The tax legislation known as the One Big Beautiful Bill Act (OBBBA), passed last summer, was the most sweeping tax legislation in close to a decade.
Among other things, it made permanent most of the tax cuts embedded in earlier legislation known as the 2017 Tax Cuts and Jobs Act (TCJA), including expanding tax brackets, lowering the top tax rate, and increasing the standard deduction.
OBBBA further lowered taxes for some taxpayers and provided an additional tax boost for seniors, parents of younger children, and those with high state and local taxes. However, some provisions are only temporary, and they could come up for debate again within the next few years.
Here’s where things stand for the 2026 tax year.
What’s inside the new tax law?
Permanent changes under the One Big Beautiful Bill Act
The following provisions were all part of the original TCJA and will become a permanent part of the tax code.
- The 7 tax brackets as defined by the original 2017 TCJA, with a top rate of 37% for higher earners and a bottom rate of 10% for lower earners, remain the same.
- The mortgage interest deduction remains at its current limit of $750,000 in qualifying mortgage debt for single filers and married couples filing jointly, or $375,000 for married individuals filing separately. Higher limits may apply to certain qualifying debt incurred before December 16, 2017.
- The SALT deduction has temporarily increased to $40,400 for tax year 2026. The cap will revert to its former level of $10,000 in 2030. The higher SALT cap phases out for incomes above $505,000 ($252,500 in the case of a married individual filing separately) for tax year 2026. For tax years 2026 through 2029, the SALT deduction and income phase-out levels also will be increased 1% a year. After 2029, the $10,000 SALT deduction applies once more to single and joint filers regardless of income and is slated to become permanent without further action by Congress. Note: Married couples filing separately are subject to a lower deduction limit. The new cap for such filers is $20,200, reverting to $5,000 in 2030.
- The standard deduction, which doubled in 2017, has been made permanent and increased to $16,100 for single filers and $32,200 for joint filers for tax year 2026. These amounts are indexed for inflation going forward.
- The lifetime gift and estate tax exclusions, which have more than doubled since 2017, have increased to $15 million for single filers and to $30 million for those who are married filing jointly. Going forward, the exclusions will be indexed for inflation.
- The Child Tax Credit (CTC), which the TCJA doubled in 2017 from $1,000, increased to $2,200 for tax year 2026.
Find out more about this credit in Viewpoints: What is the Child Tax Credit?
- Charitable deductions for non-itemizers are permanently reinstated with a new deduction for cash contributions of $1,000 for single filers and $2,000 for joint filers. The law also creates a floor of 0.5% of the taxpayer’s contribution base—generally adjusted gross income (AGI)—on the charitable deductions of individuals who itemize. (That means a formerly fully deductible charitable contribution now must be reduced by 0.5% of an individual’s contribution base for the tax year.) In addition, for those in the highest 37% tax bracket, the deduction will be capped at 35% of the dollars donated. These provisions went into effect in the 2026 tax year.
- The repeal of the personal exemption deduction. The OBBBA made permanent the repeal of the personal exemption deduction, which had been temporarily repealed by the TCJA.
Temporary provisions good for 4 years
In addition to the permanent provisions, the legislation includes numerous temporary deductions and credits good only for tax years 2025 through 2028, including:- No taxes on tips or overtime. The OBBBA created 2 new deductions: a deduction of up to $25,000 of tipped income and a deduction of $12,500 of overtime income ($25,000 for joint filers). The deductions begin to phase out for single filers with income over $150,000 and $300,000 for joint filers.
- A new $6,000 tax deduction for seniors. People who are age 65 and older get an additional $6,000 deduction that begins to phase out at incomes of $75,000 for single filers and $150,000 for joint filers. The enhanced deduction is in addition to the $2,050 single filers and $3,300 married filers are currently able to deduct if they are 65 or older.
Note: The legislation did not include an earlier proposal to eliminate taxes on Social Security benefits, which are taxable up to 85% for individuals with income of more than $34,000 or a couple with combined income of $44,000 or more. Combined income includes typical forms of income such as wages, interest, dividends, pension payments, and taxable distributions from traditional 401(k)s and IRAs (less adjustments), as well as nontaxable interest and half of Social Security benefits.
The additional $6,000 deduction for people who are 65 and older may help offset taxes on Social Security benefits for some individuals with income at these thresholds for the next 4 years.
Find out more about Social Security taxes in Viewpoints: Is Social Security still taxable?
- Deductible car loan interest. The new law allows for a deduction of up to $10,000 of loan interest for purchased vehicles whose final assembly took place in the US. The deduction would apply to single taxpayers with modified adjusted gross income of $100,000 or less ($200,000 or less for people who are married filing jointly).
What else is new?
- A savings account for children. The legislation includes a savings account called the Trump Account fundable up to $5,000 a year, treated similarly to a nondeductible traditional IRA contribution for parents or other individuals. Contributions can be made by parents, relatives, or any other “taxable entity” such as a charity, according to the legislation, until age 18, at which point the account would effectively convert to a traditional IRA. Parents of newborns born between January 1, 2025, and December 31, 2028, would also qualify for $1,000 in federal seed money to start the account.
- Expanded uses for health savings accounts (HSAs) and 529s. The legislation widens the types of health plans eligible to use HSAs to include public marketplace bronze and catastrophic plans. It also allows payments of $150 a month ($300 for a family) for direct primary care arrangements, and makes permanent an extension for telehealth arrangements. The legislation also expands uses of 529 funds to include things such as testing fees, tutoring outside the home, and educational therapies for students with disabilities, among other things. It would also allow for tax-free withdrawals for recognized postsecondary credential programs.
Learn more about spending from a 529 account.
Keep informed and get help
Remember tax legislation is complicated. Also, everyone's financial situation is different: Consider speaking with a financial or tax professional about your individual needs throughout the year.