Key Changes Under OBBB for 2026
The One, Big, Beautiful Bill, enacted on July 4, 2025 (Public Law 119-21), introduces sweeping tax law changes affecting individuals, families, and businesses for tax years beginning after December 31, 2024.(irs.gov) Important highlights include:
- Increased standard deductions: for 2026, married couples filing jointly can deduct $32,200; single filers, $16,100; heads of household, $24,150.(eitc.irs.gov)
- Higher income-tax brackets and AMT thresholds: top rate of 37% for single filers at over $640,600; AMT exemption increased to $90,100 for singles.(eitc.irs.gov)
- Adoption credit increase: up to $17,670 per child, with $5,120 refundable.(eitc.irs.gov)
- Expanded Childcare credit for employers: credit limits raised to $500,000 ($600,000 for eligible small businesses).(eitc.irs.gov)
- Clean energy credit expirations: many clean vehicle, residential clean energy, and energy improvement credits expire at the end of 2025.(irs.gov)
Tax Planning Strategies
To make the most of these changes, consider the following tactics:
1. Accelerate or Delay Expenses
- If you were planning clean vehicle or residential clean energy expenditures, make purchases before December 31, 2025 to qualify for expiring credits.(irs.gov)
- Alternatively, defer certain expenses to 2026 if beneficial under your cash flow or income projection.
2. Reassess Filing Status and Phase-outs
- Because income thresholds for deductions and credits have increased, assess whether married filing jointly or separately yields better results.
- Be mindful of phase-outs for credits like Child Tax Credit, Adoption Credit, and Qualified Business Income Deduction—stay just under phase-out ranges if possible.(eitc.irs.gov)
3. Use New and Enhanced Deductions
- Qualifying overtime and tips deductions: under OBBB, certain tips and overtime pay are no longer taxed or are deductible.(irs.gov)
- No tax on car loan interest: guidance now exists for when car-loan interest is deductible.(eitc.irs.gov)
Examples
| Scenario | Impact of OBBB Changes |
|---|---|
| Single parent with 3 children earns $60,000 | Higher standard deduction + increased EITC may significantly boost refund. |
| Small business providing childcare benefit | Employer can now claim up to $500,000 credit, offering substantial support. |
| Individual planning to buy EV in 2026 | Likely misses new 2025 expiration—credit not allowed after Sept 30, 2025. (irs.gov) |
Actionable Insights
- Review major expenditures for timing before year-end 2025.
- Project your income to understand where you fall in bracket or credit phase-out thresholds.
- Work closely with tax professionals to ensure compliance with new rules and maximize refunds or credits.
- Keep updated with IRS guidance—especially around clean energy, clean fuel, and foreign entity involvement. Recent notices clarify “material assistance” by prohibited foreign entities for credits.(irs.gov)