What Is the Trump Tax Plan? TCJA and the 2025 Update

The Trump tax plan refers to the Tax Cuts and Jobs Act (TCJA) of 2017, which lowered individual tax rates, nearly doubled the standard deduction and cut the corporate tax rate from 35% to 21%.

Most of the individual provisions were set to expire after 2025, but the One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, made many of them permanent and added new temporary deductions.

Key Takeaways

• It started with the TCJA. The 2017 law reset the seven federal brackets to 10% to 37% and lowered taxes for many filers.

• The 2025 law changed the expiration story. OBBBA made the lower rates and larger standard deduction permanent, so the top rate stays at 37% instead of returning to 39.6%.

• The standard deduction is higher. For 2025 it's $15,750 single, $31,500 married filing jointly and $23,625 head of household.

• The Child Tax Credit grew. The maximum rose to $2,200 per qualifying child beginning in 2025.

• SALT relief is temporary. The $10,000 cap rose to $40,000 for 2025, rises through 2029, then reverts to $10,000 in 2030.

• New deductions are time-limited. Deductions for tips, overtime, seniors and car loan interest run from 2025 through 2028.

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What Is the Trump Tax Plan?

The Trump tax plan is the common name for the Tax Cuts and Jobs Act of 2017, the largest set of federal tax changes in decades. It changed:

• Individual income tax rates: It set seven brackets topping out at 37%.

• The standard deduction: It nearly doubled the amount most filers can claim.

• The Child Tax Credit: It increased the credit and raised income limits to qualify.

• Corporate and business taxes: It cut the corporate rate and added new business deductions.

Many individual provisions were originally scheduled to expire after the 2025 tax year. That changed in 2025, which is the key thing to understand about how the plan affects your taxes today. Learn more in our guide to the no tax on tips deduction.

Key Changes in the Trump Tax Plan

Let's dig into some of the key changes:

Lower Individual Tax Rates

The TCJA reduced federal income tax rates and reset the brackets, replacing earlier rates that reached 39.6%. The seven rates are 10%, 12%, 22%, 24%, 32%, 35% and 37%. Here are the 2025 brackets for a single filer:

You pay each rate only on the income that falls within that bracket, not on your entire income.

Larger Standard Deduction

The TCJA nearly doubled the standard deduction, which lowers the income you're taxed on. The 2025 amounts are below.

The larger deduction led many filers to stop itemizing, since the standard amount often beats their total itemized deductions.

Changes to Itemized Deductions

The TCJA reshaped several common deductions. Major changes included:

• A SALT cap: It limited the state and local tax deduction to $10,000 — later raised temporarily, as covered below.

• Fewer miscellaneous deductions: It eliminated many miscellaneous itemized deductions.

• A lower mortgage interest limit: It capped the mortgage interest deduction at $750,000 of loan principal for new loans.

Expanded Child Tax Credit

The TCJA increased the Child Tax Credit and raised the income limits to claim it. Beginning in 2025, the maximum credit is $2,200 per qualifying child.

To claim it, the qualifying child and at least one parent generally need a valid Social Security number.

Corporate Tax Rate Reduction

One of the biggest changes cut the corporate tax rate from 35% to 21%. Supporters argued a lower corporate rate could encourage business investment, support economic growth and improve U.S. competitiveness. Unlike many individual provisions, the corporate rate did not have a scheduled expiration.

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What the 2025 Law Changed

This is the part that's easy to get wrong. Most TCJA individual provisions were set to expire after 2025 — but the One Big Beautiful Bill Act, signed July 4, 2025, made many of them permanent and added new ones.

The law also created new temporary deductions for tax years 2025 through 2028, including deductions for qualified tip income, overtime pay, taxpayers 65 and older and certain car loan interest, each subject to income limits.

Who Benefited From the Trump Tax Plan?

The effects vary by income, deductions and household situation. Potential beneficiaries include:

• Standard-deduction filers. Most filers who take the larger standard deduction.

• Families with children. Households that qualify for the expanded Child Tax Credit.

• Business owners. Filers who benefit from the lower corporate rate or the QBI deduction.

Filers in high-tax states sometimes saw smaller deductions because of the SALT cap, though the temporary increase to $40,000 may ease that through 2029. See our guide on how to get your maximum tax refund.

How the Trump Tax Plan Affects Your Taxes Today

Years after the TCJA passed, it still shapes nearly every federal return through lower rates, a larger standard deduction and modified deductions and credits. Because the 2025 law made many of these provisions permanent, they're no longer set to disappear after 2025 — though Congress could change them through future legislation.

A few temporary pieces, like the SALT cap increase and the new deductions for tips, overtime and seniors, do have end dates, so it's worth checking which rules apply in a given tax year.

Bottom Line

The Trump tax plan, created through the Tax Cuts and Jobs Act of 2017, lowered individual tax rates, raised the standard deduction, capped some deductions and cut the corporate rate from 35% to 21%. The big update is that the 2025 One Big Beautiful Bill Act made many individual provisions permanent rather than letting them expire after 2025, while adding new temporary deductions through 2028. Your next step: check the current-year standard deduction, brackets and credits before you file, since several amounts adjust each year.

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Key Terms

• Tax Cuts and Jobs Act (TCJA): The 2017 law, often called the Trump tax plan, that reset federal tax rates and deductions.

• One Big Beautiful Bill Act (OBBBA): The 2025 law that made many TCJA individual provisions permanent and added new deductions.

• Standard deduction: A set amount that reduces taxable income for filers who don't itemize.

• SALT deduction: The itemized deduction for state and local taxes, capped at $40,000 for 2025 through 2029.

• Child Tax Credit: A credit worth up to $2,200 per qualifying child beginning in 2025.

• Tax bracket: An income range taxed at a specific marginal rate, from 10% to 37%.

• Qualified business income (QBI) deduction: A deduction of up to 20% of eligible business income, made permanent in 2025.

Summary generated by AI, verified by MoneyLion editors

Sources

• Internal Revenue Service: Federal income tax rates and brackets

• Internal Revenue Service: How to update withholding to account for tax law changes for 2025

• U.S. Department of the Treasury: Tax Policy

• Congressional Budget Office: The Budget and Economic Outlook: 2019 to 2029

FAQ

Here are quick answers to common questions about the Trump tax plan.

What is the Trump tax plan?

The Trump tax plan refers to the Tax Cuts and Jobs Act of 2017, which lowered individual tax rates, raised the standard deduction, changed several deductions and cut the corporate tax rate from 35% to 21%.

Did the Trump tax plan lower taxes?

It lowered many individual tax rates and reduced the corporate rate to 21%. The actual impact varies depending on your income, deductions and where you live, so results differ from one household to the next.

What deductions changed under the Trump tax plan?

The law raised the standard deduction, capped the state and local tax deduction and limited the mortgage interest deduction to $750,000 of loan principal for new loans. It also eliminated many miscellaneous deductions.

Did the Trump tax plan expire after 2025?

No. Many individual provisions were scheduled to expire after 2025, but the One Big Beautiful Bill Act, signed in July 2025, made several of them permanent and added new temporary deductions through 2028.

How does the Trump tax plan affect taxes today?

It still shapes most federal returns through lower rates, a larger standard deduction and updated credits. Because the 2025 law made many provisions permanent, they continue to apply unless Congress changes them.