One Big Beautiful Bill Act (OBBBA)

The law’s tax title did two things for households. It removed the end-of-2025 expiration from most of the Tax Cuts and Jobs Act individual rules, enlarging several of them, and it added new breaks, many of them temporary, while trimming others.

The law also changed Medicaid, food assistance and other programs, which this page does not cover. Retirement-plan rules such as RMD ages and catch-up limits come mainly from the SECURE Act and SECURE 2.0, not from this law. For 2026, the main individual tax changes are these.

The OBBBA mixes permanent rules with provisions that end on fixed dates, so check the year behind any figure. The rate structure, standard deduction, child tax credit, estate exclusion, mortgage interest limit and AMT exemptions have no scheduled end. The SALT cap is permanent too, but its higher amount is not: $40,000 for 2025, $40,400 for 2026, 1% more each year through 2029, then $10,000 from 2030.

The four new deductions apply only to 2025 through 2028: the $6,000 senior deduction for each person 65 or older, up to $25,000 of qualified tips, up to $12,500 of qualified overtime pay ($25,000 joint), and up to $10,000 of interest on a loan for a new, U.S.-assembled personal vehicle. All four are claimed on the new Schedule 1-A whether or not you itemize, and each phases out with modified AGI: above $75,000 ($150,000 joint) for seniors, $150,000 ($300,000 joint) for tips and overtime, and $100,000 ($200,000 joint) for car loan interest.

Because they are deductions, not credits, each is worth your top tax rate times the amount deducted. They reduce income tax only: tips and overtime still count as wages for Social Security and Medicare tax.

Several changes that start in 2026 reduce the value of deductions at higher incomes. The SALT cap shrinks by 30% of modified AGI above $505,000 for 2026, though never below $10,000, so the full $40,400 is available only below that income. Itemized deductions of people in the 37% bracket are reduced by 2/37 of the smaller of the deductions or the amount by which taxable income plus those deductions reaches into that bracket, which holds their value to about 35 cents per dollar.

Charitable giving has new rules on both sides. Itemizers may deduct gifts only to the extent they exceed 0.5% of AGI, while people who take the standard deduction can deduct up to $1,000 of cash gifts to qualifying charities, or $2,000 on a joint return. Gifts to donor-advised funds do not qualify for the non-itemizer deduction.

The alternative minimum tax kept its larger exemptions, $90,100 single and $140,200 joint for 2026, but they now phase out starting at $500,000, or $1 million joint, at 50 cents per dollar instead of 25, which can pull more high-income households into the AMT.

Trump Accounts are a new account for children under 18. Contributions can start July 4, 2026, up to $5,000 a year, of which an employer may give up to $2,500, and the money must be invested in funds that track a U.S. stock index. U.S.-citizen children with a Social Security number born from 2025 through 2028 can receive a one-time $1,000 federal deposit. From the year the child turns 18, the account generally follows IRA rules.

A 529 plan can pay up to $20,000 a year of K–12 costs per beneficiary starting in 2026, and those costs now include books, tutoring and test fees as well as tuition. The tax-free limit for employer dependent-care benefits rose to $7,500 per household for 2026. Bronze and catastrophic health plans count as HSA-compatible from 2026, so more people can fund a health savings account. And people who receive advance premium tax credits for marketplace coverage must now repay any excess in full when they file, with no cap.

The mix of permanent and expiring rules creates windows. From 2025 through 2028, a retiree 65 or older below the phase-out has up to $6,000 more deduction per person, which makes those years a natural time to fill low brackets with Roth conversions or planned IRA withdrawals. Workers can claim the tips and overtime deductions through 2028, but a long-range budget should not count on them after that.

For itemizers with large state and local tax bills, each dollar of modified AGI above $505,000 costs 30 cents of SALT deduction until the cap reaches $10,000, an effective marginal rate well above the bracket. Charitable itemizers can recover part of what the 0.5% floor takes by grouping several years of gifts into one year. And with the federal exclusion at $15 million per person, a state estate tax, which in several states starts far below the federal exclusion, is often the one that matters.