One Big Beautiful Bill Act (OBBBA)

Extension and enhancement of increased standard deduction

There are two changes to the standard deduction rules under §63(c).

First, the law permanently preserves the TCJA’s enhanced standard deduction amounts. Under prior law, the increased deduction, initially established for tax years 2018 through 2025, was set to revert to pre-2018 levels beginning in 2026. 

 

By eliminating the Jan. 1, 2026, sunset provision under §63(c)(7), the new legislation ensures that the higher TCJA deduction amounts will remain in effect indefinitely beyond 2025.

Second, the law increases the base standard deduction amounts beginning in tax year 2025.

 

For married taxpayers filing jointly (MFJ), the new base deduction is $31,500, representing an increase over the inflation-adjusted TCJA amount of approximately $30,000, which was originally slated for 2025.

 

The new base amount for single filers is $15,750, exceeding the prior 2025 inflation-adjusted amount of $15,000.

 

These amounts are subject to future inflation adjustments using the chained
Consumer Price Index (CPI) methodology.

Why it matters?

• This provision offers broad-based tax relief by:

•  Reducing taxable income for all filers who don’t itemize
• Making the standard deduction a more appealing alternative to itemizing, especially when combined with the continued cap on state and local tax (SALT) deductions
• Low- and middle-income taxpayers benefit most, as a higher deduction lowers their tax liability directly

Takeaways
• Locks in and expands the TCJA’s shift toward a higher standard deduction system
• Reduces reliance on itemized deductions
• Delivers direct tax savings to most U.S. households starting in 2025