-using-digital-tablet-in-financial-district--against-illuminated-corporate-skyscrapers-at-night-990909558-e378a7eb649a4fc188d613fe55d9e9c9.jpg) What Is Worldwide Income? 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setting](https:\/\/www.investopedia.com\/thmb\/eETSfvZQOb80GwPMOZJAdNVix_4=\/282x188\/filters:no_upscale\$\$:max_bytes\$150000\$:strip_icc\$\$\/GettyImages-2226866417-92763da6a579430484683810c4a36d25.jpg) States Where You Can Avoid Taxes on Capital Gains, Dividends and Investment Income](https:\/\/www.investopedia.com\/states-where-you-can-avoid-taxes-on-capital-gains-dividends-and-investment-income-11940224)\n\n[![woman doing taxes at home](https:\/\/www.investopedia.com\/thmb\/g4C1iHcWAKQt31y1JlZOyv-ICHM=\/282x188\/filters:no_upscale\$\$:max_bytes\$150000\$:strip_icc\$\$\/GettyImages-1298373292-f055be5e350a48e5adcd8ece5bc571b1.jpg) ![woman doing taxes at home](https:\/\/www.investopedia.com\/thmb\/g4C1iHcWAKQt31y1JlZOyv-ICHM=\/282x188\/filters:no_upscale\$\$:max_bytes\$150000\$:strip_icc\$\$\/GettyImages-1298373292-f055be5e350a48e5adcd8ece5bc571b1.jpg) 10 Strategies to Lower Taxes on 401(k) Withdrawals](https:\/\/www.investopedia.com\/articles\/personal-finance\/062615\/10-little-known-ways-reduce-your-401k-taxes.asp)\n\n[![the-best-tax-software](https:\/\/www.investopedia.com\/thmb\/p3EIcBGYncp_S_R9C5N-caYmSdY=\/282x188\/filters:no_upscale\$\$:max_bytes\$150000\$:strip_icc\$\$\/the-best-tax-software-8780098-final-2aeebf0646fe4c54a3db6789cb7b6f3b.png) ![the-best-tax-software](https:\/\/www.investopedia.com\/thmb\/p3EIcBGYncp_S_R9C5N-caYmSdY=\/282x188\/filters:no_upscale\$\$:max_bytes\$150000\$:strip_icc\$\$\/the-best-tax-software-8780098-final-2aeebf0646fe4c54a3db6789cb7b6f3b.png) Best Tax Software for 2026](https:\/\/www.investopedia.com\/the-best-tax-software-8780098)\n\n[![Small business owner calculates their equipment leasing losses that they are unable to claim on this year's tax return.](https:\/\/www.investopedia.com\/thmb\/Tv-QqgI_h26kcF6IoSfcjX-5WyA=\/282x188\/filters:no_upscale\$\$:max_bytes\$150000\$:strip_icc\$\$\/Suspendedlosses-d7cff07fdef742569c5fdfb1232a5fdb.jpg) ![Small business owner calculates their equipment leasing losses that they are unable to claim on this year's tax return.](https:\/\/www.investopedia.com\/thmb\/Tv-QqgI_h26kcF6IoSfcjX-5WyA=\/282x188\/filters:no_upscale\$\$:max_bytes\$150000\$:strip_icc\$\$\/Suspendedlosses-d7cff07fdef742569c5fdfb1232a5fdb.jpg) Suspended Loss Explained: A Guide with Practical Examples](https:\/\/www.investopedia.com\/terms\/s\/suspended-loss.asp)\n\n[![Person puts a tax bill through a shredder after reducing their amount owed with credits. ](https:\/\/www.investopedia.com\/thmb\/N7jZnBD4javGTa2LQp5xlmOTMws=\/282x188\/filters:no_upscale\$\$:max_bytes\$150000\$:strip_icc\$\$\/GuidetoWealthPreservation-recirc7-v1-22ac2ddaaf9b4cf196fb954b6dcd1c51.png) ![Person puts a tax bill through a shredder after reducing their amount owed with credits. ](https:\/\/www.investopedia.com\/thmb\/N7jZnBD4javGTa2LQp5xlmOTMws=\/282x188\/filters:no_upscale\$\$:max_bytes\$150000\$:strip_icc\$\$\/GuidetoWealthPreservation-recirc7-v1-22ac2ddaaf9b4cf196fb954b6dcd1c51.png) Tax Credits: What Are They and Do You Qualify?](https:\/\/www.investopedia.com\/articles\/tax\/08\/tax-credit.asp)\n\n[![Gold reserves at the Banque de France](https:\/\/www.investopedia.com\/thmb\/gZd_LOgUKQ_KvB4JJR6UvOZP8oQ=\/282x188\/filters:no_upscale\$\$:max_bytes\$150000\$:strip_icc\$\$\/GettyImages-543859956-a444284080af4644a57fbc8d82264d61.jpg) ![Gold reserves at the Banque de France](https:\/\/www.investopedia.com\/thmb\/gZd_LOgUKQ_KvB4JJR6UvOZP8oQ=\/282x188\/filters:no_upscale\$\$:max_bytes\$150000\$:strip_icc\$\$\/GettyImages-543859956-a444284080af4644a57fbc8d82264d61.jpg) Understanding Taxes on Gold and Silver Investments](https:\/\/www.investopedia.com\/articles\/personal-finance\/081616\/understanding-taxes-physical-goldsilver-investments.asp)\n\n[Investopedia](https:\/\/www.investopedia.com\/)\n\n[Newsletter Sign Up](https:\/\/www.investopedia.com\/taxes\/trumps-tax-reform-plan-explained\/)\n\nFollow Us\n\n- [News](https:\/\/www.investopedia.com\/news-4427706)\n- [Investing](https:\/\/www.investopedia.com\/investing-4427685)\n- [Simulator](https:\/\/www.investopedia.com\/simulator\/?inv_to_sim=global_nav)\n- [Banking](https:\/\/www.investopedia.com\/banking-4427754)\n- [Personal Finance](https:\/\/www.investopedia.com\/personal-finance-4427760)\n- [Economy](https:\/\/www.investopedia.com\/economy-4689801)\n- [Reviews](https:\/\/www.investopedia.com\/financial-product-reviews-7110783)\n- [Dictionary](https:\/\/www.investopedia.com\/financial-term-dictionary-4769738)\n\n- [About Us](https:\/\/www.investopedia.com\/about-us-5093223)\n- [Editorial 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[H](https:\/\/www.investopedia.com\/terms-beginning-with-h-4769358)\n- [I](https:\/\/www.investopedia.com\/terms-beginning-with-i-4769359)\n- [J](https:\/\/www.investopedia.com\/terms-beginning-with-j-4769360)\n- [K](https:\/\/www.investopedia.com\/terms-beginning-with-k-4769361)\n- [L](https:\/\/www.investopedia.com\/terms-beginning-with-l-4769362)\n- [M](https:\/\/www.investopedia.com\/terms-beginning-with-m-4769363)\n- [N](https:\/\/www.investopedia.com\/terms-beginning-with-n-4769364)\n- [O](https:\/\/www.investopedia.com\/terms-beginning-with-o-4769365)\n- [P](https:\/\/www.investopedia.com\/terms-beginning-with-p-4769366)\n- [Q](https:\/\/www.investopedia.com\/terms-beginning-with-q-4769367)\n- [R](https:\/\/www.investopedia.com\/terms-beginning-with-r-4769368)\n- [S](https:\/\/www.investopedia.com\/terms-beginning-with-s-4769369)\n- [T](https:\/\/www.investopedia.com\/terms-beginning-with-t-4769370)\n- [U](https:\/\/www.investopedia.com\/terms-beginning-with-u-4769371)\n- [V](https:\/\/www.investopedia.com\/terms-beginning-with-v-4769372)\n- [W](https:\/\/www.investopedia.com\/terms-beginning-with-w-4769373)\n- [X](https:\/\/www.investopedia.com\/terms-beginning-with-x-4769374)\n- [Y](https:\/\/www.investopedia.com\/terms-beginning-with-y-4769375)\n- [Z](https:\/\/www.investopedia.com\/terms-beginning-with-z-4769376)\n\nInvestopedia is part of the [People Inc.](https:\/\/www.people.inc\/) publishing family.\n\nNewsletter Sign Up\n\nNewsletter Sign Up","attrs_readable_markdown":"### Key Takeaways\n- The Tax Cuts and Jobs Act (TCJA) was the most significant tax code overhaul in three decades, creating a single flat corporate tax rate of 21%.\n- Many tax benefits that helped individuals and families were initially set to expire in 2025.\n- The One Big Beautiful Bill Act (OBBBA, 2025) permanently establishes many individual provisions, such as lower tax brackets, a bigger standard deduction, and a Qualified Business Income (QBI) deduction.\n- OBBBA also raises the SALT deduction cap, boosts the Child Tax Credit, and permanently enhances the standard deduction.\n- New provisions include special reliefs—like deductions for tips, overtime pay, and U.S. auto-loan interest—while maintaining TCJA’s broad corporate reforms.\n\nThe Tax Cuts and Jobs Act (TCJA) was a major overhaul of the tax code, signed into law by President Donald Trump in his first term on Jan. 1, 2018. The Senate passed it on Dec. 2, 2017, by a party-line vote of 51 to 49.1 The House passed its version by a vote of 224 to 201. No House Democrats supported the bill, and 12 Republicans voted against it.2\n\nThe reform impacted [taxpayers](https:\/\/www.investopedia.com\/the-best-tax-software-8780098) and [business owners](https:\/\/www.investopedia.com\/the-best-tax-software-for-small-business-8780637), particularly through tax cuts. Many of the benefits for individuals were set to expire in 2025.3 However, passage of the \"One Big Beautiful Bill Act\" legislative package in July 2025 extended or made many of its provisions permanent.\n\n## Effects on Individuals\nTCJA impacted taxpayers based on their income level, filing status, and deductions. It permanently removed the mandate requiring people to buy health insurance, a key provision of the Affordable Care Act (ACA).3 The highest earners were expected to benefit most from the law, while the lowest and middle earners were expected to pay more in taxes if the individual tax provisions were extended past 2025.4\n\nHere are the key provisions affecting individuals:5\n\n- **Income tax rates**: The law kept the seven individual income tax brackets. The top rate fell from 39.6% to 37%, while the 33% bracket dropped to 32%, the 28% bracket to 24%, the 25% bracket to 22%, and the 15% bracket to 12%. The lowest bracket remained at 10%, and the 35% was unchanged.