UPDATE (January 2026): The TCJA expiration scenario described in this article did not occur. On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) made TCJA tax brackets permanent, added a new $6,000 senior deduction (2026-2028), and created new strategic planning opportunities. Read the updated OBBBA retirement planning guide here for current tax law and strategies.

The analysis below remains useful for understanding what COULD have happened with TCJA expiration, and illustrates the importance of planning for tax law changes. However, for actionable current retirement planning strategies, see the OBBBA article.

Let me guess what your retirement calculator is showing you:

You’ll withdraw $80,000 from your traditional IRA in 2030. Married filing jointly. Standard deduction of $29,200. Taxable income of $50,800. Federal tax of about $5,700.

Except that’s completely wrong.

Because the tax rates and deductions in that calculation don’t exist anymore after December 31, 2025.

The Tax Cuts and Jobs Act (TCJA) expires in less than a year. When it does, we revert to pre-2018 tax law - which means higher rates, smaller deductions, and a significantly larger tax bill on the same income.

That $5,700 federal tax bill? It’s actually closer to $7,200. And if you’re not modeling this, your entire retirement plan is built on fantasy numbers.

What Actually Happens When TCJA Expires

On January 1, 2026, unless Congress acts (spoiler: they probably won’t in time), the following changes take effect:

Tax Bracket Changes (Married Filing Jointly)

Under Current TCJA (Through 2025):

  • 10%: $0 - $23,200
  • 12%: $23,200 - $94,300
  • 22%: $94,300 - $201,050
  • 24%: $201,050 - $383,900
  • 32%: $383,900 - $487,450
  • 35%: $487,450 - $731,200
  • 37%: $731,200+

After TCJA Expiration (2026+):

  • 10%: $0 - $20,550 (bracket shrinks)
  • 15%: $20,550 - $83,550 (new rate, replaces 12%)
  • 25%: $83,550 - $178,150 (replaces 22%)
  • 28%: $178,150 - $326,600 (replaces 24%)
  • 33%: $326,600 - $414,700 (replaces 32%)
  • 35%: $414,700 - $622,050 (stays same)
  • 39.6%: $622,050+ (replaces 37%)

Standard Deduction Cuts

Current (2024, indexed for inflation through 2025):

  • Married filing jointly: ~$29,200
  • Single: ~$14,600

After TCJA Expiration (2026):

  • Married filing jointly: ~$15,000
  • Single: ~$7,500

That’s nearly a 50% cut in the standard deduction.

Personal Exemptions Return

Pre-TCJA had personal exemptions ($4,700 per person in 2017, would be ~$5,500+ in 2026). TCJA eliminated these and increased the standard deduction instead.

Post-TCJA, personal exemptions come back BUT they phase out at higher incomes (AGI over ~$330,000 for MFJ in 2026).

Net effect for most retirees: Lower total deductions than current law.

Child Tax Credit Reduced

  • Current: $2,000 per child
  • Post-TCJA: $1,000 per child

(Less relevant for retirees unless you’re raising grandkids)

Estate Tax Exemption Slashed

  • Current: ~$13.6M per person (~$27.2M per couple)
  • Post-TCJA: ~$7M per person (~$14M per couple)

This affects fewer people but is devastating for those it hits.

Real-World Impact: The Same Income, Much Higher Taxes

Let’s model three realistic retirement scenarios to see the actual damage:

Scenario 1: The $80k Retiree

Situation:

  • Married filing jointly
  • Total income: $80,000 (all from traditional IRA withdrawals)
  • No other deductions

Under TCJA (2024-2025):

  • Standard deduction: $29,200
  • Taxable income: $50,800
  • Federal tax: ~$5,700
  • Effective rate: 7.1%

After TCJA Expiration (2026+):

  • Standard deduction: $15,000
  • Personal exemptions: $11,000 (2 × $5,500)
  • Taxable income: $54,000
  • Federal tax: ~$7,200
  • Effective rate: 9.0%

Tax increase: $1,500/year (26% higher)

Over a 30-year retirement, that’s $45,000 in additional taxes on the exact same income.

Scenario 2: The $150k Retiree

Situation:

  • Married filing jointly
  • Income: $150,000 (pension + IRA withdrawals + Social Security)
  • Standard deduction only

Under TCJA:

  • Taxable income: $120,800
  • Federal tax: ~$18,100
  • Effective rate: 12.1%

After TCJA Expiration:

  • Taxable income: $124,000
  • Federal tax: ~$24,500
  • Effective rate: 16.3%

Tax increase: $6,400/year (35% higher)

Scenario 3: The $250k Retiree (Roth Conversion Zone)

Situation:

  • Married filing jointly
  • Income: $250,000 (large Roth conversions while in lower bracket)

Under TCJA:

  • Taxable income: $220,800
  • Federal tax: ~$38,500
  • Effective rate: 15.4%

After TCJA Expiration:

  • Taxable income: $224,000
  • Federal tax: ~$52,800
  • Effective rate: 21.1%

Tax increase: $14,300/year (37% higher)

This is the scenario that kills Roth conversion strategies. Converting at post-TCJA rates is dramatically less attractive.

