The 2026 Reversion of Tax Laws Is Coming — Here’s What That Means For Your Money
Written by
Ashley Donohoe
Edited by
Daria Uhlig
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The Tax Cuts and Jobs Act of 2017 lowered individual income tax rates, boosted standard deductions and eliminated personal exemptions, among other changes. However, the Trump tax cuts are due to expire at the end of next year, and you might be stuck with a higher income tax bill.
As CNBC reported, November’s election will influence what ultimately happens with tax laws, and an extension for the TCJA’s provisions is possible. But if the TCJA expires, here are some of the many changes that could affect your money in 2026.
Smaller Standard Deductions
Many taxpayers take the standard deduction since it’s often more beneficial than itemizing for lowering taxable income. The TCJA nearly doubled the standard deductions based on filing status.
For example, married couples who file jointly can get a $29,200 standard deduction in 2024 versus $12,700 back in 2017. Itemizing could become appealing again with lower standard deduction amounts after the TCJA’s reversal.
Return of Personal Exemptions
Higher standard deduction amounts have helped offset the paused personal exemptions since the tax law changes. But if the TCJA expires, you may again qualify for exemptions for yourself, your spouse and any qualifying dependents as long as you don’t exceed the income limits.
The 2026 personal exemption amount is unknown. However, you could have gotten up to $4,050 per person in 2017 to help cut your taxable income.
Higher Individual Income Tax Rates
Since the TCJA took effect, the rates for the country’s seven federal income tax brackets have ranged from 10% to 37%. A reversal would switch them back to the 2017 rates from 10% to 39.6%.
Unless you still fall in the 10% bracket in 2026, then you can see an increase in your tax liability. Plus, the reversal of the alternative minimum tax exemption amounts could hurt you if you’re a high earner.
Itemized Deduction Changes
The TCJA eliminated or changed certain deductions that you could claim when you itemize. But tax law reversals in 2026 could increase or lower your potential deduction amounts.
For example, personal state and local tax deductions would no longer be limited to $10,000, and you may qualify to deduct more of your home’s qualifying mortgage interest. Other changes include the return of miscellaneous deductions and lower adjusted gross income limits for charitable cash gifts to public institutions.
Estate and Gift Tax Exemption Changes
If you have substantial assets to transfer, then the return of lower lifetime federal estate and gift tax exemption limits could affect you starting in 2026. For comparison, the 2024 lifetime exemption sits at $13.61 million per taxpayer compared to $5.49 million back in 2017. Meeting with an estate planner could be a good idea if you’re concerned about these taxes.
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