OBBB vs TCJA Tax Rate Comparison Calculator

What OBBB Did

The One Big Beautiful Bill Act (P.L. 119-21, signed July 4, 2025) extended and made permanent many TCJA provisions that were set to sunset December 31, 2025. Specifically: kept the lower individual rates (10/12/22/24/32/35/37), doubled standard deduction, doubled child tax credit ($2,000), and eliminated personal exemptions.

It also: raised estate tax exemption to $15M (versus reversion to ~$7M without OBBB), made the 199A QBI deduction permanent, and kept the $10K SALT cap (though there were proposals to raise this — none passed).

Source: P.L. 119-21 — One Big Beautiful Bill

Pre-TCJA Baseline

Without TCJA (pre-2018 rules), federal individual tax was: brackets 10/15/25/28/33/35/39.6%, standard deduction $13,000 MFJ / $6,500 single, personal exemption $4,050 per person, SALT fully deductible, mortgage interest deductible on up to $1M of debt, child tax credit $1,000.

The pre-TCJA baseline is hypothetical — if TCJA had been allowed to expire as scheduled in 2026, these rules would have returned. OBBB prevented this from happening.

Who Wins Under OBBB

Most middle-income households win: larger standard deduction + lower brackets + doubled CTC outweigh loss of personal exemption + SALT cap for most.

Particularly favorable to: low-tax state residents (CA/NY high-tax state residents disproportionately hurt by SALT cap), households with no kids or 1 kid (smaller pre-TCJA personal exemption loss), and high-income households (lower top marginal rate 37% vs 39.6%).

Who Loses Under OBBB

Large families in high-tax states. Pre-TCJA, a MFJ family with 4 kids got $4,050 × 6 = $24,300 of personal exemptions plus full SALT deduction. Under OBBB, no personal exemptions and SALT capped at $10K. Even with doubled CTC and bigger standard deduction, often a loss.

Itemizers heavily reliant on SALT > $10K (California/NY/NJ). The SALT cap creates real out-of-pocket cost — uncapped, would save $5K-$15K for high-tax-state earners.

SALT Cap Workarounds Under OBBB: PTET Elections for Pass-Through Owners

OBBB kept the $10,000 SALT cap on individual deductions, but per IRS Notice 2020-75, Pass-Through Entity Tax (PTET) elections at the entity level are fully deductible — no cap. 36+ states (including CA, NY, NJ, MA, IL, CT) have enacted PTET regimes that let S-corps and partnerships pay state income tax at the entity level, then flow a federal deduction to owners. A New Jersey S-corp owner earning $500K net can shift $30K+ of state tax from a capped individual SALT deduction to an uncapped entity deduction, saving $6K-$11K in federal tax at the 22-24% bracket. Election deadlines and mechanics vary by state — California requires June 15 estimated payment; New York requires March 15 election. The PTET workaround is one of the few real 2026 tax-planning levers for high-earner pass-through owners in high-tax states.

OBBB vs TCJA Impact by State: CA, NY, TX, FL Scenarios in 2026

The OBBB vs TCJA net impact varies dramatically by state residence. California and New York residents (top state rates 13.3% CA / 10.9% NY) face the biggest SALT cap pinch — a $200K earner in NYC loses roughly $8,000 of formerly-deductible state and city income tax. Texas and Florida residents (no state income tax) come out ahead under OBBB because they didn't rely on SALT deductions — they get the doubled standard deduction + lower brackets + doubled CTC with no offsetting loss. Retirees relocating from NJ or CT to Florida capture a double win: state tax elimination + full OBBB deductions. Use the calculator above to run YOUR specific state and income scenario to see the net dollar difference — the answer depends heavily on your itemized-vs-standard choice, number of children, and mortgage size.