Why Almost Nobody Is Planning for This

I’ve reviewed dozens of retirement plans from DIY planners and even some from “professionals.” Maybe 5% are modeling TCJA expiration.

Why? Three reasons:

1. Most Retirement Software Hardcodes Current Tax Rates

Consumer retirement calculators use 2024 tax brackets. Period. They don’t let you edit future tax assumptions. They certainly don’t have a “TCJA expiration” toggle.

You’re planning with tax rates that won’t exist.

2. “Congress Will Extend It”

Maybe. But when? Sunset provisions exist for budget scoring reasons. Congress loves to wait until the last minute (or after) to act on tax deadlines.

Even if they extend parts of TCJA:

  • They might not extend everything
  • They might means-test the extensions
  • They might trade tax cuts for spending cuts you don’t want
  • The extension might not pass until March 2026

Planning assumption: Model the expiration. If Congress saves you, great. If not, you’re protected.

3. Recency Bias

TCJA has been law since 2018. People forget that these rates are temporary. Your brain thinks “current tax rates are normal” when they’re actually historical anomalies.

Pre-TCJA tax structure was law from 1992-2017 (with modifications). TCJA is the outlier, not the baseline.

The Strategic Windows Closing in 2025

TCJA expiration creates several time-limited opportunities that disappear on December 31, 2025:

Window 1: Roth Conversions at Lower Rates

The Play:

  • Convert traditional IRA money to Roth in 2025
  • Pay tax at current 22-24% brackets
  • Avoid paying tax at future 25-28% brackets
  • Lock in tax-free growth and withdrawals

Example: Converting $100,000 in 2025:

  • Tax at 22% bracket = $22,000 paid
  • Same conversion in 2027 at 25% bracket = $25,000
  • Savings: $3,000 per $100k converted

Plus you avoid RMDs on that money, get tax-free growth, and have tax-free withdrawals in retirement.

Who should do this:

  • Anyone with significant traditional IRA balances
  • Pre-retirees in lower tax brackets now than expected in retirement
  • People who can afford the tax bill without touching the IRA

Who should NOT:

  • People who need to withdraw from IRA to pay the conversion tax (defeats the purpose)
  • Anyone already in the 32%+ brackets (you won’t save enough)

Window 2: Large Charitable Contributions

With the standard deduction dropping from ~$29,200 to ~$15,000, itemizing becomes viable for more people in 2026+.

The Play:

  • Make large charitable contributions in 2025 while standard deduction is high
  • OR delay them to 2026+ when itemizing is more beneficial
  • Consider Qualified Charitable Distributions (QCDs) from IRAs at 70½+

Bunching strategy: Make 2-3 years of charitable giving in 2026 to exceed the lower standard deduction, then take standard deduction in 2027-2028.

Window 3: Estate Planning for High Net Worth

If your estate is between $7M and $13.6M per person, you have until December 31, 2025 to use the higher exemption.

Strategies:

  • Irrevocable life insurance trusts
  • Grantor retained annuity trusts (GRATs)
  • Spousal lifetime access trusts (SLATs)
  • Direct gifts using lifetime exemption

Critical: These need to be executed BEFORE December 31, 2025. Estate planning takes months. Don’t wait until December.

Window 4: Accelerating Income into 2025

If you have control over income timing (business owners, contractors, retirees with flexibility):

Consider accelerating income into 2025:

  • Take larger IRA distributions in 2025
  • Exercise stock options in 2025
  • Realize capital gains in 2025
  • Take bonuses in 2025 instead of 2026

You’ll pay tax at current lower rates instead of 2026’s higher rates.

Warning: This only works if the income doesn’t push you into higher brackets. Run the numbers.

The IRMAA Complication Nobody Mentions

Modified Adjusted Gross Income (MAGI) determines your Medicare Part B and Part D premiums. Higher income = higher premiums (called IRMAA surcharges).

2024 IRMAA Brackets (individual):

  • $103,000 - $129,000: +$69.90/month ($839/year)
  • $129,000 - $161,000: +$174.70/month ($2,096/year)
  • $161,000 - $193,000: +$279.50/month ($3,354/year)
  • $193,000+: Even higher

The TCJA problem:

When TCJA expires, your taxable income goes up (smaller standard deduction). Same gross income, higher MAGI. You might cross IRMAA thresholds you weren’t expecting.

Example:

  • You have $130,000 gross income in 2026
  • Under TCJA: MAGI would be ~$100,800 (below first IRMAA tier)
  • After TCJA: MAGI would be ~$115,000 (in first IRMAA tier)
  • Additional cost: $1,678/year in Medicare premiums

This compounds the TCJA tax increase with stealth Medicare premium increases.

