When people talk about the “Trump Tax Cuts,” they usually mean the Tax Cuts and Jobs Act (TCJA) of 2017. This law brought changes to how we pay federal taxes in the United States and was signed by President Donald Trump in December 2017.
Tax laws are ever-changing, and we expect more significant changes from this current Trump administration. To properly apply new tax provisions or address any concerns regarding past taxes, rely on our New York tax attorneys at Thorgood Law Firm.
When Did the Trump Tax Cuts Start, and How Long Will They Last?
Most of the changes started on January 1, 2018, just days after the law was signed in December 2017. That meant people saw changes in their 2018 tax returns, which they filed in early 2019.
Many of the individual tax changes will end on December 31, 2025, unless Congress votes to extend them. This is called a “sunset.” After that, most rules will go back to how they were before 2018.
On the other hand, corporate tax changes (like the 21% corporate rate) do not expire. They are “permanent” under the law, though Congress can always pass a new law to change them.
How Did the TCJA Affect People’s Individual Taxes?
The law changed tax rates, deductions, exemptions, and more. Here are some of the major parts in plain language:
- New Tax Brackets: We still have seven brackets, but the rates went down. The highest rate used to be 39.6%. Now it is 37%. Other rates went down, too (like 15% down to 12%, 25% down to 22%, etc.). If Congress does nothing, these lower rates expire after 2025.
- Bigger Standard Deduction: The standard deduction nearly doubled. Many more people found it easier to take the standard deduction instead of itemizing. For example, in 2018, the standard deduction became $12,000 for single filers and $24,000 for married couples. It has risen a bit each year with inflation (for 2025, it might be around $15,000 single and $30,000 married). But remember, this jump only lasts until the end of 2025.
- No More Personal Exemptions: Before 2018, you got a “personal exemption” for yourself, your spouse, and each dependent (for example, around $4,050 per person in 2017). That ended in 2018. So families lost those exemption amounts but gained a bigger standard deduction and a bigger child tax credit. The personal exemption is set to come back in 2026 unless the law changes.
- Expanded Child Tax Credit: The child tax credit went from $1,000 to $2,000 per qualifying child (under age 17). This helped many families. Part of this credit can be refunded, meaning you get money back even if you owe zero tax. There is also a new $500 nonrefundable credit for older dependents (like college-age kids or elderly parents). These, too, end after 2025 unless renewed.
- State and Local Tax (SALT) Cap: This is a big deal for people in New York, New Jersey and California. You can only deduct up to $10,000 in state and local taxes (including property tax, income tax, or sales tax). Before 2018, you could deduct all your state and local taxes with no cap. Many taxpayers in these three states pay much more than $10,000 in these taxes, so they lost part of that deduction. This SALT cap is scheduled to end in 2025, so in 2026, you might be able to deduct all your state and local taxes again (unless Congress changes this).
- Home Mortgage Interest: For new mortgages taken after December 15, 2017, you can only deduct interest on up to $750,000 of mortgage debt (used to be $1 million). Interest on home equity loans is not deductible unless you use the loan to buy or improve your house.
- Fewer People Itemize: Because of the bigger standard deduction and SALT cap, fewer people do itemized deductions now. That simplified taxes for some, but it also meant losing certain write-offs, like many “miscellaneous itemized deductions” (tax prep fees, unreimbursed work expenses, etc.). These are gone through 2025.
- Alternative Minimum Tax (AMT): The law raised the AMT exemption, so fewer middle-income people get stuck paying the AMT now. However, the AMT still exists for certain higher earners.
- Estate and Gift Taxes: The amount you can leave to others without paying estate tax almost doubled. For 2018, it was around $11.18 million per person, and it climbs each year (in 2023, it is about $12.92 million). This reverts to around half that amount in 2026. But remember, New York State has its own estate tax with a lower threshold (around $6.58 million in 2023).
The main idea: Many Americans saw some tax cuts in their paychecks from 2018 onward, but in places like New York (with high taxes), some people ended up paying more because of the SALT cap. Most of these individual provisions expire after 2025.
Why Was the SALT Cap Such a Big Deal in New York?
In states with high income taxes and property taxes, like New York, New Jersey, and California, many people used to deduct all their state and local taxes on their federal return. After the $10,000 cap, if you pay $15,000 or $20,000 in state and local taxes, you can only deduct $10,000.
