Why Making the 2017 Tax Cuts Permanent Means Bigger Refunds for Millions of Taxpayers

For years, taxpayers have wondered what would happen when the individual tax cuts from the Tax Cuts and Jobs Act (TCJA) were set to expire. Originally scheduled to sunset after 2025, these tax brackets reduced tax rates for nearly every income group—creating lower tax bills and larger refunds.

With the tax cuts now made permanent, the lower brackets from 10% to 37% are no longer temporary policy. That single change produces a measurable, long-term impact on taxpayers: lower tax liability every year and bigger refunds compared to pre-2017 law.

This guide breaks down why the continued TCJA brackets matter, how they translate directly into higher refunds, and what taxpayers can expect in 2026 and beyond.

What Were the TCJA Tax Bracket Changes?

Before TCJA, individual tax rates were higher across nearly all brackets. The TCJA lowered them to:

• 10 percent
• 12 percent
• 22 percent
• 24 percent
• 32 percent
• 35 percent
• 37 percent

These replaced higher pre-2017 rates such as 15 percent, 25 percent, 28 percent, 33 percent, 35 percent, and 39.6 percent.

With the permanency decision, these lower percentages are now established going forward.

Why Making the Lower Rates Permanent Increases Refunds

Refunds are based on a simple formula:

Refund = Total Withholding – Final Tax Liability

Lower tax brackets reduce your liability, which means:

• More of your withholding is returned
• Taxpayers owe less at filing time
• Refunds naturally increase
• Credits (refundable and non-refundable) go further

Under pre-TCJA brackets, many families would owe several hundred to several thousand more in tax. Now, that extra liability is permanently removed.

Real-World Example: How Much Lower Rates Affect You

Consider a married couple earning $78,000:

Under Pre-2017 Brackets

Portions of their income would have been taxed at 15 percent and 25 percent.

Under the TCJA Permanent Brackets

Their income falls primarily into the 12 percent bracket.

Result:

• Lower tax on income
• Reduced overall liability
• A larger refund once withholding is applied

This pattern repeats for most taxpayers, especially middle-income households.

Refund Impact for Different Income Groups

Low-Income Earners

Lower brackets mean:

• More of their income is taxed at 10 percent
• Less tax owed, larger refundable credit benefits
• Bigger refunds for those receiving EITC or CTC

Middle-Income Earners

These filers see the most dramatic boost:

• Major portions taxed at 12 or 22 percent instead of 15 or 25
• Hundreds or thousands saved
• Withholding produces larger refunds

Higher-Income Earners

Permanent retention of the 37 percent top bracket (instead of 39.6 percent) means:

• Lower year-end balance due
• Higher likelihood of refunds with high withholding
• More favorable tax planning overall

How This Change Interacts With Withholding

Lower permanent tax rates mean that:

• Employers may not adjust withholding immediately
• Many taxpayers will over-withhold during the year
• Refund season may produce a surge in larger-than-expected refunds

This is especially true combined with new OBBB deductions, which further reduce liability.

Why Permanency Matters for Tax Planning

Keeping the lower TCJA bracket structure is more than a refund issue—it stabilizes long-term tax strategy.

Taxpayers can now confidently plan around:

• Lower marginal tax rates
• More favorable bracket cutoffs
• Lower taxes on raises, overtime, bonuses, and investments
• Higher net take-home pay
• Larger annual refunds due to stable withholding tables

For families, seniors, and hourly workers, this creates more predictability and better planning opportunities.

What Would Refunds Look Like If TCJA Had Expired?

Had the TCJA brackets expired:

• Many filers would move to higher rate brackets
• Taxpayers would owe more at filing
• Refund totals would drop sharply
• Withholding would no longer cover full liability
• Millions would see unexpected tax bills

By making the TCJA permanent, all of these refund-reducing outcomes were avoided.

Why This Matters for the 2026 Filing Season

As taxpayers prepare returns for 2025 income, the permanent bracket system ensures:

• Calculations stay predictable
• Liability remains lower at every income level
• Refund totals benefit from both the TCJA and the new OBBB deductions
• The 2026 season may produce some of the largest refunds in over a decade

Lower brackets supported by multiple new deductions create a uniquely refund-friendly environment.

The permanency of the TCJA tax brackets is one of the most important tax changes heading into 2026. By locking in lower individual rates from 10 percent to 37 percent, the IRS has effectively cemented lower tax liability for millions of Americans.

That means:

• Lower taxes every year
• Higher refund potential
• More breathing room for households
• Stronger interaction with refundable and non-refundable credits

With these brackets now permanent, taxpayers can count on consistently larger refunds compared to the pre-2017 tax system.