One Big Beautiful Bill Act OBBBA Complete Tax Breakdown by Category 2026
Signed into law on July 4, 2025, the One Big Beautiful Bill Act permanently extended most Tax Cuts and Jobs Act provisions and added dozens of new tax rules.
Some affect your 2025 taxes filed this spring. Most kick in for 2026 and beyond.
Bottom line: This legislation touches almost every part of the tax code—from income taxes to estate taxes to new deductions you’ve never heard of.
What You Need to Know Right Now
The Big Beautiful Bill makes permanent tax changes that were supposed to expire December 31, 2025. Without it, tax rates would’ve jumped back to 2017 levels.
The 7 tax brackets as defined by the original 2017 TCJA with a top rate of 37% for higher earners and a bottom rate of 10% for lower earners remain the same.
The cost? We estimate the One Big Beautiful Bill Act would reduce federal tax revenue by $5 trillion over the next decade on a conventional basis.
What You Came to Know
Income Tax Changes
Tax Brackets Made Permanent
For tax year 2026, the top tax rate remains 37% for individual single taxpayers with incomes greater than $640,600 ($768,700 for married couples filing jointly).
The seven brackets are now: 10%, 12%, 22%, 24%, 32%, 35%, and 37%—permanently indexed for inflation.
Standard Deduction Increased
For tax year 2026, the standard deduction increases to $32,200 for married couples filing jointly. For single taxpayers and married individuals filing separately, the standard deduction rises to $16,100.
Heads of households get $24,150.
Bonus Senior Deduction (2025-2028)
Effective 2025 through 2028, individuals age 65 and older may claim an additional $6,000 deduction beyond the standard deduction.
This phases out for modified AGI over $75,000 ($150,000 for joint filers).
SALT Cap Temporarily Raised
The bill raises the $10,00 cap on the SALT deduction enacted by TCJA to $40,000 for taxpayers making $500,000 or less in modified adjusted gross income in 2025.
This increase runs through 2029, then reverts to $10,000 in 2030.
💡 Pro Tip
The SALT cap increase is temporary and income-limited. If you’re in a high-tax state and make under $500,000, bunch your property tax payments before 2030 when the cap drops back to $10,000. Just make sure your total SALT deductions exceed the standard deduction—otherwise, itemizing doesn’t help.
Credits and Deductions for Workers and Families
Child Tax Credit Increased
The Child Tax Credit increased from $2,000 to $2,200 for qualified taxpayers, permanent for tax years 2025 and beyond.
For tax year 2026, the maximum credit allowed for adoptions is the amount of qualified adoption expenses up to $17,670, up from $17,280 for 2025. For tax year 2026, the amount of credit that may be refundable is $5,120.
No Tax on Tips (2025-2028)
The law creates new tax deductions for tips of up to $25,000 per year received by workers earning less than $150,000, with the tax deduction set to expire in 2028.
This applies to 68 different job types designated by the IRS.
No Tax on Overtime (2025-2028)
No tax on overtime provides a deduction of up to $12,500 per taxpayer with phaseout for MAGI over $150,000 (over $300,000 for Married Filing Jointly filers).
Employers must report qualified overtime on Form W-2.
Employer Childcare Credit Expansion
For tax year 2026, the OBBB significantly enhances an important credit for employers; it increases the maximum amount of employer-provided childcare tax credit from $150,000 to $500,000 ($600,000 if the employer is an eligible small business).
Charitable Deduction for Non-Itemizers
Effective in 2026, taxpayers who take the standard deduction will be able to claim a deduction for charitable contributions (up to $1,000 for single filers and $2,000 for those married and filing jointly).
For itemizers, only contributions exceeding 0.5% of AGI are deductible.
Business and Investment Provisions
Estate Tax Exemption Raised to $15 Million
Estates of decedents who die during 2026 have a basic exclusion amount of $15,000,000, up from a total of $13,990,000 for estates of decedents who died in 2025.
For married couples, that’s $30 million transferred tax-free.
100% Bonus Depreciation Restored
The House Bill reinstates taxpayers’ ability to immediately expense 100% of the cost of certain qualified property placed in service on or after January 20, 2025, and before January 1, 2030.
Businesses can write off machinery, equipment, and vehicles immediately.
Pass-Through Business Deduction Permanent
Owners of LLCs, S corporations, and partnerships keep the 20% qualified business income deduction permanently.
Qualified Opportunity Zones Extended
The Qualified Opportunity Zone (QOZ) program was created to stimulate economic development in distressed communities by offering tax incentives to investors who invest deferred capital gain in QOZs. The OBBB makes the QOZ program permanent with rolling ten-year QOZ designations.
