Tax Planning
Planning your taxes under the One, Big, Beautiful Bill: What changes for 2026
Major deductions and credits have shifted under the ‘One, Big, Beautiful Bill’—here’s what individuals should plan for before filing their 2025 return and looking ahead to 2026.
By NomadicTax Research Team • 5-8 min read • April 2, 2026
## What is the One, Big, Beautiful Bill (OBBB) and why it matters now
Passed in 2025, the One, Big, Beautiful Bill introduces sweeping tax law changes—from expanded deductions to credit eligibility—that affect both your 2025 return and how you plan for 2026. Many provisions are **retroactive to January 1, 2025**, meaning your withholding, estimated payments, or deductions might already be out of sync. ([irs.gov](https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill?utm_source=openai))
### Key changes to know for tax planning now
| Provision | What changed | Action & Example |
|---|---|---|
| **Standard Deduction** | Increased for all filing statuses—e.g. married filing jointly jumps to **$32,200** for TY 2026. ([irs.gov](https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill?utm_source=openai)) | Review whether itemizing still makes sense. A couple with mortgage interest and SALT near $20,000 should run the numbers.
| **Foreign Earned Income Exclusion** | Raised to **$132,900** under new indexing. ([irs.gov](https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill?utm_source=openai)) | If you're a U.S. citizen working abroad, this gives more shelter. Compare your home vs foreign income and consider Foreign Housing Exclusion too.
| **SALT Deduction Limit** | Temporarily increased to $40,000 (single or joint) for TY 2025–2026, with phase-out above AGI $500,000. ([irs.gov](https://www.irs.gov/newsroom/understanding-the-one-big-beautiful-bill-individual-tax-provisions-youtube-video-text-script?utm_source=openai)) | High-SALT states taxpayers might reclaim lost deduction. But watch out: for AGI over $500k the benefit tapers down by 30% above the threshold.
| **New deductions/credits** | • Additional standard deduction for those **65+**; <br>• Tips may be deductible; <br>• Overtime deductions; <br>• Adoption Credit now partially refundable up to **$5,000**; ([irs.gov](https://www.irs.gov/newsroom/taxpayers-could-see-a-change-in-their-2025-tax-bill-or-refund?utm_source=openai)) | If you're eligible (e.g. a senior, adopted child, tipped worker), make sure to gather documentation. Employers may not adjust W-2s—self-reporting matters.
| **Employer-provided childcare and Dependent Care FSA** | Dependent Care FSA limit bumped from **$5,000 to $7,500**; employee benefit credits enhanced. ([irs.gov](https://www.irs.gov/publications/p15b/?utm_source=openai)) | Use this to max out pre-tax savings. For married filing separately status: contribution limit is half.
## Sample tax planning scenarios
- **Freelancer who’s tipping & overtime**: If you earn both, you might now deduct tips + overtime for 2025 and adjust estimated payments accordingly.
- **Senior couple in high-state-tax state**: By itemizing and understanding the SALT cap change, you might reduce taxable income significantly. But above $500k AGI requires watching the phase-out.
- **Parent adopting a child**: With a partially refundable Adoption Credit, even if tax liability is low, you could receive cash back—ensure all forms & SSNs are in place.
## Actionable insights for 2025–2026 tax season
- **Revisit withholding**: Use updated IRS Withholding Estimator to factor in these new deductions like no tax on tips, no tax on overtime. ([irs.gov](https://www.irs.gov/newsroom/tax-withholding-estimator-now-reflects-changes-under-the-one-big-beautiful-bill?utm_source=openai))
- **Organize documents**: SSNs for taxpayer & children, proof of tips/overtime income, qualified expenses for child/adoption.
- **Consider retirement and income timing**: If taxable income crosses phase-out thresholds, shifting income or retirement contributions into 2026 could help.
- **Consult a pro**: Especially if business/multiple income streams or you’re digital nomad (more in separate article).
## Conclusion
These OBBB changes give individuals fresh opportunities: more deductions, higher standard deduction, bigger tax credits. Planning is essential, especially with retroactivity. Evaluate your 2025 income & credits now—small shifts can lead to large savings this filing season.