\n- **Standard deduction**: TCJA raised the standard deduction for all filers.\n- **Personal exemption**:The law suspended the personal exemption through 2025.\n- **Health coverage mandate**: TCJA ended the individual mandate, a provision of the ACA that penalized people who didn't get [health insurance](https:\/\/www.investopedia.com\/the-best-health-insurance-companies-8762191) coverage.\n- **Child tax credit**: The law raised the child tax credit and created a nonrefundable credit for non-child dependents. It can only be claimed if the taxpayer provides the child's Social Security number (SSN), who must be younger than 17. These changes were set to expire in 2025.\n- **Estate tax**: The law temporarily raised the [estate tax](https:\/\/www.investopedia.com\/terms\/e\/estatetax.asp) exemption. This change is expected to be reversed after 2025.\n- **Student loans**: It lets 529 plans fund K through 12 private school tuition—up to \\$10,000 per year, per child. Under the SECURE Act of 2019, the benefits of 529 plans were expanded, allowing plan holders to withdraw a maximum lifetime amount of \\$10,000 per beneficiary penalty-free to pay down qualified [student debt](https:\/\/www.investopedia.com\/terms\/s\/student-debt.asp).6\n- **Retirement savings**: The law repealed the ability to retroactively designate a [Roth](https:\/\/www.investopedia.com\/the-best-roth-ira-brokers-8764132) contribution as a traditional [IRA](https:\/\/www.investopedia.com\/the-best-ira-brokers-8764115) or vice-versa. The SECURE Act lets people contribute to IRAs after age 70½. [HSAs](https:\/\/www.investopedia.com\/the-best-health-savings-account-providers-11687235) weren't affected by the law.6\n- **Alternative Minimum Tax (AMT)**: The law temporarily raised the exemption amount and exemption phase-out threshold for the AMT, which was intended to curb tax avoidance among high earners.\n- **Mortgage interest**: TCJA limits the [mortgage](https:\/\/www.investopedia.com\/the-best-mortgage-lenders-11714101) interest deduction for married couples filing jointly to \\$750,000. The change was set to expire after 2025, but was extended as part of the OBBBA.7\n- **Pease limitation**: The law repealed the Pease limitation on itemized deductions and gradually reduced their value when adjusted gross income exceeds a certain threshold.8\n- **Miscellaneous itemized deductions**: The suspended miscellaneous itemized deductions include deductions for moving expenses, except for active-duty military personnel, and union dues through 2025.\n\n### Important\nThe law cut [corporate tax rates](https:\/\/www.investopedia.com\/terms\/c\/corporatetax.asp) permanently and individual tax rates temporarily, except for those extended or made permanent by the OBBBA.75\n## State and Local Tax (SALT)\nThe law capped the tax [deduction for state and local taxes](https:\/\/www.investopedia.com\/trumps-tax-bill-makes-a-big-change-that-could-impact-high-earners-especially-those-in-new-york-and-california-11779390) at \\$10,000 through the 2025 tax year, but this generally affects only taxpayers who live in states with notably high tax rates and who itemize their deductions rather than claim the standard deduction.5 The cap was raised to \\$40,000 for tax years 2025 to 2028 under the OBBA, but will revert to \\$10,000 after 2028.7\n\nThe deduction covers property and income taxes or sales taxes, but not both. Taxpayers must choose between deducting one type of tax or the other. The TCJA further limited this deduction for those who are married but file separate returns.5\n\n## Businesses and the TCJA\nHere are the key provisions affecting businesses:5\n\n- **Corporate Tax Rate**: The law created a single corporate tax rate of 21% and repealed the corporate AMT. These provisions do not expire. Supporters argued that lowering the corporate tax rate would reduce the need for companies to move their taxes to low- or no-tax countries, often through mergers with foreign firms.\n- **Immediate Expensing**: TCJA allows full expensing of short-lived capital investments rather than requiring them to be depreciated over time. The section 179 deduction cap doubles to \\$1 million, and the phaseout begins after \\$2.5 million of equipment spending, up from the previous \\$2 million.\n- **Pass-Through Income**: Owners of pass-through businesses, which include sole proprietorships, partnerships, and S corporations, gained a 20% deduction for pass-through income. To discourage high earners from recharacterizing regular wages as pass-through income, the deduction is capped at 50% of wage income or 25% of wage income plus 2.5% of the cost of qualifying property.\n- **Interest**: The net interest deduction is capped at 30% of earnings before interest and taxes (EBIT).\n- **Cash Accounting**: Businesses with up to \\$25 million in average annual gross receipts over the preceding three years can use [cash accounting](https:\/\/www.investopedia.com\/terms\/c\/cashaccounting.asp)—up from the old tax code's \\$5 million.\n- **Net Operating Losses**: The law scrapped net operating loss (NOL) carrybacks and caps carryforwards at 90% of taxable income, falling to 80%.\n- **Section 199**: The law eliminated the section 199 (domestic production activities) deduction for businesses that engage in domestic manufacturing and other production work.\n- **Foreign Earnings**: The law introduced a territorial tax system under which only domestic earnings are subject to tax. Companies with over \\$500 million in annual gross receipts are subject to the base erosion anti-abuse tax, designed to counteract base erosion and profit shifting, a tax-planning strategy that involves moving taxable profits from one country to another with low or no taxes. BEAT is calculated by subtracting a company's regular corporate tax liability from 10% of its taxable income, ignoring base-eroding payments.9\n## Intangible Property\nTCJA altered the treatment of intangible property held abroad, such as patents, trademarks, and copyrights.5 For example, Nike's ([NKE](https:\/\/www.investopedia.com\/markets\/quote?tvwidgetsymbol=nke)) Swoosh trademark is house in an untaxed Dutch subsidiary.10\n\nWhen the foreign tax rate on foreign earnings above a 10% standard rate of return is below 13.125%, the law taxes these excess returns at 21%, after a 50% deduction and a deduction worth 37.5% of FDII. This excess income, which the law assumes to be derived from intangible assets, is called global intangible low-taxed income (GILTI). Credits can offset up to 80% of GILTI liability.\n\nForeign-derived intangible income is from the export of intangibles held domestically, which is taxed at a 13.125% effective rate, rising to 16.406% after 2025.5\n\n## Projected Economic Growth\nFormer Treasury Secretary Steven Mnuchin claimed that the Republican tax plan would spur sufficient economic growth to pay for itself and more.11 On Dec. 11, 2017, the Treasury released a one-page analysis claiming that the law would increase revenues by \\$1.8 trillion over 10 years.12\n\nThe [Federal Reserve](https:\/\/www.investopedia.com\/terms\/f\/federalreservebank.asp) projected growth of 2.5% in 2018, 2.1% in 2019, 2.0% in 2020, and 1.8% over the longer run.12 Real GDP data for the years after the TCJA showed the following growth rates:13\n\n- 0\\.6% in 2018\n- 2\\.8% in 2019\n- 4\\.6% in 2020\n- 7\\.0% in 2021\n- 2\\.8% in 2022\n- 3\\.4% in 2023\n- 1\\.9% in 2024\n## Who Benefited From TCJA?\nThe TCJA cut the corporate tax rate to benefit shareholders, who tend to be higher earners. It only originally cut individuals' taxes for a limited period, though the OBBA extended or made permanent many of the cuts. It scaled back the AMT and estate tax and reduced the taxes levied on pass-through income. It did not close the [carried interest](https:\/\/www.investopedia.com\/terms\/c\/carriedinterest.asp) loophole, which benefited professional investors.