The OBBBA made changes to tax law in two ways:
- Keeping provisions in place that were set to expire
- Adding new provisions
Here are some highlights of both types:
Staying the same:
- American taxpayers were looking at the largest tax increase in history as of 1/1/2026. The OBBBA prevented that by keeping the income tax rates the same. Brackets were adjusted up for inflation.
- The standard deduction was going to be cut in half as of 1/1/2026 which would have also been a big hit to taxpayers. The OBBA maintained the standard deduction at current levels with an increase for 2026.
New provisions:
- A new deduction for individuals age 65 and older of $6000 per person. Phase out begins at $75k ($150k for joint filers).
- No tax on tips. The maximum deduction is $25k of tips. Subject to a lot of specifics regarding what is a tip and what industries are included. Phase out begins at $150k ($300k for joint filers).
- No tax on overtime. The maximum deduction is $12.5k ($25k for joint filers). Phase out begins at $150k ($300k for joint filers).
- No tax on car loan interest for loans originated after 12/31/2024. The maximum deduction is $10k. Subject to restrictions on weight and location of final assembly. Phase out begins at $100k ($200k for joint filers).
- Trump accounts. Beginning after 7/4/2026 (America’s 250th birthday), Trump accounts can be established for eligible children. The government will make a one-time contribution of $1000. Contributions of up to $5000 annually are permitted.
- The SALT cap has been lifted from $10k to $40k. This is huge for higher income taxpayers and taxpayers in states with high property taxes. Phase out starts at $500k.
- The Electric Vehicle Credit ended on 9/30/2025.
- The Clean Energy Credit for improvements such as windows, HVAC systems, and insulation expires on 12/31/2025. The credit for solar panels also expires on 12/31/2025.
- Charitable contributions are impacted in two ways. First, for taxpayers who itemize their deductions, the OBBBA introduced a floor of .5% of AGI for charitable contributions. This means that a taxpayer with AGI of $100k would not be able to deduct their first $500 of charitable contributions. Starting in 2026, however, there is a new provision that allows the deduction of up to $1000 ($2000 for joint filers) in charitable contributions for non-itemizers. This means that beginning in 2026, taxpayers that take the standard deduction would also be able to deduct up to these amounts in charitable contributions.
Have questions about any of the above? Contact the Tax Strategists at Management Accounting today. Reducing Taxes. Increasing Wealth.
