The One Big Beautiful Bill Act (OBBBA) makes significant changes to federal individual income taxes beginning with tax year 2026, affecting returns filed in 2027. Many provisions of the Tax Cuts and Jobs Act (TCJA) that were scheduled to expire after 2025 have been permanently extended, while several new deductions, limits, and tax benefits take effect for the 2026 tax year. 

This guide explains the most important 2026 tax law changes individual taxpayers should know before filing their federal income tax return.

What's Changing for Tax Year 2026?

The One Big Beautiful Bill Act:

• Permanently extends the current federal income tax rates. 
• Keeps the higher standard deduction in place. 
• Permanently eliminates personal exemptions. 
• Continues the Child Tax Credit structure established under prior law. 
• Creates a charitable deduction for taxpayers who do not itemize. 
• Makes the Qualified Business Income (QBI) deduction permanent. 
• Adds new limitations for some high-income taxpayers who itemize deductions.

2026 Standard Deduction Amounts

One of the biggest taxpayer benefits under the OBBBA is the permanent extension of the increased standard deduction. For tax year 2026, the standard deduction increases to: 

Most taxpayers claim the standard deduction rather than itemizing, making this one of the most impactful tax changes for 2026. 

Federal Tax Brackets for 2026

The OBBBA permanently extends the current federal income tax brackets, preventing the higher pre-TCJA tax rates from returning. The seven tax brackets remain: 

• 10%
• 12%
• 22%
• 24%
• 32%
• 35%
• 37%

The top tax rate remains 37% for higher-income taxpayers. 

Child Tax Credit Changes for 2026

The One Big Beautiful Bill Act permanently extends the Child Tax Credit framework created by the Tax Cuts and Jobs Act. Taxpayers with qualifying children may continue claiming this valuable tax benefit, subject to applicable IRS eligibility and income requirements. 

Personal Exemptions Remain Eliminated

Before the TCJA, taxpayers could claim personal exemptions for themselves and dependents. The OBBBA permanently removes personal exemptions from the tax code, meaning taxpayers cannot claim a personal exemption deduction in 2026 or future years. 

New Charitable Deduction for Non-Itemizers

Beginning in tax year 2026, taxpayers who take the standard deduction may also claim a deduction for eligible cash charitable donations. 

Maximum deduction amounts:

• Up to $1,000 for Single filers, Head of Household filers, and Married Filing Separately filers. 
• Up to $2,000 for Married Filing Jointly filers. 

This change allows more taxpayers to receive a tax benefit for charitable giving, even if they do not itemize deductions. 

Itemized Deduction Changes for High-Income Taxpayers

Starting with tax year 2026, taxpayers in the highest income tax bracket may be subject to a new limitation that reduces the overall tax benefit of itemized deductions. This rule replaces the former Pease limitation and primarily affects taxpayers in or near the 37% tax bracket. 

Qualified Business Income (QBI) Deduction Made Permanent

The Qualified Business Income deduction was scheduled to expire after 2025. The OBBBA permanently extends the deduction and introduces additional enhancements, including expanded phase-in ranges and a new minimum deduction for certain qualifying business owners. 

This change benefits many:

• Self-employed taxpayers
• Freelancers
• Independent contractors
• Small business owners 

Mortgage Interest Deduction Updates

The OBBBA permanently extends existing mortgage interest deduction limits. Taxpayers may generally deduct mortgage interest only on the first $750,000 of qualified acquisition debt ($375,000 for married individuals filing separately). 

Beginning in 2026, PMI and FHA mortgage insurance payments count as deductible mortgage interest.

Alternative Minimum Tax (AMT) Changes for 2026

The Alternative Minimum Tax exemption amounts remain significantly higher under the OBBBA. For tax year 2026: 

• Single taxpayers: $90,100 exemption. 
• Married Filing Jointly taxpayers: $140,200 exemption. 
• Married Filing Separately taxpayers: $70,100 exemption.

Higher exemption amounts mean fewer taxpayers will be subject to the AMT. 

Additional 2026 Tax Changes

Other notable provisions taking effect in 2026 include:

Casualty Loss Deduction Expansion

Taxpayers may deduct qualifying losses from both federally declared and state-declared disasters. Previously, this deduction only applied to federally declared disasters.

Educator Expense Deduction for Itemizers

Eligible educators may claim a new itemized deduction for qualified unreimbursed classroom and instructional expenses. The deduction is no longer limited at $300.

Gambling Loss Deduction Limitation

The deduction for gambling losses is generally limited to the lesser of 90% of wagering losses or total gambling winnings. 

Form 1099 Reporting Threshold Increase

The reporting threshold for Forms 1099-NEC and 1099-MISC increases from $600 to $2,000 beginning in 2026. 

Energy Tax Credits Ending

Several residential energy-related tax credits are no longer available for tax year 2026. 

Frequently Asked Questions

Does the One Big Beautiful Bill Act affect 2026 tax returns?

Yes. Many provisions of the law first apply to tax year 2026, which means taxpayers will see these changes when filing returns in 2027. 

Is the standard deduction increasing for 2026?

Yes. The standard deduction increases to $16,100 for Single filers, $32,200 for Married Filing Jointly filers, and $24,150 for Head of Household filers. 

Can I deduct charitable donations if I don't itemize?

Yes. Beginning in 2026, eligible taxpayers who take the standard deduction may deduct up to $1,000 ($2,000 for joint filers) of qualifying cash charitable contributions. 

Did the Child Tax Credit expire after 2025?

No. The OBBBA permanently extends the Child Tax Credit structure that was previously scheduled to expire. 

Key Takeaway

The One Big Beautiful Bill Act tax changes for 2026 permanently extend many taxpayer-friendly provisions, including lower tax rates, higher standard deductions, and the Qualified Business Income deduction. The law also introduces new rules for charitable deductions, itemized deductions, and other tax benefits that may affect your 2026 federal income tax return filed in 2027.