How to Model TCJA Expiration (Most Software Can’t)

Here’s what you need to do this correctly:

What You Need in Your Planning Software:

  1. Editable tax brackets by year
    • Set 2025 brackets to current TCJA rates
    • Set 2026+ brackets to post-TCJA rates
    • Allow for inflation adjustments
  2. Editable standard deduction by year
    • 2025: $29,200 (MFJ)
    • 2026+: $15,000 (MFJ, then inflation-adjusted)
  3. Personal exemption toggles
    • Off for 2018-2025
    • On for 2026+ (~$5,500 per person, inflation-adjusted)
    • Phase-out rules for high incomes
  4. Side-by-side scenario comparison
    • Scenario A: TCJA extended forever (best case)
    • Scenario B: TCJA expires as scheduled (base case)
    • Scenario C: Partial extension or modification (hedge case)

The Critical Calculations:

Before and after comparison:

  • Same retirement age, same withdrawals, different tax regimes
  • What’s your lifetime tax bill difference?
  • Does it change your withdrawal strategy?
  • Should you convert more to Roth in 2025?

IRMAA threshold analysis:

  • Where are the IRMAA cliffs?
  • How close are you to crossing them?
  • Can you manage income to stay below thresholds?

Roth conversion optimization:

  • How much can you convert in 2025 at 22% vs 24%?
  • What’s the tax savings vs converting post-2026?
  • Can you afford the 2025 tax bill?

What To Do Right Now (January 2025)

You have 11 months before TCJA expires. Here’s your action plan:

January-March 2025: Analysis Phase

Step 1: Model both scenarios

  • Run your retirement plan with current tax law
  • Re-run with post-TCJA tax law
  • Calculate the difference

Step 2: Identify your opportunities

  • Roth conversion capacity at current rates
  • IRMAA threshold proximity
  • Estate planning needs (if applicable)

Step 3: Run the numbers on Roth conversions

  • How much can you convert while staying in 22% bracket?
  • How much at 24%?
  • What’s your 2025 tax bill if you max out conversions?
  • Can you pay it without touching the IRA?

April-August 2025: Execution Phase

Step 4: Execute Roth conversions

  • Start early (don’t wait until December)
  • Do it in tranches (quarterly)
  • Monitor bracket creep as you go

Step 5: Estate planning (if needed)

  • Engage attorney NOW (they’re swamped)
  • Execute trusts and transfers
  • Complete by November (don’t wait until December)

Step 6: Charitable planning

  • Decide on bunching strategy
  • Set up donor-advised fund if appropriate
  • Execute large 2025 gifts if beneficial

September-December 2025: Final Adjustments

Step 7: Year-end tax projection

  • Where did you land for the year?
  • Room for more conversions?
  • Any last-minute moves?

Step 8: Adjust withholding if needed

  • Large Roth conversions create tax bills
  • Adjust W-4 or make estimated payments
  • Avoid underpayment penalties

Step 9: Document everything

  • Keep records of conversions
  • Document decision rationale
  • Update your retirement plan for 2026+ reality

The “Congress Will Fix It” Gamble

Possible outcomes:

Outcome 1: Full Extension (20% probability)

Congress extends all TCJA provisions. Your planning was unnecessary but harmless.

Outcome 2: Partial Extension (30% probability)

They extend some provisions (maybe lower brackets) but not others (standard deduction stays lower). Your situation is complicated.

Outcome 3: Expiration As Scheduled (40% probability)

Nothing passes in time. Rates revert January 1, 2026. If you didn’t plan, you’re screwed.

Outcome 4: Last-Minute Retroactive Fix (10% probability)

Congress acts in February 2026, makes it retroactive to January 1. Chaos ensues. Your planning protected you.

Point: You can’t control Congress. You can control your 2025 actions.

What Most Retirement Calculators Get Wrong

Generic retirement calculator assumptions:

  • “7% average returns” ✓
  • “3% inflation” ✓
  • “4% withdrawal rate” ✓
  • “Tax rates never change” ✗✗✗

That last one is catastrophic for anyone retiring in the next 20 years.

What you need instead:

Software that lets you:

  • Edit tax parameters by year
  • Model tax law changes
  • Compare scenarios with different tax assumptions
  • See the impact on lifetime tax bills
  • Optimize Roth conversions across different rate environments
  • Model IRMAA impacts with changing MAGI

The Bottom Line

TCJA expires December 31, 2025. Tax rates increase. Deductions shrink. Most people aren’t planning for it.

If you model your retirement with 2024 tax rates extending forever:

  • Your projected tax bills are 20-35% too low
  • Your safe withdrawal rate is overstated
  • Your Roth conversion analysis is wrong
  • Your IRMAA planning is incomplete

What you should do:

  1. Model TCJA expiration in your retirement plan (not “hope Congress fixes it”)
  2. Run Roth conversion scenarios for 2025 while rates are lower
  3. Consider estate planning if you’re in the $7-13M range
  4. Update your tax assumptions to reflect post-2026 reality
  5. Build flexibility into your plan for tax law uncertainty

The window is closing. You have 11 months.

Want to model TCJA expiration in YOUR retirement plan? Download Fatboy Financial Planner - one of the few tools that lets you edit tax parameters by year and see the real impact of tax law changes on your retirement.

Because planning with fantasy tax rates isn’t planning. It’s hoping.

Questions about TCJA expiration planning? Email: fbfinancialplanner@gmail.com

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