\n\nThe Tax Policy Center originally estimated that the majority of taxpayers (53.4%) would face a tax increase when the individual tax cuts were set to expire after 2025, while 69.7% of those in the middle quintile (40th to 60th percentile) were expected to pay more, compared to just 8% of the highest-earning 0.1%.14\n\nChange in after-tax income by income percentile\n\n## Updates Under the One Big Beautiful Bill Act (2025)\nThe OBBBA, signed into law on July 4, 2025, changes the outlook for taxpayers by making permanent many TCJA provisions as well as adding several new benefits:7\n\n- **Permanent lower individual tax rates:** Keeps the seven-bracket system (10%, 12%, 22%, 24%, 32%, 35%, 37%) beyond 2025, adjusted for inflation.\n- **Standard deduction increase and permanence:** \\$15,750 for single filers and \\$31,500 for married couples filing jointly in 2025; indexed for inflation.\n- **Child Tax Credit raised and permanent:** Increased to \\$2,200 per child, with inflation adjustments and stronger refundability.\n- **SALT deduction cap raised:** From \\$10,000 to \\$40,000 (married filing jointly) for 2025 to 2028, phasing out for high earners; scheduled to revert afterward.\n- **Qualified Business Income (QBI) deduction:** Made permanent, providing certainty for small business owners and pass-through entities.\n- **New targeted deductions:**\n- [No tax on tips](https:\/\/www.investopedia.com\/how-the-new-tax-bill-could-boost-your-refund-next-year-11830394) (up to an annual threshold).\n- No tax on the overtime pay portion of wages.\n- Auto-loan interest deduction for qualifying U.S.-assembled vehicles.\n\n| U.S. Tax Law Comparison: Pre-TCJA vs. TCJA vs. OBBBA (2025) |   |   |   |\n|---|---|---|---|\n| Provision | Pre-TCJA (2017 rules) | TCJA (2018–2024) | OBBBA (2025– ) |\n| **Corporate Tax Rate** | Up to 35% | Flat 21% (permanent) | 21% (permanent, unchanged) |\n| **Individual Tax Brackets** | 7 brackets, top rate 39.6% | 7 brackets, top rate 37% (set to expire 2025) | 7 brackets (10%, 12%, 22%, 24%, 32%, 35%, 37%) made permanent; indexed |\n| **Standard Deduction** | \\$6,350 (single), \\$12,700 (married joint) | ~\\$12,000 (single), ~\\$24,000 (joint), indexed (expiring 2025) | \\$15,750 (single), \\$31,500 (joint) in 2025, indexed; permanent |\n| **Personal Exemptions** | \\$4,050 per person | Eliminated | Remains eliminated |\n| **Child Tax Credit** | \\$1,000 per child (partially refundable) | \\$2,000 per child (\\<17), phase-outs; scheduled to drop post-2025 | \\$2,200 per child, indexed for inflation, permanent; refundable portion expanded |\n| **State & Local Tax (SALT) Deduction** | Unlimited | Capped at \\$10,000 (through 2025) | Raised to \\$40,000 (2025–2028, phase-outs for high earners), reverts to \\$10,000 afterward |\n| **Mortgage Interest Deduction** | Interest on up to \\$1M mortgage | Limited to \\$750k (through 2025) | Continues at \\$750k (no major change) |\n| **Pass-Through Business Deduction (QBI)** | None | Up to 20% deduction on qualified income (expiring 2025) | Made permanent |\n| **Estate Tax Exemption** | ~\\$5.49M per person | Doubled (~\\$11.2M per person, expiring 2025) | Permanently extended at higher level (indexed for inflation) |\n| **Health Insurance Mandate (ACA)** | Penalty for no coverage | Penalty reduced to \\$0 (effective 2019) | Remains \\$0 |\n| **Depreciation \/ Expensing** | Section 179, more limited | 100% bonus depreciation (phased down 2023–2026) | Made permanent under OBBBA |\n| **New Provisions (not in TCJA)** | N\/A | N\/A | Deductions for reported tips (limited), overtime pay, auto-loan interest (U.S. vehicles) |\n## The Bottom Line\nThe Tax Cuts and Jobs Act reshaped the U.S. tax code in 2018, and many of its temporary individual provisions were due to expire at the end of 2025. With the passage of the One Big Beautiful Bill Act on July 4, 2025, however, many of those provisions are now permanent. Taxpayers can expect continued lower rates, bigger deductions, and new reliefs, though some benefits (like the expanded SALT cap) will remain temporary or revert to previous levels after 2028.","meta_canonical":null}

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URL	https://www.investopedia.com/taxes/trumps-tax-reform-plan-explained/
Last Crawled	2026-04-12 13:06:52 (36 minutes ago)
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Meta Title	What Is the Tax Cuts and Jobs Act (TCJA)?
Meta Description	Learn what the Tax Cuts and Jobs Act is, when it was passed, the major tax changes it introduced, and how it continues to affect individuals and businesses.
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Boilerpipe Text	Key Takeaways The Tax Cuts and Jobs Act (TCJA) was the most significant tax code overhaul in three decades, creating a single flat corporate tax rate of 21%. Many tax benefits that helped individuals and families were initially set to expire in 2025. The One Big Beautiful Bill Act (OBBBA, 2025) permanently establishes many individual provisions, such as lower tax brackets, a bigger standard deduction, and a Qualified Business Income (QBI) deduction. OBBBA also raises the SALT deduction cap, boosts the Child Tax Credit, and permanently enhances the standard deduction. New provisions include special reliefs—like deductions for tips, overtime pay, and U.S. auto-loan interest—while maintaining TCJA’s broad corporate reforms. The Tax Cuts and Jobs Act (TCJA) was a major overhaul of the tax code, signed into law by President Donald Trump in his first term on Jan. 1, 2018. The Senate passed it on Dec. 2, 2017, by a party-line vote of 51 to 49. 1 The House passed its version by a vote of 224 to 201. No House Democrats supported the bill, and 12 Republicans voted against it. 2 The reform impacted taxpayers and business owners , particularly through tax cuts. Many of the benefits for individuals were set to expire in 2025. 3 However, passage of the "One Big Beautiful Bill Act" legislative package in July 2025 extended or made many of its provisions permanent. Effects on Individuals TCJA impacted taxpayers based on their income level, filing status, and deductions. It permanently removed the mandate requiring people to buy health insurance, a key provision of the Affordable Care Act (ACA). 3 The highest earners were expected to benefit most from the law, while the lowest and middle earners were expected to pay more in taxes if the individual tax provisions were extended past 2025. 4 Here are the key provisions affecting individuals: 5 Income tax rates : The law kept the seven individual income tax brackets. The top rate fell from 39.6% to 37%, while the 33% bracket dropped to 32%, the 28% bracket to 24%, the 25% bracket to 22%, and the 15% bracket to 12%. The lowest bracket remained at 10%, and the 35% was unchanged. Standard deduction : TCJA raised the standard deduction for all filers. Personal exemption : The law suspended the personal exemption through 2025. Health coverage mandate : TCJA ended the individual mandate, a provision of the ACA that penalized people who didn't get health insurance coverage. Child tax credit : The law raised the child tax credit and created a nonrefundable credit for non-child dependents. It can only be claimed if the taxpayer provides the child's Social Security number (SSN), who must be younger than 17. These changes were set to expire in 2025. Estate tax : The law temporarily raised the estate tax exemption. This change is expected to be reversed after 2025. Student loans : It lets 529 plans fund K through 12 private school tuition—up to $10,000 per year, per child. Under the SECURE Act of 2019, the benefits of 529 plans were expanded, allowing plan holders to withdraw a maximum lifetime amount of $10,000 per beneficiary penalty-free to pay down qualified student debt . 6 Retirement savings : The law repealed the ability to retroactively designate a Roth contribution as a traditional IRA or vice-versa. The SECURE Act lets people contribute to IRAs after age 70½. HSAs weren't affected by the law. 6 Alternative Minimum Tax (AMT) : The law temporarily raised the exemption amount and exemption phase-out threshold for the AMT, which was intended to curb tax avoidance among high earners. Mortgage interest : TCJA limits the mortgage interest deduction for married couples filing jointly to $750,000. The change was set to expire after 2025, but was extended as part of the OBBBA. 7 Pease limitation : The law repealed the Pease limitation on itemized deductions and gradually reduced their value when adjusted gross income exceeds a certain threshold. 8 Miscellaneous itemized deductions : The suspended miscellaneous itemized deductions include deductions for moving expenses, except for active-duty military personnel, and union dues through 2025. Important The law cut corporate tax rates permanently and individual tax rates temporarily, except for those extended or made permanent by the OBBBA. 