Reduced Income Tax Rates: The Act makes permanent the lower individual income tax rates and wider tax brackets introduced by the Tax Cuts and Jobs Act (TCJA), preventing a scheduled tax-rate increase after 2025. For example, the top individual rate will remain at 37% (instead of reverting to 39.6%), and the marriage penalty relief for most brackets continues. This means that married couples filing jointly will typically not face higher taxes compared to what they would have paid as singles.
Child Tax Credit: The child tax credit (CTC) has been made permanent and increased to $2,200 per qualifying child for 2025. This amount will be adjusted for inflation after 2025. However, no credit is allowed unless the taxpayer includes a social security number (SSN) for both the qualifying child and the taxpayer (or for at least one spouse in the case of a joint return).
Credit for Contributions to Scholarship-Granting Organizations: For tax years ending after Dec. 31, 2026, individual taxpayers can claim a new income tax credit of up to $1,700 per year for cash contributions to qualifying scholarship-granting organizations (SGOs) in participating states. To maximize this benefit, confirm your state's participation and ensure the SGO is on the IRS-approved list before contributing.
Individuals' Charitable Deductions: Beginning in 2026, the Act makes permanent the 60% ceiling for cash gifts to 50% charities, and provides that a contribution of cash to a 50% charity is deductible to the extent that the total amount of contributions of cash to 50% charities doesn't exceed the excess of: (a) 60% of the taxpayer's contribution base for the tax year, over (b) the total amount of contributions to 50% charities for the tax year. To maximize your deduction, prioritize cash donations to 50% charities.
Wagering Losses: Starting in 2026, only 90% of your wagering losses can be deducted against your winnings, even if your losses equal or exceed your winnings. To maximize your deductions, consider realizing wagering losses in 2025 before the new rule takes effect, and keep detailed records of all activity.
Miscellaneous Itemized Deductions; Educator Expenses: The Act permanently eliminates miscellaneous itemized deductions for individual taxpayers. Thus, formerly deductible items such as unreimbursed employee business expenses, investment expenses, and tax determination expenses are permanently disallowed. However, starting in 2026, the Act adds a new educator expense deduction that will allow K–12 teachers, counselors, coaches, and aides who work at least 900 hours per year to deduct unreimbursed classroom expenses, such as books, supplies, and equipment. This new deduction won't be classified as a miscellaneous itemized deduction.
Estate & Gift Tax Exclusion Amount: The basic exclusion amount for federal estate and gift tax will increase to $15 million (indexed for inflation) for estates of decedents dying and gifts made after Dec. 31, 2025. Review and update estate plans and consider making large lifetime gifts to take advantage of this higher exclusion.