For wealthy or upper-middle-class families in New York, that means you might lose a big chunk of deductions. State officials say New York families collectively paid billions more in federal taxes because of that cap. Some people considered moving to a lower-tax state. Others tried “workarounds,” like New York’s Pass-Through Entity Tax (PTET), which helps some business owners bypass the cap.
What Happened to Personal Exemptions?
Before 2018, you got a separate exemption for each person on your tax return—yourself, spouse, and dependents. That exemption was around $4,050 each in 2017. The TCJA stopped personal exemptions completely from 2018 through 2025.
This means if you have a large family, you lose multiple exemptions. However, there was a bigger standard deduction and a bigger child tax credit to help offset that. People with many kids got the higher child tax credit. Single filers with no children just got the bigger standard deduction.
In 2026, unless the law changes, personal exemptions will come back. The amount will likely be around $2,000–$5,000 per person then (depending on inflation).
How Did the Child Tax Credit Change?
The child tax credit doubled. It went from $1,000 per child to $2,000, with up to $1,400 refundable. The income limits also went up a lot. Before, a married couple might lose the credit if their income was above $110,000. Now, they can earn up to $400,000 and still get the credit.
This helps families with children under age 17. For older dependents (like a 20-year-old in college or an elderly parent), there is a smaller $500 nonrefundable credit. The larger child tax credit mostly expires after 2025, so it will go back to $1,000 if Congress does not extend it.
What About the Mortgage Interest Deduction or Other Itemized Deductions?
If you bought a home after December 15, 2017, you can only deduct interest on mortgage balances up to $750,000. (Before that date, it was $1 million.) Also, home equity loan interest is no longer deductible unless you spend that loan money on your house (like a renovation).
Many itemized deductions were cut back. For example, “miscellaneous itemized deductions” (like unreimbursed job expenses, tax prep fees, and investment advisor fees) were suspended until after 2025. Also, personal casualty losses are only deductible if it was a federally declared disaster area.
On the upside, the old “Pease limitation” on itemized deductions for very high earners was removed through 2025. So, if you are a very high-income person, you do not have your itemized deductions phased out.
Did the Trump Tax Cuts Get Rid of the “Obamacare” Penalty?
Yes. The Affordable Care Act (ACA) used to fine people who did not have health insurance. The TCJA changed that penalty to $0 starting in 2019. This part did not have a 2025 expiration; it is permanent. There is no federal penalty for not having health insurance anymore, although some states have their own rules.
I Have an LLC or S-Corp. Did I Get Any Special Benefits?
Yes, many pass-through businesses (like sole proprietors, LLCs, partnerships, S-corporations) can get a 20% deduction on their “qualified business income.” This is called the QBI deduction (Section 199A).
- If you made $100,000 from your pass-through business, you might get to deduct $20,000 and pay tax on only $80,000.
- This deduction has complex rules, especially for higher-income service businesses (like lawyers and doctors). If your income is too high and you’re in certain “professional services,” the 20% might phase out.
- This pass-through deduction expires after 2025.
For many small business owners, this was a big help. But it can be confusing, so it is best to speak to a tax advisor.
Did the Trump Tax Cuts Affect My Ability to Deduct Big Purchases or Equipment?
Yes. The law introduced (or expanded) 100% bonus depreciation for many assets put in service after late 2017. That means a business can deduct the entire cost of certain machinery or equipment in the year they buy it, instead of spreading it out.
But this 100% bonus depreciation started to phase down in 2023. It is 80% in 2023, 60% in 2024, 40% in 2025, 20% in 2026, and then 0% afterward. If you want the full write-off, you had to place the item in service before 2023.
Remember, New York State does not allow the same bonus depreciation. You might have to add that bonus amount back on your NY tax return and then depreciate it over time for state taxes.
Our New York Tax Attorneys Are Here to Help You
The Tax Cuts and Jobs Act of 2017 lowered tax rates for most Americans, increased the standard deduction, and helped many businesses, but it also capped SALT deductions, removed personal exemptions, and made many changes that expire after 2025.
Every person’s situation is different. If you need help understanding how these rules affect you or how to plan ahead, Thorgood Law Firm is here to guide you. We have the knowledge and experience to help with IRS issues, audits, state tax problems, and more.
Contact us for a free consultation. Let us know how we can help you deal with tax challenges and protect your finances.