7 5 State and Local Tax (SALT) The law capped the tax deduction for state and local taxes at $10,000 through the 2025 tax year, but this generally affects only taxpayers who live in states with notably high tax rates and who itemize their deductions rather than claim the standard deduction. 5 The cap was raised to $40,000 for tax years 2025 to 2028 under the OBBA, but will revert to $10,000 after 2028. 7 The deduction covers property and income taxes or sales taxes, but not both. Taxpayers must choose between deducting one type of tax or the other. The TCJA further limited this deduction for those who are married but file separate returns. 5 Businesses and the TCJA Here are the key provisions affecting businesses: 5 Corporate Tax Rate : The law created a single corporate tax rate of 21% and repealed the corporate AMT. These provisions do not expire. Supporters argued that lowering the corporate tax rate would reduce the need for companies to move their taxes to low- or no-tax countries, often through mergers with foreign firms. Immediate Expensing : TCJA allows full expensing of short-lived capital investments rather than requiring them to be depreciated over time. The section 179 deduction cap doubles to $1 million, and the phaseout begins after $2.5 million of equipment spending, up from the previous $2 million. Pass-Through Income : Owners of pass-through businesses, which include sole proprietorships, partnerships, and S corporations, gained a 20% deduction for pass-through income. To discourage high earners from recharacterizing regular wages as pass-through income, the deduction is capped at 50% of wage income or 25% of wage income plus 2.5% of the cost of qualifying property. Interest : The net interest deduction is capped at 30% of earnings before interest and taxes (EBIT). Cash Accounting : Businesses with up to $25 million in average annual gross receipts over the preceding three years can use cash accounting —up from the old tax code's $5 million. Net Operating Losses : The law scrapped net operating loss (NOL) carrybacks and caps carryforwards at 90% of taxable income, falling to 80%. Section 199 : The law eliminated the section 199 (domestic production activities) deduction for businesses that engage in domestic manufacturing and other production work. Foreign Earnings : The law introduced a territorial tax system under which only domestic earnings are subject to tax. Companies with over $500 million in annual gross receipts are subject to the base erosion anti-abuse tax, designed to counteract base erosion and profit shifting, a tax-planning strategy that involves moving taxable profits from one country to another with low or no taxes. BEAT is calculated by subtracting a company's regular corporate tax liability from 10% of its taxable income, ignoring base-eroding payments. 9 Intangible Property TCJA altered the treatment of intangible property held abroad, such as patents, trademarks, and copyrights. 5 For example, Nike's ( NKE ) Swoosh trademark is house in an untaxed Dutch subsidiary. 10 When the foreign tax rate on foreign earnings above a 10% standard rate of return is below 13.125%, the law taxes these excess returns at 21%, after a 50% deduction and a deduction worth 37.5% of FDII. This excess income, which the law assumes to be derived from intangible assets, is called global intangible low-taxed income (GILTI). Credits can offset up to 80% of GILTI liability. Foreign-derived intangible income is from the export of intangibles held domestically, which is taxed at a 13.125% effective rate, rising to 16.406% after 2025. 5 Projected Economic Growth Former Treasury Secretary Steven Mnuchin claimed that the Republican tax plan would spur sufficient economic growth to pay for itself and more. 11 On Dec. 11, 2017, the Treasury released a one-page analysis claiming that the law would increase revenues by $1.8 trillion over 10 years. 12 The Federal Reserve projected growth of 2.5% in 2018, 2.1% in 2019, 2.0% in 2020, and 1.8% over the longer run. 12 Real GDP data for the years after the TCJA showed the following growth rates: 13 0.6% in 2018 2.8% in 2019 4.6% in 2020 7.0% in 2021 2.8% in 2022 3.4% in 2023 1.9% in 2024 Who Benefited From TCJA? The TCJA cut the corporate tax rate to benefit shareholders, who tend to be higher earners. It only originally cut individuals' taxes for a limited period, though the OBBA extended or made permanent many of the cuts. It scaled back the AMT and estate tax and reduced the taxes levied on pass-through income. It did not close the carried interest loophole, which benefited professional investors. The Tax Policy Center originally estimated that the majority of taxpayers (53.4%) would face a tax increase when the individual tax cuts were set to expire after 2025, while 69.7% of those in the middle quintile (40th to 60th percentile) were expected to pay more, compared to just 8% of the highest-earning 0.1%. 14 Change in after-tax income by income percentile Updates Under the One Big Beautiful Bill Act (2025) The OBBBA, signed into law on July 4, 2025, changes the outlook for taxpayers by making permanent many TCJA provisions as well as adding several new benefits: 7 Permanent lower individual tax rates: Keeps the seven-bracket system (10%, 12%, 22%, 24%, 32%, 35%, 37%) beyond 2025, adjusted for inflation. Standard deduction increase and permanence: $15,750 for single filers and $31,500 for married couples filing jointly in 2025; indexed for inflation. Child Tax Credit raised and permanent: Increased to $2,200 per child, with inflation adjustments and stronger refundability. SALT deduction cap raised: From $10,000 to $40,000 (married filing jointly) for 2025 to 2028, phasing out for high earners; scheduled to revert afterward. Qualified Business Income (QBI) deduction: Made permanent, providing certainty for small business owners and pass-through entities. New targeted deductions: No tax on tips (up to an annual threshold). No tax on the overtime pay portion of wages. Auto-loan interest deduction for qualifying U.S.-assembled vehicles. U.S. Tax Law Comparison: Pre-TCJA vs. TCJA vs. OBBBA (2025) Provision Pre-TCJA (2017 rules) TCJA (2018–2024) OBBBA (2025– ) Corporate Tax Rate Up to 35% Flat 21% (permanent) 21% (permanent, unchanged) Individual Tax Brackets 7 brackets, top rate 39.6% 7 brackets, top rate 37% (set to expire 2025) 7 brackets (10%, 12%, 22%, 24%, 32%, 35%, 37%) made permanent; indexed Standard Deduction $6,350 (single), $12,700 (married joint) ~$12,000 (single), ~$24,000 (joint), indexed (expiring 2025) $15,750 (single), $31,500 (joint) in 2025, indexed; permanent Personal Exemptions $4,050 per person Eliminated Remains eliminated Child Tax Credit $1,000 per child (partially refundable) $2,000 per child (<17), phase-outs; scheduled to drop post-2025 $2,200 per child, indexed for inflation, permanent; refundable portion expanded State & Local Tax (SALT) Deduction Unlimited Capped at $10,000 (through 2025) Raised to $40,000 (2025–2028, phase-outs for high earners), reverts to $10,000 afterward Mortgage Interest Deduction Interest on up to $1M mortgage Limited to $750k (through 2025) Continues at $750k (no major change) Pass-Through Business Deduction (QBI) None Up to 20% deduction on qualified income (expiring 2025) Made permanent Estate Tax Exemption ~$5.49M per person Doubled (~$11.2M per person, expiring 2025) Permanently extended at higher level (indexed for inflation) Health Insurance Mandate (ACA) Penalty for no coverage Penalty reduced to $0 (effective 2019) Remains $0 Depreciation / Expensing Section 179, more limited 100% bonus depreciation (phased down 2023–2026) Made permanent under OBBBA New Provisions (not in TCJA) N/A N/A Deductions for reported tips (limited), overtime pay, auto-loan interest (U.S. vehicles) The Bottom Line The Tax Cuts and Jobs Act reshaped the U.S. tax code in 2018, and many of its temporary individual provisions were due to expire at the end of 2025. With the passage of the One Big Beautiful Bill Act on July 4, 2025, however, many of those provisions are now permanent. Taxpayers can expect continued lower rates, bigger deductions, and new reliefs, though some benefits (like the expanded SALT cap) will remain temporary or revert to previous levels after 2028.
