Quick answer
The expiration of individual Tax Cuts and Jobs Act (TCJA) provisions on December 31, 2025, represents the largest tax law transition on the IRS Special Enrollment Examination (SEE) in a decade. Candidates testing in 2026 must master shifting individual tax brackets (reverting to 10% to 39.6%), the return of personal exemptions, the expiration of the $10,000 SALT cap, and the phaseout of the Section 199A Qualified Business Income deduction.
For Enrolled Agent candidates, preparing for the Special Enrollment Examination (SEE) administered by Prometric on behalf of the Internal Revenue Service requires studying the exact tax code in effect for the testing window.
The IRS tests tax laws based on the prior calendar year during the annual May 1 through February 28 testing window. With dozens of cornerstone individual and pass-through tax provisions enacted under the Tax Cuts and Jobs Act of 2017 scheduled to sunset after December 31, 2025, candidates testing in 2026 face an unprecedented dual challenge: calculating current liabilities while understanding transition rules and sunset triggers.
Below is the definitive, operational breakdown of how the 2026 TCJA sunset impacts SEE Part 1 (Individuals), Part 2 (Businesses), and Part 3 (Representation, Practices, and Procedures).
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Key facts
- Statutory Authority: Tax Cuts and Jobs Act (TCJA) of 2017 (Public Law 115-97), Title I.
- Sunset Date: Individual and pass-through provisions expire December 31, 2025, unless extended by Congress.
- Testing Window Impact: IRS SEE tests the prior tax year (Tax Year 2025 for exams taken May 1, 2026 to February 28, 2027) with prospective transition questions.
- Permanent Corporate Rate: The 21% flat corporate income tax rate under Section 11(b) is permanent and does not sunset.
- Section 199A Expiration: The 20% Qualified Business Income (QBI) deduction for sole proprietorships, partnerships, and S-corporations expires after 2025.
- Estate & Gift Exemption: Reverts from approximately $13.61 million per individual down to approximately $5 million (adjusted for post-2011 inflation, roughly $7 million).
What Major TCJA Provisions Sunset After 2025?
The TCJA created a bifurcated tax code: corporate rate cuts were enacted permanently, while almost all individual and pass-through provisions were given an expiration date of December 31, 2025, to comply with Senate budget reconciliation rules (the Byrd Rule).
Candidates must recognize exactly which tax mechanics revert to pre-2018 Internal Revenue Code rules:
1. Individual Tax Rate Brackets
Pre-sunset rates of 10%, 12%, 22%, 24%, 32%, 35%, and 37% revert to the pre-TCJA structure: 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%. The threshold for the top 39.6% bracket drops significantly compared to the 37% threshold.2. Standard Deduction and Personal Exemptions
The roughly doubled standard deduction introduced by TCJA expires, reverting to approximately half its current real value. Concurrently, personal and dependency exemptions return (projected at roughly $5,000 per dependent/taxpayer, adjusted for inflation).3. State and Local Tax (SALT) Deduction
The contentious $10,000 limitation ($5,000 for married filing separately) on deductible state and local property, income, and sales taxes sunsets. Taxpayers who itemize deductions may once again deduct uncapped state and local taxes, subject to pre-TCJA overall limitation rules.4. Miscellaneous Itemized Deductions Subject to 2% AGI Floor
Deductions suspended under TCJA (unreimbursed employee business expenses on Form 2106, tax preparation fees, investment advisory fees) return as itemized deductions on Schedule A, subject to the 2% Adjusted Gross Income (AGI) floor.5. Section 199A Qualified Business Income (QBI) Deduction
The 20% deduction for eligible pass-through business income expires entirely for tax years beginning after December 31, 2025. This dramatically alters the tax parity between C-corporations (retaining the 21% flat rate) and pass-through entities.2026 TCJA Sunset Comparison Matrix: Pre-Sunset vs. Post-Sunset Rules
| Tax Provision | TCJA Rules (2018–2025) | Post-Sunset Reversion (2026+) | Exam Impact Area |
|---|---|---|---|
| Top Individual Tax Rate | 37% | 39.6% | SEE Part 1 (Individuals) |
| Standard Deduction | ~$14,600 Single / ~$29,200 MFJ | Reverts to ~50% baseline (plus inflation) | SEE Part 1 (Itemized vs Standard) |
| Personal Exemptions | Suspended ($0) | Reinstated (~$5,000 per person) | SEE Part 1 (Filing Status & Dependents) |
| SALT Deduction Cap | Capped at $10,000 per return | Uncapped (subject to Pease limit) | SEE Part 1 (Schedule A Itemizing) |
| Mortgage Interest Cap | $750,000 acquisition debt | $1,000,000 acquisition + $100k home equity | SEE Part 1 (Itemized Deductions) |
| Child Tax Credit (CTC) | $2,000 ($1,700 refundable) | Reverts to $1,000 per qualifying child | SEE Part 1 (Tax Credits) |
| Section 199A QBI Deduction | Up to 20% pass-through deduction | Expires completely (0%) | SEE Part 2 (Sole Props, S-Corps, LLCs) |
| Corporate Income Tax | Flat 21% | Remains flat 21% (Permanent) | SEE Part 2 (C-Corporations) |
| Bonus Depreciation | Phasing down (20% in 2026) | 0% Bonus (Section 179 remains) | SEE Part 2 (Depreciation & Basis) |
| Estate & Gift Exemption | ~$13.61M per individual | Reverts to ~$5M adjusted for inflation | SEE Part 1 & Part 2 (Wealth Transfer) |
How the Sunset Impacts Each Part of the Special Enrollment Exam
SEE Part 1: Individuals (The Heaviest Impact)
Part 1 candidates will see the most drastic changes. Exam questions test taxpayer choice between taking the standard deduction versus itemizing on Schedule A. Under TCJA, nearly 90% of taxpayers took the standard deduction. Post-sunset, itemizing calculations become essential exam targets:- Medical Expenses: The 7.5% AGI floor remains permanent under subsequent legislation.