Under the new provisions, if a QOF investment is held for at least 10 years and up to 30 years, no tax is imposed on gain realized when the investment is sold or exchanged.
QSBS Holding Period Reduced
The required holding period for QSBS benefits for stock acquired after the applicable date would be reduced from 5 years to 3 years, with 50% benefits phasing in beginning after a three-year holding period.
New Accounts and Programs
Trump Accounts for Children
Parents, guardians, or others can establish a Trump Account for an eligible child. Trump Accounts cannot be funded before July 4, 2026. The federal government will make a one-time $1,000 contribution for each eligible child’s account.
Annual contribution limit: $5,000 per year (adjusted for inflation).
Employers can contribute up to $2,500 per year tax-free for employees or dependents.
529 Plan Distribution Limits Increased
Annual distribution limits from 529 Plans for elementary, secondary or religious school expenses increase to $20,000 (from $10,000) beginning after December 31, 2025.
Clean Energy Credits Eliminated
Electric vehicle tax credits would be phased out by September 2025, and EV charging tax credits would be phased out by June 2026.
Energy Efficient Home Improvement Credit (25C): Not allowed for any property placed in service after December 31, 2025.
Most renewable energy credits remain intact with stricter supply chain documentation requirements.
Other Notable Changes
Car Loan Interest Deduction
A new provision, Internal Revenue Code Section 139L, allows eligible lenders to exclude 25% of interest income from federal taxable income on qualifying passenger vehicle loans.
Only U.S. banks and savings associations benefit.
1099 Reporting Threshold Raised
The law increases the reporting threshold for Form 1099-MISC and Form 1099-NEC from $600 to $2,000 in 2026. The threshold will be adjusted for inflation for future years.
HSA Expansion
Starting January 1, 2026, bronze and catastrophic health insurance plans are treated as HSA-compatible.
Telehealth services can be received before meeting the deductible without losing HSA eligibility.
What to Do Next
For 2025 Tax Returns (Filed Now)
Check if you qualify for:
No tax on tips deduction (up to $25,000)
No tax on overtime deduction (up to $12,500)
Senior deduction ($6,000 if you’re 65+)
Increased child tax credit ($2,200 per child)
For 2026 Tax Planning
Maximize:
Higher standard deduction ($32,200 for married couples)
SALT deduction up to $40,000 if you itemize and make under $500,000
Charitable giving if you don’t itemize (up to $1,000/$2,000 deduction)
529 plan withdrawals for private K-12 education (up to $20,000)
Consider:
Trump Accounts for children born 2025-2028
Estate planning with the new $15 million exemption
Opportunity Zone investments with permanent tax benefits
FAQs About the Big Beautiful Bill Tax Breakdown
Q: Do I need to do anything different for my 2025 taxes?
Yes. If you’re 65+, received tips, worked overtime, or have qualifying children, new deductions may apply. Use Schedule 1-A for these special deductions.
Q: What’s the biggest change for most taxpayers?
The permanent extension of lower tax rates and higher standard deduction. Without this bill, rates would’ve jumped back to 2017 levels in 2026.
Q: Are the no-tax-on-tips and no-tax-on-overtime provisions permanent?
No. Both expire after 2028. The senior deduction also ends in 2028.
Q: Can I still claim the EV tax credit?
Only if you bought before September 30, 2025. The $7,500 clean vehicle credit was phased out.
Q: What happens to the SALT deduction after 2029?
It reverts to the $10,000 cap in 2030 unless Congress extends the higher limit.
Q: Where can I find official IRS guidance on these changes?
Visit https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions for comprehensive guidance on all provisions.
Disclaimer
This article provides general information about tax provisions in the Big Beautiful Bill for educational purposes only and does not constitute tax or legal advice. Tax benefits vary based on individual income, filing status, and specific circumstances. AllAboutLawyer.com doesn’t provide tax services or personalized tax planning. For guidance on how these changes affect your tax situation, consult a qualified tax professional or CPA.
For complete details on all Big Beautiful Bill tax provisions and how they affect different income brackets, visit the official IRS guidance page at https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions.
Stay informed, stay protected. — AllAboutLawyer.com
This is general tax information, not legal or tax advice. Consult a qualified tax professional for your situation.
Last Updated: January 28, 2026 — We keep this current with the latest legal developments
About the Author
Sarah Klein, JD, is a former consumer rights attorney who spent years helping clients with issues like unfair billing, product disputes, and debt collection practices. At All About Lawyer, she simplifies consumer protection laws so readers can defend their rights and resolve problems with confidence.
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