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[Warren Buffett's Investing Rule That Could Change Your Future](https://www.investopedia.com/warren-buffett-s-investing-rule-that-could-change-your-financial-future-11947169) Table of Contents Expand Table of Contents - [Effects on Individuals](https://www.investopedia.com/taxes/trumps-tax-reform-plan-explained/#toc-effects-on-individuals) - [State and Local Tax (SALT)](https://www.investopedia.com/taxes/trumps-tax-reform-plan-explained/#toc-state-and-local-tax-salt) - [Businesses and the TCJA](https://www.investopedia.com/taxes/trumps-tax-reform-plan-explained/#toc-businesses-and-the-tcja) - [Intangible Property](https://www.investopedia.com/taxes/trumps-tax-reform-plan-explained/#toc-intangible-property) - [Projected Economic Growth](https://www.investopedia.com/taxes/trumps-tax-reform-plan-explained/#toc-projected-economic-growth) - [Who Benefited From TCJA?](https://www.investopedia.com/taxes/trumps-tax-reform-plan-explained/#toc-who-benefited-from-tcja) - [Updates Under the One Big Beautiful Bill Act (2025)](https://www.investopedia.com/taxes/trumps-tax-reform-plan-explained/#toc-updates-under-the-one-big-beautiful-bill-act-2025) - [The Bottom Line](https://www.investopedia.com/taxes/trumps-tax-reform-plan-explained/#toc-the-bottom-line) # What Is the Tax Cuts and Jobs Act (TCJA)? Trump's Tax Reform Plan Explained (Updated for 2025) By [David Floyd](https://www.investopedia.com/contributors/54375/) ![]() ![](https://www.investopedia.com/thmb/aDpxwnSB8xoXBttLHxNeP8Wouro=/200x200/filters:no_upscale:max_bytes$150000$:strip_icc/floyd_bio_pic_final-5bfc2a7f46e0fb0051bdb022.jpg) [Full Bio](https://www.investopedia.com/contributors/54375/) David Floyd is a reporter for Coindesk with 5+ years of experience as a financial writer. He is a former staff writer for Investopedia. Learn about our [editorial policies](https://www.investopedia.com/legal-4768893#editorial-policy) Updated December 11, 2025 Reviewed by [Khadija Khartit](https://www.investopedia.com/khadija-khartit-4799776) ![Khadija Khartit]() ![Khadija Khartit](https://www.investopedia.com/thmb/W2re2_rNx_MIW9RPQv9BMFNHVH4=/200x200/filters:no_upscale:max_bytes$150000$:strip_icc/Pic1-KhadijaKhartit-cc5b57fba2bd46ed87bdb3ddbcd2ef69.jpg) Reviewed by Khadija Khartit [Full Bio](https://www.investopedia.com/khadija-khartit-4799776) Khadija Khartit is a strategy, investment, and funding expert, and an educator of fintech and strategic finance in top universities. She has been an investor, entrepreneur, and advisor for more than 25 years. She is a FINRA Series 7, 63, and 66 license holder. Learn about our [Financial Review Board](https://www.investopedia.com/investopedia-financial-review-board-5076269) Fact checked by [Vikki Velasquez](https://www.investopedia.com/vikki-velasquez-5198872) ![Vikkie Velasquez]() ![Vikkie Velasquez](https://www.investopedia.com/thmb/qsiqwN4603qvBBcEmwBBFAZ7h-8=/200x200/filters:no_upscale:max_bytes$150000$:strip_icc/vikki-velasquez-investopedia-portrait-1-18b989d75f1f4d6d9b5b3a47cb3ffc5f.jpg) Fact checked by Vikki Velasquez [Full Bio](https://www.investopedia.com/vikki-velasquez-5198872) Vikki Velasquez is a researcher and writer who has managed, coordinated, and directed various community and nonprofit organizations. She has conducted in-depth research on social and economic issues and has also revised and edited educational materials for the Greater Richmond area. Learn about our [editorial policies](https://www.investopedia.com/legal-4768893#editorial-policy) ![Three people in a business meeting one speaking and the other two seated and listening](https://www.investopedia.com/thmb/cVx7cM7UjtMdrwAGO_RtRwmJc_Q=/1500x0/filters:no_upscale:max_bytes$150000$:strip_icc/taxcutsandjobsact-ca17c835fc864a70b5392e3a304d1ccf.jpg) ![Three people in a business meeting one speaking and the other two seated and listening](https://www.investopedia.com/thmb/cVx7cM7UjtMdrwAGO_RtRwmJc_Q=/1500x0/filters:no_upscale:max_bytes$150000$:strip_icc/taxcutsandjobsact-ca17c835fc864a70b5392e3a304d1ccf.jpg) The Tax Cuts and Job Act prompted a significant overhaul of the tax code, affecting millions of Americans. Nick White and Fiona Jackson-Downes / Getty Images Close ### Key Takeaways - The Tax Cuts and Jobs Act (TCJA) was the most significant tax code overhaul in three decades, creating a single flat corporate tax rate of 21%. - Many tax benefits that helped individuals and families were initially set to expire in 2025. - The One Big Beautiful Bill Act (OBBBA, 2025) permanently establishes many individual provisions, such as lower tax brackets, a bigger standard deduction, and a Qualified Business Income (QBI) deduction. - OBBBA also raises the SALT deduction cap, boosts the Child Tax Credit, and permanently enhances the standard deduction. - New provisions include special reliefs—like deductions for tips, overtime pay, and U.S. auto-loan interest—while maintaining TCJA’s broad corporate reforms. The Tax Cuts and Jobs Act (TCJA) was a major overhaul of the tax code, signed into law by President Donald Trump in his first term on Jan. 1, 2018. The Senate passed it on Dec. 2, 2017, by a party-line vote of 51 to 49.1 The House passed its version by a vote of 224 to 201. No House Democrats supported the bill, and 12 Republicans voted against it.2 The reform impacted [taxpayers](https://www.investopedia.com/the-best-tax-software-8780098) and [business owners](https://www.investopedia.com/the-best-tax-software-for-small-business-8780637), particularly through tax cuts. Many of the benefits for individuals were set to expire in 2025.3 However, passage of the "One Big Beautiful Bill Act" legislative package in July 2025 extended or made many of its provisions permanent. ## Effects on Individuals TCJA impacted taxpayers based on their income level, filing status, and deductions. It permanently removed the mandate requiring people to buy health insurance, a key provision of the Affordable Care Act (ACA).3 The highest earners were expected to benefit most from the law, while the lowest and middle earners were expected to pay more in taxes if the individual tax provisions were extended past 2025.4 Here are the key provisions affecting individuals:5 - Income tax rates: The law kept the seven individual income tax brackets. The top rate fell from 39.6% to 37%, while the 33% bracket dropped to 32%, the 28% bracket to 24%, the 25% bracket to 22%, and the 15% bracket to 12%. The lowest bracket remained at 10%, and the 35% was unchanged. - Standard deduction: TCJA raised the standard deduction for all filers. - Personal exemption:The law suspended the personal exemption through 2025. - Health coverage mandate: TCJA ended the individual mandate, a provision of the ACA that penalized people who didn't get [health insurance](https://www.investopedia.com/the-best-health-insurance-companies-8762191) coverage. - Child tax credit: The law raised the child tax credit and created a nonrefundable credit for non-child dependents. It can only be claimed if the taxpayer provides the child's Social Security number (SSN), who must be younger than 17. These changes were set to expire in 2025. - Estate tax: The law temporarily raised the [estate tax](https://www.investopedia.com/terms/e/estatetax.asp) exemption. This change is expected to be reversed after 2025. - Student loans: It lets 529 plans fund K through 12 private school tuition—up to \$10,000 per year, per child. Under the SECURE Act of 2019, the benefits of 529 plans were expanded, allowing plan holders to withdraw a maximum lifetime amount of \$10,000 per beneficiary penalty-free to pay down qualified [student debt](https://www.investopedia.com/terms/s/student-debt.asp).6 - Retirement savings: The law repealed the ability to retroactively designate a [Roth](https://www.investopedia.com/the-best-roth-ira-brokers-8764132) contribution as a traditional [IRA](https://www.investopedia.com/the-best-ira-brokers-8764115) or vice-versa. The SECURE Act lets people contribute to IRAs after age 70½. [HSAs](https://www.investopedia.com/the-best-health-savings-account-providers-11687235) weren't affected by the law.6 - Alternative Minimum Tax (AMT): The law temporarily raised the exemption amount and exemption phase-out threshold for the AMT, which was intended to curb tax avoidance among high earners. - Mortgage interest: TCJA limits the [mortgage](https://www.investopedia.com/the-best-mortgage-lenders-11714101) interest deduction for married couples filing jointly to \$750,000. The change was set to expire after 2025, but was extended as part of the OBBBA.7 - Pease limitation: The law repealed the Pease limitation on itemized deductions and gradually reduced their value when adjusted gross income exceeds a certain threshold.8 - Miscellaneous itemized deductions: The suspended miscellaneous itemized deductions include deductions for moving expenses, except for active-duty military personnel, and union dues through 2025. ### Important The law cut [corporate tax rates](https://www.investopedia.com/terms/c/corporatetax.asp) permanently and individual tax rates temporarily, except for those extended or made permanent by the OBBBA.75 ## State and Local Tax (SALT) The law capped the tax [deduction for state and local taxes](https://www.investopedia.com/trumps-tax-bill-makes-a-big-change-that-could-impact-high-earners-especially-those-in-new-york-and-california-11779390) at \$10,000 through the 2025 tax year, but this generally affects only taxpayers who live in states with notably high tax rates