A simplified overview of key updates for tax years 2025, 2026 and beyond.
As new tax provisions begin rolling out under the One Big Beautiful Bill Act (OBBBA) legislation, many individuals and families are wondering what these changes might mean for their financial picture. To help you stay informed and prepared, we’ve created a simple overview of the key updates, along with a few questions and considerations to help you evaluate how these rules may apply to your situation. While this guide offers a helpful starting point, your advisor and/or tax preparer can walk you through the details and identify planning opportunities tailored to your goals.
Individual Taxpayers
Area |
What’s Changing |
What It Means for You |
Tax Brackets |
Current tax brackets remain; top rate stays 37% | No major shift in how your income is taxed |
Standard Deduction |
Increases to $15,750 (single) / $31,500 (joint) | More income may be sheltered from tax |
Senior Deduction |
Extra deduction for taxpayers 65+, amount depends on filing status | Additional tax relief for older adults |
Tip & Overtime Deduction |
New temporary deductions for certain workers | Potentially lower taxable income if you earn tips or overtime |
Auto Loan Interest |
Deduction for interest on U.S.-assembled new cars, phases out with income between $200 -250K ($100-$150K for single filers) |
Possible savings when purchasing a qualifying vehicle |
Charitable Giving |
New above‑the‑line deduction starting 2026 ($1k per person) | Some charitable gifts may reduce taxable income even if you don’t itemize |
State and Local Tax (SALT) Deduction Cap |
Temporarily raised to $40k, if AGI over $500K ($250K for Married filing Separately) phase out begins and is reduced by 30% above threshold and fully phased out $600k ($250k MFS). | Higher‑tax‑state residents may see more relief |
Questions to Ask/Consider
- How will these new tax rules affect my 2025 and 2026 tax returns?
- Should I adjust my withholding or estimated tax payments?
- Will I benefit more from the standard deduction or itemizing under the new rules?
- How can the temporary deductions apply to me?
Families with Children
Area |
What’s Changing |
What It Means for You |
Child Tax Credit |
Increased to $2,200 per child | Larger credit for eligible families |
Child & Dependent Care Credit |
Higher maximum credit | More support for childcare expenses |
Dependent Care Flexible Spending Account (FSA) |
Contribution limit increases to $7,500 | Ability to set aside more pre‑tax dollars |
“Trump Accounts” |
$1,000 for children born 2025–2028 | New savings opportunity for newborns |
529 Plans |
Expanded eligible expenses | More flexibility in education planning |
Questions to Ask/Consider
- How do the updated Child Tax Credit and childcare rules affect my family?
- Should I increase my Dependent Care FSA contributions?
- Will the expanded 529 rules change how I save for education?
- If I’m welcoming a child between 2025–2028, should I consider a “Trump Account”?
Small Business & Self‑Employed
Area |
What’s Changing |
What It Means for You |
Qualified Business Income (QBI) Deduction |
Made permanent with expanded ranges | Continued tax benefit for many business owners |
Bonus Depreciation |
Returns to 100% | Full write‑off for qualifying equipment purchases |
Section 179 |
Higher expensing limits | More upfront deductions for business investments |
Research and Experimental (R&E) Expenses |
Immediate deduction for qualifying small businesses | Faster tax relief for research spending |
Qualified Small Business Stock (QSBS) |
Higher exclusion for new stock | Potentially greater tax benefits for startup investors |
Questions to Ask/Consider
- How do the new QBI rules affect my business income?
- Should I time equipment purchases to take advantage of 100% bonus depreciation?
- Do the updated R&E or Section 179 rules apply to my business?
- Could QSBS planning be relevant for my company or investments?
Estate & Health Planning
Area |
What’s Changing |
What It Means for You |
Estate/Generation-Skipping Transfer (GST) Exemption |
Increases to $15M per person in 2026 | More room for tax‑efficient wealth transfer |
Health Savings Account (HSA) Eligibility |
More health plans qualify | Easier access to tax‑advantaged healthcare savings |
Questions to Ask/Consider
- How do the higher exemptions affect my gifting or trust strategy?
- Am I newly eligible for an HSA, and should I adjust my healthcare savings approach (i.e., use as investment account)?
Alternative Minimum Tax (AMT)
Area |
What’s Changing |
What It Means for You |
AMT Exemption |
Higher exemption amounts | Fewer taxpayers likely to be affected |
Phaseout Thresholds |
Increased starting 2026 | More room before AMT applies |
Qualified Small Business Stock (QSBS) & Alternative Minimum Tax (AMT) |
QSBS gains no longer trigger AMT | Simplifies planning for investors |
Questions to Ask/Consider
- Am I still at risk for the AMT under the new thresholds?
- Should I rethink the timing of exercising incentive stock options?
- How do the QSBS changes affect my AMT exposure?
In Summary
These tax law changes can be complex, and even seasoned investors can find it challenging to keep up with what matters most for their situation. If you’re unsure how these updates may affect you, reach out to your advisor and/or tax preparer. We’re here to help you navigate the details, identify opportunities, and make confident decisions moving forward.
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