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OBBB Act: Individual Income Tax Rates

January 15, 2026



On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (OBBBA) into law.

The Act introduces broad tax reforms, including extensions of expiring TCJA provisions and revisions to green energy regulations.

This summary explains the permanent extension of individual income tax rate schedules applicable to taxable years beginning in 2025 and beyond.


Background：Expiration of TCJA Provisions

Under the Tax Cuts and Jobs Act (TCJA), for taxable years beginning after December 31, 2017 and ending before January 1, 2026, individuals were subject to seven temporary income tax rates: 10%, 12%, 22%, 24%, 32%, 35%, and 37%.

Had the TCJA expired as scheduled on December 31, 2025, the pre-2018 rate structure would have resumed on January 1, 2026, with brackets of 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%. In that case, the 12% bracket would have reverted to 15%, 22% to 25%, 24% to 28%, and the top rate would have increased from 37% to 39.6%.


Permanent Modification of Income Tax Rates

Under the OBBBA, the individual income tax rate schedule—10%, 12%, 22%, 24%, 32%, 35%, and 37%—has been made permanent for taxable years beginning in 2025 and beyond.

Additionally, the method of applying annual inflation adjustments has been modified、providing an additional year of inflation adjustment for the 10% bracket, increasing its upper threshold and the starting point of the 12% bracket. As a result, more income will fall within the 10% bracket, reducing the amount subject to the 12% bracket. This impact is expected to appear in taxable years beginning in 2026.


Please refer to the accompanying tables for the progressive tax rates and corresponding tax amounts for 2025 and 2026.



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