and who itemize their deductions rather than claim the standard deduction.5 The cap was raised to \$40,000 for tax years 2025 to 2028 under the OBBA, but will revert to \$10,000 after 2028.7 The deduction covers property and income taxes or sales taxes, but not both. Taxpayers must choose between deducting one type of tax or the other. The TCJA further limited this deduction for those who are married but file separate returns.5 ## Businesses and the TCJA Here are the key provisions affecting businesses:5 - Corporate Tax Rate: The law created a single corporate tax rate of 21% and repealed the corporate AMT. These provisions do not expire. Supporters argued that lowering the corporate tax rate would reduce the need for companies to move their taxes to low- or no-tax countries, often through mergers with foreign firms. - Immediate Expensing: TCJA allows full expensing of short-lived capital investments rather than requiring them to be depreciated over time. The section 179 deduction cap doubles to \$1 million, and the phaseout begins after \$2.5 million of equipment spending, up from the previous \$2 million. - Pass-Through Income: Owners of pass-through businesses, which include sole proprietorships, partnerships, and S corporations, gained a 20% deduction for pass-through income. To discourage high earners from recharacterizing regular wages as pass-through income, the deduction is capped at 50% of wage income or 25% of wage income plus 2.5% of the cost of qualifying property. - Interest: The net interest deduction is capped at 30% of earnings before interest and taxes (EBIT). - Cash Accounting: Businesses with up to \$25 million in average annual gross receipts over the preceding three years can use [cash accounting](https://www.investopedia.com/terms/c/cashaccounting.asp)—up from the old tax code's \$5 million. - Net Operating Losses: The law scrapped net operating loss (NOL) carrybacks and caps carryforwards at 90% of taxable income, falling to 80%. - Section 199: The law eliminated the section 199 (domestic production activities) deduction for businesses that engage in domestic manufacturing and other production work. - Foreign Earnings: The law introduced a territorial tax system under which only domestic earnings are subject to tax. Companies with over \$500 million in annual gross receipts are subject to the base erosion anti-abuse tax, designed to counteract base erosion and profit shifting, a tax-planning strategy that involves moving taxable profits from one country to another with low or no taxes. BEAT is calculated by subtracting a company's regular corporate tax liability from 10% of its taxable income, ignoring base-eroding payments.9 ## Intangible Property TCJA altered the treatment of intangible property held abroad, such as patents, trademarks, and copyrights.5 For example, Nike's ([NKE](https://www.investopedia.com/markets/quote?tvwidgetsymbol=nke)) Swoosh trademark is house in an untaxed Dutch subsidiary.10 When the foreign tax rate on foreign earnings above a 10% standard rate of return is below 13.125%, the law taxes these excess returns at 21%, after a 50% deduction and a deduction worth 37.5% of FDII. This excess income, which the law assumes to be derived from intangible assets, is called global intangible low-taxed income (GILTI). Credits can offset up to 80% of GILTI liability. Foreign-derived intangible income is from the export of intangibles held domestically, which is taxed at a 13.125% effective rate, rising to 16.406% after 2025.5 ## Projected Economic Growth Former Treasury Secretary Steven Mnuchin claimed that the Republican tax plan would spur sufficient economic growth to pay for itself and more.11 On Dec. 11, 2017, the Treasury released a one-page analysis claiming that the law would increase revenues by \$1.8 trillion over 10 years.12 The [Federal Reserve](https://www.investopedia.com/terms/f/federalreservebank.asp) projected growth of 2.5% in 2018, 2.1% in 2019, 2.0% in 2020, and 1.8% over the longer run.12 Real GDP data for the years after the TCJA showed the following growth rates:13 - 0\.6% in 2018 - 2\.8% in 2019 - 4\.6% in 2020 - 7\.0% in 2021 - 2\.8% in 2022 - 3\.4% in 2023 - 1\.9% in 2024 ## Who Benefited From TCJA? The TCJA cut the corporate tax rate to benefit shareholders, who tend to be higher earners. It only originally cut individuals' taxes for a limited period, though the OBBA extended or made permanent many of the cuts. It scaled back the AMT and estate tax and reduced the taxes levied on pass-through income. It did not close the [carried interest](https://www.investopedia.com/terms/c/carriedinterest.asp) loophole, which benefited professional investors. The Tax Policy Center originally estimated that the majority of taxpayers (53.4%) would face a tax increase when the individual tax cuts were set to expire after 2025, while 69.7% of those in the middle quintile (40th to 60th percentile) were expected to pay more, compared to just 8% of the highest-earning 0.1%.14 Change in after-tax income by income percentile ## Updates Under the One Big Beautiful Bill Act (2025) The OBBBA, signed into law on July 4, 2025, changes the outlook for taxpayers by making permanent many TCJA provisions as well as adding several new benefits:7 - Permanent lower individual tax rates: Keeps the seven-bracket system (10%, 12%, 22%, 24%, 32%, 35%, 37%) beyond 2025, adjusted for inflation. - Standard deduction increase and permanence: \$15,750 for single filers and \$31,500 for married couples filing jointly in 2025; indexed for inflation. - Child Tax Credit raised and permanent: Increased to \$2,200 per child, with inflation adjustments and stronger refundability. - SALT deduction cap raised: From \$10,000 to \$40,000 (married filing jointly) for 2025 to 2028, phasing out for high earners; scheduled to revert afterward. - Qualified Business Income (QBI) deduction: Made permanent, providing certainty for small business owners and pass-through entities. - New targeted deductions: - [No tax on tips](https://www.investopedia.com/how-the-new-tax-bill-could-boost-your-refund-next-year-11830394) (up to an annual threshold). - No tax on the overtime pay portion of wages. - Auto-loan interest deduction for qualifying U.S.-assembled vehicles. \| U.S. Tax Law Comparison: Pre-TCJA vs. TCJA vs. OBBBA (2025) \| \| \| \| \|---\|---\|---\|---\| \| Provision \| Pre-TCJA (2017 rules) \| TCJA (2018–2024) \| OBBBA (2025– ) \| \| Corporate Tax Rate \| Up to 35% \| Flat 21% (permanent) \| 21% (permanent, unchanged) \| \| Individual Tax Brackets \| 7 brackets, top rate 39.6% \| 7 brackets, top rate 37% (set to expire 2025) \| 7 brackets (10%, 12%, 22%, 24%, 32%, 35%, 37%) made permanent; indexed \| \| Standard Deduction \| \$6,350 (single), \$12,700 (married joint) \| ~\$12,000 (single), ~\$24,000 (joint), indexed (expiring 2025) \| \$15,750 (single), \$31,500 (joint) in 2025, indexed; permanent \| \| Personal Exemptions \| \$4,050 per person \| Eliminated \| Remains eliminated \| \| Child Tax Credit \| \$1,000 per child (partially refundable) \| \$2,000 per child (\<17), phase-outs; scheduled to drop post-2025 \| \$2,200 per child, indexed for inflation, permanent; refundable portion expanded \| \| State & Local Tax (SALT) Deduction \| Unlimited \| Capped at \$10,000 (through 2025) \| Raised to \$40,000 (2025–2028, phase-outs for high earners), reverts to \$10,000 afterward \| \| Mortgage Interest Deduction \| Interest on up to \$1M mortgage \| Limited to \$750k (through 2025) \| Continues at \$750k (no major change) \| \| Pass-Through Business Deduction (QBI) \| None \| Up to 20% deduction on qualified income (expiring 2025) \| Made permanent \| \| Estate Tax Exemption \| ~\$5.49M per person \| Doubled (~\$11.2M per person, expiring 2025) \| Permanently extended at higher level (indexed for inflation) \| \| Health Insurance Mandate (ACA) \| Penalty for no coverage \| Penalty reduced to \$0 (effective 2019) \| Remains \$0 \| \| Depreciation / Expensing \| Section 179, more limited \| 100% bonus depreciation (phased down 2023–2026) \| Made permanent under OBBBA \| \| New Provisions (not in TCJA) \| N/A \| N/A \| Deductions for reported tips (limited), overtime pay, auto-loan interest (U.S. vehicles) \| ## The Bottom Line The Tax Cuts and Jobs Act reshaped the U.S. tax code in 2018, and many of its temporary individual provisions were due to expire at the end of 2025. With the passage of the One Big Beautiful Bill Act on July 4, 2025, however, many of those provisions are now permanent. Taxpayers can expect continued lower rates, bigger deductions, and new reliefs, though some benefits (like the expanded SALT cap) will remain temporary or revert to previous levels after 2028. Article Sources Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our [editorial policy.](https://www.investopedia.com/legal-4768893#EditorialPolicy) 1. U.S. Congress. "[H.R.1 - An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018: Actions](https://www.congress.gov/bill/115th-congress/house-bill/1/actions)." 2. U.S. House of Representatives, Office of the Clerk. "[Roll Call 699 \\| Bill Number: H. R. 1](https://clerk.house.gov/Votes/2017699)." 3. U.S. Congress. "[H.R.1 - An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018: Summary](https://www.congress.gov/bill/115th-congress/house-bill/1)." 4. The Tax Policy Center. "[Unpacking the TCJA: Who Benefits and Who Loses from Extending Major Provisions](https://taxpolicycenter.org/taxvox/unpacking-tcja-who-benefits-and-who-loses-extending-major-provisions)." 