Which tax cuts end on December 31, 2025
The largest group of expiring tax cuts are the ones passed in the Tax Cuts and Jobs Act of 2017. These include lower individual income tax rates, the expanded child tax credit, the increased standard deduction, and limits on state and local tax deductions. Unless Congress votes to extend them, all of these revert to their 2017 levels on January 1, 2026.
The 2017 law was written with a sunset date built in. That means the tax changes were always scheduled to expire — it was not an accident or a surprise. Congress has to vote to keep them in place if lawmakers want them to continue.
Some provisions expired earlier. The enhanced child tax credit that gave families up to $3,600 per child ended after 2021. The employee retention credit for businesses ended in 2021 as well. The provisions expiring at the end of 2025 are the ones that lasted the full eight years.
Key Takeaways
- Individual income tax rates, the standard deduction, and the child tax credit all revert to 2017 levels on January 1, 2026, unless Congress extends them before then.
- The state and local tax deduction cap of $10,000 also expires, meaning you could deduct more of your state and local taxes if you itemize.
- Business tax provisions, including the 20 percent deduction for pass-through business income, expire at the same time.
- Congress typically votes on extensions in late 2025, but the timing is not may provide and changes can happen at the last minute.
- Your tax bill in 2026 could be significantly higher if these provisions expire, so planning now can help you understand what to expect.
What happens to income tax rates and the standard deduction
The 2017 law lowered income tax rates across all brackets. For example, the top rate dropped from 39.6 percent to 37 percent. The standard deduction nearly doubled — it went from $6,350 to $12,000 for single filers and from $12,700 to $24,000 for married couples filing jointly. These numbers have been adjusted for inflation each year since then.
When these provisions expire, the rates and deduction amounts go back to what they were in 2017, adjusted for inflation. That means your taxable income will be higher, and you will owe more tax on the same earnings. A married couple earning $100,000 would see a noticeable increase in their tax bill.
The standard deduction will shrink, which also means more of your income becomes taxable. If you do not itemize deductions, this is the main way the expiration affects your taxes.
Changes to the child tax credit and dependent deductions
The 2017 law increased the child tax credit from $1,000 per child to $2,000 per child. It also raised the income threshold at which the credit starts to phase out. When this expires, the credit goes back to $1,000 per child, and the phase-out threshold returns to its 2017 level.
Families with multiple children will see the biggest impact. A family with three children currently receives $6,000 in credits. Starting in 2026, that drops to $3,000 unless Congress extends the higher amount.
The dependent exemption also changes. The 2017 law suspended the personal exemption — the deduction you could claim for yourself, your spouse, and each dependent. When the law expires, that exemption comes back, though it will be adjusted for inflation. This partially offsets the loss of the higher child tax credit, but not completely for most families.
State and local tax deduction limits
The 2017 law capped the deduction for state and local taxes (often called SALT) at $10,000 per year. Before that, there was no cap — you could deduct all of your state income taxes, property taxes, and sales taxes if you itemized.
When this provision expires, the cap disappears. You can deduct the full amount of state and local taxes you paid, with no $10,000 limit. This matters most in high-tax states like California, New York, and New Jersey, where state income taxes and property taxes are substantial.
However, you only benefit from this if you itemize deductions instead of taking the standard deduction. With the standard deduction increasing under the 2017 law, fewer people itemize now than before. When the standard deduction shrinks in 2026, more people may find it worthwhile to itemize and claim the full SALT deduction.
Business tax provisions that expire
The 2017 law included a 20 percent deduction for income from pass-through businesses — sole proprietorships, partnerships, S corporations, and LLCs. This let business owners deduct one-fifth of their business income from their personal taxes. The provision was limited to certain income levels and had restrictions based on the type of business and how many employees you had.
When this expires, the 20 percent deduction goes away. Business owners will owe tax on a larger portion of their business income. The impact depends on your business structure and income level, but it can be substantial for owners of profitable businesses.
The corporate tax rate is not expiring. The 2017 law lowered the corporate rate from 35 percent to 21 percent, and that change is permanent. Only the pass-through deduction and certain other business provisions are set to expire.
What Congress might do before the expiration
Congress has several options. It can extend all the provisions as they are now. It can extend some and let others expire. It can modify them — for example, keeping the child tax credit at $2,000 but letting the income tax rates revert. Or it can let them all expire and do nothing.
The timing of any vote is uncertain. Congress sometimes votes on extensions in the final weeks of the year, and sometimes negotiations drag into the new year. Tax policy changes can also be bundled with other legislation, so the outcome depends on what else is being negotiated.
Historically, Congress has extended tax cuts multiple times before letting them expire. But there is no may provide that will happen again. The political environment, the federal budget situation, and other priorities all affect whether extensions pass.
How to plan for the expiration
If you expect these provisions to expire, you can start planning now. Review your tax situation with a tax professional who can estimate what your 2026 taxes might look like under both scenarios — if the cuts are extended and if they expire.
You might consider accelerating income into 2025 if you expect rates to be higher in 2026, or deferring income to 2026 if you think Congress will extend the cuts. You might also look at whether itemizing deductions in 2026 makes sense, especially if you live in a high-tax state and the SALT cap expires.
Some people increase retirement contributions or charitable donations in 2025 to reduce their taxable income before rates potentially rise. Others adjust their withholding or estimated tax payments to avoid surprises when they file.
Frequently Asked Questions
Will Congress definitely extend these tax cuts?
No. Congress has to vote to extend them, and there is no may provide it will. Extensions have happened in the past, but the outcome depends on the political situation and budget priorities at the time. It is wise to plan for both possibilities.
What is the exact date when these cuts expire?
December 31, 2025. The changes take effect on January 1, 2026, when you file your 2025 taxes in early 2026, the old rates and deductions apply to income earned in 2025. The new (or reverted) rates apply to income earned starting January 1, 2026.
Does the corporate tax rate of 21 percent expire too?
No. The corporate tax rate reduction to 21 percent is permanent. Only the individual income tax rates, the standard deduction, the child tax credit, the SALT cap, and certain business provisions expire at the end of 2025.
If I own a small business, how much more will I owe in taxes?
It depends on your business structure and income. If you use the 20 percent pass-through deduction now, losing it means you will owe tax on that additional 20 percent of income. A tax professional can calculate the specific impact for your situation based on your business type and income level.
Should I try to earn more money in 2025 before the rates go up?
That depends on your circumstances and whether you think Congress will extend the cuts. A tax professional can help you weigh the benefits and risks of accelerating income. Keep in mind that earning significantly more income could push you into a higher tax bracket or affect other tax benefits you receive.