The One Big Beautiful Bill: What Changes for You in 2026
Updated: 18 hours ago
The One Big Beautiful Bill Act, signed in July 2025, is the biggest federal tax change since 2017. Some of it already showed up on the 2025 returns you filed this spring. More of it takes effect in 2026.
Here is a guide to what changed, who it affects, and what you can still do before December 31.
This article is general information, not tax or legal advice. Your situation may be different.
The Changes at a Glance
What changed | 2026 amount | How long it lasts |
Standard deduction | $16,100 single/ $32,200 married | Permanent |
Child Tax Credit | $2,200 per child | Permanent |
State and local tax (SALT) deduction cap | $40,400 | Through 2029 |
New deduction for tips | Up to $25,000 | Through 2028 |
New deduction for overtime | Up to $12,500 ($25,000 married) | Through 2028 |
New deduction for age 65+ | $6,000 per person | Through 2028 |
New deduction for car loan interest | Up to $10,000 | Through 2028 |
Charity deduction for non-itemizers | Up to $1,000 ($2,000 married) | Starts 2026 |
Estate tax exemption | $15 million per person | Permanent |
Tax rates stay the same (10% to 37%), and the rates are now permanent.
If you Earn Tips or Overtime
Tips: you can deduct up to $25,000 of tips if you work in a job where tipping is common, such as server, bartender, hairstylist, or delivery driver. Mandatory service charges don't count.
Overtime: you can deduct the extra part of your overtime pay (the "half" in time-and-a-half), up to $12,500, or $25,000 if married.
Both deductions shrink once income passes $150,000 (single) or $300,000 (married).
You don't need to itemize to claim them. They don't reduce Social Security or Medicare taxes.
Example: You earn $30 an hour and $45 an hour for overtime. The extra $15 an hour is deductible. With 300 overtime hours, you deduct $4,500.
If You're 65 or Older
You get an extra $6,000 deduction ($12,000 if you and your spouse are both 65+), whether or not you itemize. It shrinks once income passes $75,000 (single) or $150,000 (married).
If You Bought a New Car
You can deduct up to $10,000 a year of interest on a loan for a new car or truck bought for personal use after 2024, if it was assembled in the U.S. Used cars and leases don't qualify. The deduction shrinks once income passes $100,000 (single) or $200,000 (married).
If You have Children
Child Tax Credit: $2,200 per child under 17.
Trump Accounts: a new savings account for children. Babies born from 2025 through 2028 can get a free $1,000 deposit from the government.
Michael & Susan Dell Foundation gift: Children born before Jan. 1, 2025, may qualify for a $250 charitable deposit if they live in a ZIP code where the median income is $150,000 or less.
Dependent care FSA: the limit rises from $5,000 to $7,500. Raise your election during open enrollment this fall.
529 plans: you can now use up to $20,000 a year for K–12 tuition, tutoring, books, and test fees.
If You Own a Home or Live in a High-Tax State
Starting this year, you can deduct up to $40,400 in state and local taxes (income and property combined), up from the old $10,000 cap. Mortgage insurance premiums (PMI) are also deductible again beginning in 2026.
Together, these changes mean many homeowners may come out ahead by itemizing instead of taking the standard deduction, which hasn’t been true for years.
There’s an income limit. The higher cap starts to shrink once your income passes $505,000 and drops back to $10,000 at about $606,000.
You can also time your payments to your advantage. Paying property taxes or state estimated taxes before December 31 instead of in January moves the deduction into this year, which can help you clear the standard deduction.
Prepaying only works for taxes that have already been assessed. Paying property tax for a bill that hasn’t been issued yet usually isn’t deductible.
Prepaying helps most if you’re still under the $40,400 cap. Anything over the cap isn’t deductible no matter when you pay it.
Married filing separately gets half the cap and half the income thresholds.
If You Give to Charity
Don't itemize? You can now deduct up to $1,000 ($2,000 married) of cash gifts to charity.
Itemize? Only gifts above 0.5% of your income count.
Age 70½+? Giving directly from your IRA is often the best option.
Smart Ways to Give
Give from your IRA (age 70½+): gifts made directly from your IRA to charity aren't counted as income. They skip the new limits and count toward your required minimum distribution.
Give appreciated stock: you avoid capital gains tax and, if you itemize, deduct the full value.
Bunch your gifts: giving two years' worth in one year can help you itemize. A donor-advised fund makes this easy.
Many people who got no benefit from giving now get a small one. People who itemize may get slightly less. Either way, a little planning can help your generosity go further. Our team is happy to help you plan your gifts.
If You're a Higher Earner
Alternative Minimum Tax (AMT): More people may owe AMT in 2026 because the exemption now phases out at lower income levels and phases out faster. You’re most at risk if you exercise incentive stock options (ISOs) or have a large one-time gain that pushes your income up.
Cap on the value of itemized deductions: If you’re in the top 37% tax bracket, each dollar of itemized deductions now saves you at most 35 cents in tax instead of 37 cents. Itemizing still helps, just slightly less than it used to.
Timing your income: Several tax breaks, including the higher state and local tax deduction, shrink as your income rises. A bonus, stock sale or other income spike can reduce several of them in the same year. Talk to us before making big moves so we can help you plan the timing.
If You Own a Business
20% pass-through deduction (QBI) is now permanent.
100% bonus depreciation is back permanently. Equipment must be in use by December 31 to deduct it this year.
1099 forms: starting with 2026 payments, you only need to issue a 1099-NEC to contractors you paid $2,000 or more (up from $600).
State PTET elections are still available to work around the SALT limit.
Credits That Went Away
Electric vehicle credits ended for cars bought after September 30, 2025.
Home energy credits for solar, heat pumps, windows, insulation, and similar upgrades ended after 2025. Projects installed in 2026 don't qualify.
Before December 31: Your Checklist
☐ Ask us for a quick 2026 tax projection.
☐ Update your W-4 if the new deductions lower your tax, so you keep more of each paycheck.
☐ Save pay stubs that show your tips and overtime.
☐ Max out your 401(k), IRA, and HSA contributions.
☐ Raise your dependent care FSA election during open enrollment.
☐ Plan your charitable gifts under the new rules.
How Boyd Shoker Can Help
The new rules affect everyone differently. We can show you exactly how they apply to you and what to do before year-end.
Comments