What Is the One, Big, Beautiful Bill (OBBB)?
Passed in mid-2025, the OBBB permanently restructured many U.S. federal tax provisions. Inflation provisions were adjusted for 2026, and several deductions and credits were expanded, aiming to benefit low- and middle-income taxpayers, families, and small businesses. (irs.gov)
Major Changes to Know (Tax Year 2026)
| Change | Description | Why It Matters for Planning |
|---|---|---|
| Higher standard deductions | $32,200 for married filing jointly; $16,100 for single; $24,150 for heads of household. (irs.gov) | Larger deductions reduce taxable income; reconsider itemizing based on SALT limitations. |
| Expanded HSA eligibility & telehealth access | Bronze and catastrophic plans are now HSA-compatible; telehealth allowed before reaching HDHP deductible; HSA funds can cover periodic fees under certain direct primary care arrangements. (irs.gov) | If you’re eligible, maximizing HSA contributions is tax-efficient. Telehealth now helps even if your deductible isn’t met. |
| Full first-year bonus depreciation, including sound recording productions | All qualifying business property placed in service after Jan 19, 2025, can be 100% expensed. (irs.gov) | Ideal for businesses investing in equipment; consider timing acquisitions and making §168(k) elections. |
| Child Tax Credit bump to $2,200 per child; SALT deduction cap rise | Some credits are now permanent; SALT limit raised to ~$40,000 for joint filers 2025–2029. (irs.gov) | Families benefit; high SALT state taxes are more effectively deductible within limits. |
Strategic Tax-Planning Moves
- Optimize tax deductions: With larger standard deductions, itemizing works only when deductions exceed those thresholds. Use a “hybrid” strategy: prepay property tax or mortgage interest, bunch donations.
- Accelerate business purchases: Buy qualifying equipment before year-end to leverage full Section 168(k) depreciation; ensure use begins before regulations update. (irs.gov)
- Max out HSAs if eligible** – pre-tax contributions save income tax & payroll tax. Ensure your insurance plan qualifies.
- Review your AGI: Some deductions/credits phase out based on modified adjusted gross income (MAGI). SALT cap phase-out begins beyond $500,000 MAGI for joint filers. (irs.gov)
- Watch tax withholding or estimated payments: Changes are retroactive to 2025 for some credits. Make sure enough federal tax is withheld or estimated to avoid penalties. (irs.gov)
Real-World Example
Maria is married, filing jointly, with three kids. In 2025, her state and local taxes were high, and she itemized. For 2026, her standard deduction under OBBB is ~$32,200; with itemizable expenses of ~$28,000, she’d be better off taking the standard deduction. Meanwhile, she purchases $10,000 worth of qualified business equipment in early 2026, fully expensing it under §168(k).
Action Steps Before Filing Season
- Gather 2025 income and deductions early to evaluate itemizing vs standard.
- Track health plan eligibility & open enrollment dates for HSA-compatibility.
- Plan business-asset purchase timing carefully.
- Estimate credits like the Adoption Credit, Child Tax Credit, and ensure SSN compliance for dependents. (irs.gov)
Staying ahead of these changes can save thousands. Consult with a tax professional to tailor strategies to your situation.