Complete Guide to Tax Changes Under the OBBBA
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The One Big Beautiful Bill Act (OBBBA) enacted in July 2025 represents the most significant tax legislation since the Tax Cuts and Jobs Act. Here's everything you need to know about the 2026 tax changes affecting your wallet.
Major 2026 Tax Changes at a Glance
1. Tax Brackets Made Permanent with New Inflation Adjustments
What Changed:
- TCJA tax structure now permanent (no 2025 sunset)
- Special 2026 adjustment: 10% and 12% brackets got 4% inflation boost
- Higher brackets (22%-37%) got standard 2.3% adjustment
Impact:
- More income taxed at lower rates
- Saves typical family $200-$500 in 2026
Calculate your savings: 2026 Federal Tax Bracket Calculator
2. NEW $6,000 Senior Deduction (Age 65+)
Biggest News for Seniors:
- $6,000 additional deduction per taxpayer age 65+
- Available whether you itemize OR take standard deduction
- Phases out starting at $75K (single) / $150K (married)
- Phaseout rate: 6% per dollar over threshold
Example:
- Married couple, both 67, income $120K
- NEW deduction: $12,000 ($6,000 × 2)
- Tax savings: ~$2,640 (at 22% bracket)
Check your benefit: Standard Deduction Calculator
3. Child Tax Credit Increased to $2,200
What Changed:
- Increased from $2,000 to $2,200 per child
- Refundable portion: $1,700 (up from $1,600)
- Now adjusted for inflation going forward
- Made permanent
Calculate your credit: Child Tax Credit Calculator
4. QBI Deduction Extended Phase-In Range
For Business Owners:
- Made permanent (no expiration)
- Phase-in range EXTENDED to $75K (single) / $150K (married)
- Was previously $50K / $100K
- More businesses can benefit from partial deduction
Check your QBI deduction: QBI Deduction Calculator
5. Alternative Minimum Tax (AMT) Changes
Critical Updates:
- Phaseout threshold LOWERED to $500K/$1M (from $625K/$1.25M)
- Phaseout rate DOUBLED to 50% (from 25%)
- More high earners affected
- Exemption disappears faster
Check if you're affected: AMT Calculator
6. Earned Income Tax Credit Parameters Updated
What Changed:
- Maximum credits adjusted for inflation
- 2026 max: $664 to $8,231 depending on children
- Income thresholds updated
- Investment income limit: $11,950
Calculate your EITC: EITC Calculator
Who Benefits Most from 2026 Changes?
Seniors (Age 65+) - BIGGEST WINNERS
Why:
- NEW $6,000 deduction per person
- Higher standard deduction already
- Many will see $2,000-$3,000 tax cuts
Action: Use the Standard Deduction Calculator to see your benefit.
Families with Children
Why:
- $200 more per child in CTC
- Better refundability
- Inflation adjustments protect value
Action: Calculate with our Child Tax Credit Calculator.
Small Business Owners
Why:
- QBI deduction made permanent
- Extended phase-in helps more businesses
- 20% deduction continues
Action: Check eligibility with QBI Calculator.
Low-Income Workers
Why:
- Bottom tax brackets got extra inflation adjustment
- EITC increased
- More of your income tax-free
Action: See your benefit with EITC Calculator.
Planning Strategies for 2026
For High Earners ($200K+)
- Watch the AMT: New lower thresholds mean more people hit AMT
- Time ISO exercises carefully: AMT implications worse in 2026
- Maximize retirement contributions: Reduce AGI to avoid phase-outs
Tool: AMT Calculator
For Retirees
- Maximize the senior deduction: $6,000 per person is substantial
- Time Roth conversions: Lower taxes make conversions attractive
- Review withholding: Adjust for new deduction amounts
Tool: Tax Withholding Calculator
For Business Owners
- Structure for QBI optimization: Entity choice matters
- Manage W-2 wages: Important for deduction above thresholds
- Consider aggregation: Multiple businesses can benefit
Tool: QBI Deduction Calculator
For Everyone
- Update W-4 withholding: Changes affect paycheck amounts
- Review your tax situation: Run calculators with new numbers
- Plan deductions strategically: Standard vs. itemized decision
Tool: Tax Withholding Calculator
State Tax Considerations
Not all states conform to federal changes:
States That May Not Conform:
- California: Often doesn't conform to federal changes
- New York: Selective conformity
- New Jersey: May modify provisions
Action: Check your state's tax website for conformity status.
What Didn't Change Under OBBBA
OBBBA did not rewrite the retirement COLA tables. Those still come from the IRS each fall. For 2026, IRS Notice 2025-67 set:
- 401(k) / 403(b) / 457 elective deferrals: $24,500 ($32,500 with the $8,000 age-50 catch-up)
- Traditional and Roth IRA: $7,500 ($8,600 with the $1,100 age-50 catch-up)
HSA and HDHP amounts are indexed separately. The estate tax exemption is $15 million and is now a permanent, inflation-indexed figure under OBBBA.
Important Dates for 2026
- January 1, 2026: New tax rules effective
- January 15, 2026: Q4 2025 estimated tax payment due
- February 2026: Start receiving W-2s and 1099s
- April 15, 2026: Tax filing deadline
- October 15, 2026: Extension deadline
Frequently Asked Questions
Do I need to do anything to get the senior deduction?
No. If you're 65+ by December 31, 2026, you automatically qualify. Just report your age on your tax return.
Will my paycheck change in 2026?
Possibly. Your employer should adjust withholding based on new tax tables. If not automatic, file a new W-4.
Should I adjust my withholding?
Use our Tax Withholding Calculator to determine if adjustments are needed.
Are these changes permanent?
Yes! The OBBBA made most provisions permanent, ending the uncertainty from the TCJA sunset.
How do I calculate my 2026 taxes?
Use our suite of free calculators:
- Federal Tax Bracket Calculator
- Standard Deduction Calculator
- Senior Deduction Calculator
- No Tax on Tips Calculator
- No Tax on Overtime Calculator
- Car Loan Interest Deduction Calculator
- WFTC Savings Estimator
- Child Tax Credit Calculator
- EITC Calculator
- QBI Deduction Calculator
- AMT Calculator
- FEIE Calculator
- Adoption Tax Credit Calculator
- FSA & Commuter Benefits Calculator
For the full Working Families Tax Cuts map, see the Working Families Tax Cuts hub. For official indexed dollar amounts, see our 2026 IRS Inflation Adjustments Guide.
Bottom Line
The 2026 tax changes under the OBBBA provide significant benefits for many taxpayers, especially seniors, families, and business owners. The key is understanding how the changes affect YOUR specific situation and planning accordingly.
Use our calculators to run your numbers and optimize your 2026 tax strategy!