In case you haven’t heard, many provisions of the 2017 Tax Cuts and Jobs Act (TCJA) are scheduled to expire at the end of 2025. While Congress may vote to extend some of them, that decision is still up in the air. 

Assuming Congress doesn’t extend the TCJA provisions, one of the things that will change are marginal tax rates for individual income taxes. Why should you care? Because this means you could be paying more in taxes come 2026.

What are marginal tax rates?

Marginal tax rates are a set of numbers used to calculate how much you owe in taxes before credits. These are applied to tax brackets or certain ranges of income. 

For example, in 2024, the first $11,600 of your income is taxed at a rate of 10%. After that, any income between $11,600 and $47,150 is taxed at 12%. And so on. The monetary amount ($11,000) is your tax bracket, while the percentage (10%) is your marginal tax rate. Brackets are adjusted every year to account for inflation.

What were the marginal tax rates before the TCJA?

Before the TCA was enacted in 2017, marginal tax rates were:

• 10%

• 15%

• 25%

• 28%

• 33%

• 35%

• 39.6%

What are the marginal tax rates under the TCJA?

The TCJA changed the marginal tax rates to:

• 10%

• 12%

• 22%

• 24%

• 32%

• 35%

• 37%

Why are the TCJA marginal tax rates different?

The TCJA was passed to help stimulate the economy and give both businesses and individuals a tax break. As such, it lowered marginal tax rates for individual income taxes, charging individuals less in income tax than they would have paid otherwise. 

What happens if the TCJA expires?

If Congress doesn’t extend this provision of the TCJA, marginal tax rates for individual income taxes will revert to what they were before 2017, leaving individuals with a higher tax burden.

There are also other provisions in the TCJA that could expire at the end of 2025 if Congress doesn’t take action. When it comes to individuals and families, these include:

• Standard deduction: the TCJA doubled the standard deduction amount; if it expires, the deduction will revert to the pre-TCJA amount ($6,500) and adjust for inflation

• Personal exemption: the TCJA reduced the temporary exemption amount to $0; if it expires, the personal exemption amount will return to $4,150 and adjust for inflation

• Child tax credit: if this credit expires, its structure will change, affecting who’s eligible for it

• Credit for other dependents: if it expires, this credit will no longer be available to anyone

Other provisions, like deductions, exclusions, and corporate tax laws, will also change if the TCJA expires. But will it? We’ll just have to wait and see what Congress decides.

When will the TCJA expire?

Currently, most TCJA tax provisions that affect individual taxpayers, including marginal tax rates, are set to expire on December 31, 2025. Some corporate tax provisions will also expire then, while others will phase out between 2025 and 2028.