- Charitable Contributions: Cash donation limit returns to 50% of AGI (down from 60% under TCJA).
- Home Equity Indebtedness: Deductibility of interest on up to $100,000 of home equity debt returns, provided the debt was not used for personal consumption.
SEE Part 2: Businesses (Entity Selection & Pass-Through Parity)
Entity classification questions in Part 2 become significantly more complex. With Section 199A gone, an S-Corporation or partnership owner in the 39.6% bracket pays 39.6% plus the 3.8% Net Investment Income Tax (NIIT) or self-employment tax. Meanwhile, a C-Corporation continues paying a flat 21% corporate rate. Prometric questions will test your ability to calculate comparative effective tax rates when choosing between C-Corp status, S-Corp elections, and single-member LLCs.SEE Part 3: Representation, Practices, and Procedures
Part 3 tests Treasury Department Circular 230 and IRS audit procedures. Sunset questions focus on:- Practitioner Due Diligence (Section 10.22): Documenting transition advice and advising clients on multi-year tax planning strategies.
- Accuracy-Related Penalties (Section 6662): Substantial understatement thresholds when claiming transitional deductions.
- Statutory Disclosures (Form 8275): Disclosing positions contrary to transitional IRS proposed regulations.
Worked Example: Individual Taxpayer Standard Deduction vs. Itemizing Decision
Consider a married couple filing jointly (MFJ) in a high-tax state with the following 2026 deductions:
- State income and property taxes paid: $24,000
- Mortgage interest paid on $600,000 debt: $18,000
- Qualified charitable contributions: $6,000
- Unreimbursed employee business expenses (W-2 travel): $4,000
- Adjusted Gross Income (AGI): $180,000
Under TCJA Rules (2025):
- SALT Deduction: Capped strictly at $10,000.
- Mortgage Interest: $18,000 is fully deductible ($600,000 is under the $750,000 cap).
- Charitable Contributions: $6,000 is fully deductible.
- Unreimbursed Employee Expenses: $0 (suspended under TCJA).
- Total Itemized Deductions: $10,000 + $18,000 + $6,000 = $34,000.
- Standard Deduction: ~$30,000 MFJ. The couple itemizes for a modest $4,000 deduction advantage.
Under Post-Sunset Rules (2026):
- SALT Deduction: $24,000 (fully deductible, no $10,000 cap).
- Mortgage Interest: $18,000 is fully deductible.
- Charitable Contributions: $6,000 is fully deductible.
- Unreimbursed Employee Expenses: 2% of $180,000 AGI is $3,600. Expenses of $4,000 exceed the floor by $400.
- Total Itemized Deductions: $24,000 + $18,000 + $6,000 + $400 = $48,400.
- Standard Deduction: ~$15,500 MFJ.
- Personal Exemptions: Two taxpayer exemptions ($5,000 x 2 = $10,000 additional deduction).
- Total Deductive Reduction: $48,400 itemized + $10,000 personal exemptions = $58,400.
How to Prepare for 2026 EA Exam Updates
- Verify Your Question Bank Vintage: Never use 2023 or 2024 practice questions for the 2026 exam. Platforms like VoraPrep Enrolled Agent prep update all 3,500+ practice questions dynamically to reflect current and transition rules.
- Master Schedule A Line by Line: Expect Prometric to test edge-case itemized deductions that were dormant for eight years, including casualty losses, investment interest expense, and mortgage insurance premiums.
- Review IRS Circular 230 Practice Standards: Ethics and representation make up 100% of Part 3. Ensure you understand practitioner disclosure rules when advising clients during statutory tax sunsets.