5. U.S. Congress. "[H.R.1 - An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018](https://www.congress.gov/bill/115th-congress/house-bill/1/text)." 6. U.S. Congress. "[H.R.1994 - Setting Every Community Up for Retirement Enhancement Act of 2019](https://www.congress.gov/bill/116th-congress/house-bill/1994/text)." 7. U.S. Congress. "[H.R.1 - One Big Beautiful Bill Act](https://www.congress.gov/bill/119th-congress/house-bill/1/text)." 8. Urban Institute & Brookings Institution. "[Effects of The Tax Cuts and Jobs Act: A Preliminary Analysis](https://www.brookings.edu/wp-content/uploads/2018/06/ES_20180608_tcja_summary_paper_final.pdf)." Page 3. 9. The Tax Foundation. "[Base Erosion and Anti-Abuse Tax (BEAT)](https://taxfoundation.org/taxedu/glossary/base-erosion-anti-abuse-tax-beat/)." 10. Reuters. "[Nike Urges Court to Throw Out EU Probe Into Dutch Tax Deal](https://www.reuters.com/business/nike-urges-court-throw-out-eu-probe-into-dutch-tax-deal-2021-01-25/)." 11. NBC News. "[Mnuchin Says FEMA Doing 'A Terrific Job' in Puerto Rico](https://www.nbcnews.com/politics/politics-news/mnuchin-says-fema-doing-terrific-job-puerto-rico-n806356)." 12. U.S. Department of the Treasury. "[Analysis of Growth and Revenue Estimates Based on the U.S. Senate Committee on Finance Tax Reform Plan, December 11, 2017](https://www.crapo.senate.gov/imo/media/doc/2017DEC_TreasuryGrowthMemo.pdf)." 13. Federal Reserve Bank of St. Louis, FRED. "[Real Gross Domestic Product (Percent Change From Preceding Period)](https://fred.stlouisfed.org/series/A191RL1Q225SBEA#0)." Adjust for Annual and End of Period. 14. The Tax Policy Center. "[Distributional Analysis of the Conference Agreement for the Tax Cuts and Jobs Act](https://taxpolicycenter.org/sites/default/files/publication/150816/2001641_distributional_analysis_of_the_conference_agreement_for_the_tax_cuts_and_jobs_act_0.pdf)." Page 8. Compare Accounts Advertiser Disclosure × The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace. Read more - [Personal Finance](https://www.investopedia.com/personal-finance-4427760) - [Taxes](https://www.investopedia.com/taxes-4427724) - [Tax Laws & Regulations](https://www.investopedia.com/tax-laws-and-regulations-4689688) Partner Links ## Related Articles [![Limited Partnership (LP)](https://www.investopedia.com/thmb/LAz4eZ4ZPUGCwWU5p-KC3NiSHHc=/282x188/filters:no_upscale:max_bytes$150000$:strip_icc/Limited-partnership-4193607-4d28563ecfe348229857be6d9c2f059d.jpg) ![Limited Partnership (LP)](https://www.investopedia.com/thmb/LAz4eZ4ZPUGCwWU5p-KC3NiSHHc=/282x188/filters:no_upscale:max_bytes$150000$:strip_icc/Limited-partnership-4193607-4d28563ecfe348229857be6d9c2f059d.jpg) Limited Partnership (LP): What It Is, Pros and Cons, How to Form One](https://www.investopedia.com/terms/l/limitedpartnership.asp) [![Not for Profit: An organization or enterprise that does not earn profits for its owners.](https://www.investopedia.com/thmb/9rFh22Upg9rEUn_O8Wc9OHg5Jdw=/282x188/filters:no_upscale:max_bytes$150000$:strip_icc/not-for-profit.asp-FINAL-1-39398aa9faa74c25b1328311050ea87f.png) ![Not for Profit: An organization or enterprise that does not earn profits for its owners.](https://www.investopedia.com/thmb/9rFh22Upg9rEUn_O8Wc9OHg5Jdw=/282x188/filters:no_upscale:max_bytes$150000$:strip_icc/not-for-profit.asp-FINAL-1-39398aa9faa74c25b1328311050ea87f.png) Understanding Not-for-Profit Organizations and Their Tax Implications](https://www.investopedia.com/terms/n/not-for-profit.asp) [![Hands holding receipts with more receipts, a calculator and glasses on the desk](https://www.investopedia.com/thmb/sz_cnYYum8GEb2QQE5KJ5LLjBxM=/282x188/filters:no_upscale:max_bytes$150000$:strip_icc/GettyImages-1520995081-a16700d5f6834e8ea0ee843bca7219ac.jpg) ![Hands holding receipts with more receipts, a calculator and glasses on the desk](https://www.investopedia.com/thmb/sz_cnYYum8GEb2QQE5KJ5LLjBxM=/282x188/filters:no_upscale:max_bytes$150000$:strip_icc/GettyImages-1520995081-a16700d5f6834e8ea0ee843bca7219ac.jpg) 5 IRS Audit Red Flags to Avoid on Your Tax Return](https://www.investopedia.com/red-flags-trigger-an-audit-8787649) [![Young businesswoman using digital tablet in financial district, against illuminated corporate skyscrapers at night](https://www.investopedia.com/thmb/H1m8Ztpbs5mvGKOPUbXOejHE_2k=/282x188/filters:no_upscale:max_bytes$150000$:strip_icc/young-businesswoman-using-digital-tablet-in-financial-district--against-illuminated-corporate-skyscrapers-at-night-990909558-e378a7eb649a4fc188d613fe55d9e9c9.jpg) ![Young businesswoman using digital tablet in financial district, against illuminated corporate skyscrapers at night](https://www.investopedia.com/thmb/H1m8Ztpbs5mvGKOPUbXOejHE_2k=/282x188/filters:no_upscale:max_bytes$150000$:strip_icc/young-businesswoman-using-digital-tablet-in-financial-district--against-illuminated-corporate-skyscrapers-at-night-990909558-e378a7eb649a4fc188d613fe55d9e9c9.jpg) What Is Worldwide Income? 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Readable Markdown	### Key Takeaways - The Tax Cuts and Jobs Act (TCJA) was the most significant tax code overhaul in three decades, creating a single flat corporate tax rate of 21%. - Many tax benefits that helped individuals and families were initially set to expire in 2025. - The One Big Beautiful Bill Act (OBBBA, 2025) permanently establishes many individual provisions, such as lower tax brackets, a bigger standard deduction, and a Qualified Business Income (QBI) deduction. - OBBBA also raises the SALT deduction cap, boosts the Child Tax Credit, and permanently enhances the standard deduction. - New provisions include special reliefs—like deductions for tips, overtime pay, and U.S. auto-loan interest—while maintaining TCJA’s broad corporate reforms. The Tax Cuts and Jobs Act (TCJA) was a major overhaul of the tax code, signed into law by President Donald Trump in his first term on Jan. 1, 2018. The Senate passed it on Dec. 2, 2017, by a party-line vote of 51 to 49.1 The House passed its version by a vote of 224 to 201. No House Democrats supported the bill, and 12 Republicans voted against it.2 The reform impacted [taxpayers](https://www.investopedia.com/the-best-tax-software-8780098) and [business owners](https://www.investopedia.com/the-best-tax-software-for-small-business-8780637), particularly through tax cuts. Many of the benefits for individuals were set to expire in 2025.3 However, passage of the "One Big Beautiful Bill Act" legislative package in July 2025 extended or made many of its provisions permanent. ## Effects on Individuals TCJA impacted taxpayers based on their income level, filing status, and deductions. It permanently removed the mandate requiring people to buy health insurance, a key provision of the Affordable Care Act (ACA).3 The highest earners were expected to benefit most from the law, while the lowest and middle earners were expected to pay more in taxes if the individual tax provisions were extended past 2025.4 Here are the key provisions affecting individuals:5 - Income tax rates: The law kept the seven individual income tax brackets. The top rate fell from 39.6% to 37%, while the 33% bracket dropped to 32%, the 28% bracket to 24%, the 25% bracket to 22%, and the 15% bracket to 12%. The lowest bracket remained at 10%, and the 35% was unchanged. - Standard deduction: TCJA raised the standard deduction for all filers. - Personal exemption:The law suspended the personal exemption through 2025. - Health coverage mandate: TCJA ended the individual mandate, a provision of the ACA that penalized people who didn't get [health insurance](https://www.investopedia.com/the-best-health-insurance-companies-8762191) coverage. - Child tax credit: The law raised the child tax credit and created a nonrefundable credit for non-child dependents. It can only be claimed if the taxpayer provides the child's Social Security number (SSN), who must be younger than 17. These changes were set to expire in 2025. - Estate tax: The law temporarily raised the [estate tax](https://www.investopedia.com/terms/e/estatetax.asp) exemption. This change is expected to be reversed after 2025. - Student loans: It lets 529 plans fund K through 12 private school tuition—up to \$10,000 per year, per child. Under the SECURE Act of 2019, the benefits of 529 plans were expanded, allowing plan holders to withdraw a maximum lifetime amount of \$10,000 per beneficiary penalty-free to pay down qualified [student debt](https://www.investopedia.com/terms/s/student-debt.asp).6 - Retirement savings: The law repealed the ability to retroactively designate a [Roth](https://www.investopedia.com/the-best-roth-ira-brokers-8764132) contribution as a traditional [IRA](https://www.investopedia.com/the-best-ira-brokers-8764115) or vice-versa. The SECURE Act lets people contribute to IRAs after age 70½. [HSAs](https://www.investopedia.com/the-best-health-savings-account-providers-11687235) weren't affected by the law.6 - Alternative Minimum Tax (AMT): The law temporarily raised the exemption amount and exemption phase-out threshold for the AMT, which was intended to curb tax avoidance among high earners. - Mortgage interest: TCJA limits the [mortgage](https://www.investopedia.com/the-best-mortgage-lenders-11714101) interest deduction for married couples filing jointly to \$750,000. The change was set to expire after 2025, but was extended as part of the OBBBA.7 - Pease limitation: The law repealed the Pease limitation on itemized deductions and gradually reduced their value when adjusted gross income exceeds a certain threshold.8 - Miscellaneous itemized deductions: The suspended miscellaneous itemized deductions include deductions for moving expenses, except for active-duty military personnel, and union dues through 2025. ### Important The law cut [corporate tax rates](https://www.investopedia.com/terms/c/corporatetax.asp) permanently and individual tax rates temporarily, except for those extended or made permanent by the OBBBA.75 ## State and Local Tax (SALT) The law capped the tax [deduction for state and local taxes](https://www.investopedia.com/trumps-tax-bill-makes-a-big-change-that-could-impact-high-earners-especially-those-in-new-york-and-california-11779390) at \$10,000 through the 2025 tax year, but this generally affects only taxpayers who live in states with notably high tax rates and who itemize their deductions rather than claim the standard deduction.5 The cap was raised to \$40,000 for tax years 2025 to 2028 under the OBBA, but will revert to \$10,000 after 2028.7 The deduction covers property and income taxes or sales taxes, but not both. Taxpayers must choose between deducting one type of tax or the other. The TCJA further limited this deduction for those who are married but file separate returns.5 ## Businesses and the TCJA Here are the key provisions affecting businesses:5 - Corporate Tax Rate: The law created a single corporate tax rate of 21% and repealed the corporate AMT. These provisions do not expire. Supporters argued that lowering the corporate tax rate would reduce the need for companies to move their taxes to low- or no-tax countries, often through mergers with foreign firms. - Immediate Expensing: TCJA allows full expensing of short-lived capital investments rather than requiring them to be depreciated over time. The section 179 deduction cap doubles to \$1 million, and the phaseout begins after \$2.5 million of equipment spending, up from the previous \$2 million. - Pass-Through Income: Owners of pass-through businesses, which include sole proprietorships, partnerships, and S corporations, gained a 20% deduction for pass-through income. To discourage high earners from recharacterizing regular wages as pass-through income, the deduction is capped at 50% of wage income or 25% of wage income plus 2.5% of the cost of qualifying property. - Interest: The net interest deduction is capped at 30% of earnings before interest and taxes (EBIT). - Cash Accounting: Businesses with up to \$25 million in average annual gross receipts over the preceding three years can use [cash accounting](https://www.investopedia.com/terms/c/cashaccounting.asp)—up from the old tax code's \$5 million. - Net Operating Losses: The law scrapped net operating loss (NOL) carrybacks and caps carryforwards at 90% of taxable income, falling to 80%. - Section 199: The law eliminated the section 199 (domestic production activities) deduction for businesses that engage in domestic manufacturing and other production work. - Foreign Earnings: The law introduced a territorial tax system under which only domestic earnings are subject to tax. Companies with over \$500 million in annual gross receipts are subject to the base erosion anti-abuse tax, designed to counteract base erosion and profit shifting, a tax-planning strategy that involves moving taxable profits from one country to another with low or no taxes. BEAT is calculated by subtracting a company's regular corporate tax liability from 10% of its taxable income, ignoring base-eroding payments.9 ## Intangible Property TCJA altered the treatment of intangible property held abroad, such as patents, trademarks, and copyrights.5 For example, Nike's ([NKE](https://www.investopedia.com/markets/quote?tvwidgetsymbol=nke)) Swoosh trademark is house in an untaxed Dutch subsidiary.10 When the foreign tax rate on foreign earnings above a 10% standard rate of return is below 13.125%, the law taxes these excess returns at 21%, after a 50% deduction and a deduction worth 37.5% of FDII. This excess income, which the law assumes to be derived from intangible assets, is called global intangible low-taxed income (GILTI). Credits can offset up to 80% of GILTI liability. Foreign-derived intangible income is from the export of intangibles held domestically, which is taxed at a 13.125% effective rate, rising to 16.406% after 2025.5 ## Projected Economic Growth Former Treasury Secretary Steven Mnuchin claimed that the Republican tax plan would spur sufficient economic growth to pay for itself and more.11 On Dec. 11, 2017, the Treasury released a one-page analysis claiming that the law would increase revenues by \$1.8 trillion over 10 years.12 The [Federal Reserve](https://www.investopedia.com/terms/f/federalreservebank.asp) projected growth of 2.5% in 2018, 2.1% in 2019, 2.0% in 2020, and 1.8% over the longer run.12 Real GDP data for the years after the TCJA showed the following growth rates:13 - 0\.6% in 2018 - 2\.8% in 2019 - 4\.6% in 2020 - 7\.0% in 2021 - 2\.8% in 2022 - 3\.4% in 2023 - 1\.9% in 2024 ## Who Benefited From TCJA? The TCJA cut the corporate tax rate to benefit shareholders, who tend to be higher earners. It only originally cut individuals' taxes for a limited period, though the OBBA extended or made permanent many of the cuts. It scaled back the AMT and estate tax and reduced the taxes levied on pass-through income. It did not close the [carried interest](https://www.investopedia.com/terms/c/carriedinterest.asp) loophole, which benefited professional investors. The Tax Policy Center originally estimated that the majority of taxpayers (53.4%) would face a tax increase when the individual tax cuts were set to expire after 2025, while 69.7% of those in the middle quintile (40th to 60th percentile) were expected to pay more, compared to just 8% of the highest-earning 0.1%.14 Change in after-tax income by income percentile ## Updates Under the One Big Beautiful Bill Act (2025) The OBBBA, signed into law on July 4, 2025, changes the outlook for taxpayers by making permanent many TCJA provisions as well as adding several new benefits:7 - Permanent lower individual tax rates: Keeps the seven-bracket system (10%, 12%, 22%, 24%, 32%, 35%, 37%) beyond 2025, adjusted for inflation. - Standard deduction increase and permanence: \$15,750 for single filers and \$31,500 for married couples filing jointly in 2025; indexed for inflation. - Child Tax Credit raised and permanent: Increased to \$2,200 per child, with inflation adjustments and stronger refundability. - SALT deduction cap raised: From \$10,000 to \$40,000 (married filing jointly) for 2025 to 2028, phasing out for high earners; scheduled to revert afterward. - Qualified Business Income (QBI) deduction: Made permanent, providing certainty for small business owners and pass-through entities. - New targeted deductions: - [No tax on tips](https://www.investopedia.com/how-the-new-tax-bill-could-boost-your-refund-next-year-11830394) (up to an annual threshold). - No tax on the overtime pay portion of wages. - Auto-loan interest deduction for qualifying U.S.-assembled vehicles. \| U.S. Tax Law Comparison: Pre-TCJA vs. TCJA vs. OBBBA (2025) \| \| \| \| \|---\|---\|---\|---\| \| Provision \| Pre-TCJA (2017 rules) \| TCJA (2018–2024) \| OBBBA (2025– ) \| \| Corporate Tax Rate \| Up to 35% \| Flat 21% (permanent) \| 21% (permanent, unchanged) \| \| Individual Tax Brackets \| 7 brackets, top rate 39.6% \| 7 brackets, top rate 37% (set to expire 2025) \| 7 brackets (10%, 12%, 22%, 24%, 32%, 35%, 37%) made permanent; indexed \| \| Standard Deduction \| \$6,350 (single), \$12,700 (married joint) \| ~\$12,000 (single), ~\$24,000 (joint), indexed (expiring 2025) \| \$15,750 (single), \$31,500 (joint) in 2025, indexed; permanent \| \| Personal Exemptions \| \$4,050 per person \| Eliminated \| Remains eliminated \| \| Child Tax Credit \| \$1,000 per child (partially refundable) \| \$2,000 per child (\<17), phase-outs; scheduled to drop post-2025 \| \$2,200 per child, indexed for inflation, permanent; refundable portion expanded \| \| State & Local Tax (SALT) Deduction \| Unlimited \| Capped at \$10,000 (through 2025) \| Raised to \$40,000 (2025–2028, phase-outs for high earners), reverts to \$10,000 afterward \| \| Mortgage Interest Deduction \| Interest on up to \$1M mortgage \| Limited to \$750k (through 2025) \| Continues at \$750k (no major change) \| \| Pass-Through Business Deduction (QBI) \| None \| Up to 20% deduction on qualified income (expiring 2025) \| Made permanent \| \| Estate Tax Exemption \| ~\$5.49M per person \| Doubled (~\$11.2M per person, expiring 2025) \| Permanently extended at higher level (indexed for inflation) \| \| Health Insurance Mandate (ACA) \| Penalty for no coverage \| Penalty reduced to \$0 (effective 2019) \| Remains \$0 \| \| Depreciation / Expensing \| Section 179, more limited \| 100% bonus depreciation (phased down 2023–2026) \| Made permanent under OBBBA \| \| New Provisions (not in TCJA) \| N/A \| N/A \| Deductions for reported tips (limited), overtime pay, auto-loan interest (U.S. vehicles) \| ## The Bottom Line The Tax Cuts and Jobs Act reshaped the U.S. tax code in 2018, and many of its temporary individual provisions were due to expire at the end of 2025. With the passage of the One Big Beautiful Bill Act on July 4, 2025, however, many of those provisions are now permanent. Taxpayers can expect continued lower rates, bigger deductions, and new reliefs, though some benefits (like the expanded SALT cap) will remain temporary or revert to previous levels after 2028.
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