One Big Beautiful Bill Act (OBBBA) - Tax Guide for 2026

If you file your own taxes, here's the good news: most of these changes work in your favor, and you don't need to do anything special to get them — they're built into the standard forms and software you'll use in early 2027.

This guide covers what's changing for tax year 2026 (the return you'll file in 2027) under the One Big Beautiful Bill Act, or "OBBBA" for short.

Quick note before we start: This is general information, not personal tax advice. Everyone's situation is a little different, so if something here seems like it could really move the needle for you, it's worth a quick check to confirm you qualify. 

Standard Deduction (Higher, and It's Permanent)

Most people take the standard deduction instead of itemizing — and it's staying generous:

What this means for you: if your itemized deductions (mortgage interest, charitable gifts, etc.) don't add up to more than these amounts, just take the standard deduction. It's simpler and it's already this good.

Bonus if you're 65 or older: you get an extra $6,000 deduction (per spouse if you're both 65+) on top of the above, through 2028. This one phases out at higher incomes, so it mostly helps middle-income retirees.

Tax Brackets (Same 7 Rates, Now Locked In)

The seven federal tax brackets are permanent: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. The top rate stays at 37% instead of jumping back up like it was scheduled to. Nothing you need to do here — your tax software will handle the math.

Child Tax Credit — Actually Went Up

If you have qualifying kids, good news: the credit didn't just "stay the same," it increased to $2,200 per child for 2026. As always, it phases out at higher incomes, and your kids need valid Social Security numbers to qualify.

No More Personal Exemptions

This one's not new for 2026, but it's now permanent: you can't claim a separate deduction just for yourself or your dependents the way filers could before 2018. That's already baked into the higher standard deduction above, so it's not really a loss — just a different way the math works now.

New: Charitable Deduction Even If You Don't Itemize

This is one of the best new perks for DIY filers who take the standard deduction. Starting in 2026, you can also deduct cash donations to charity — no itemizing required:

• Up to $1,000 if you're Single, Head of Household, or Married Filing Separately
• Up to $2,000 if you're Married Filing Jointly

If you do itemize: two changes to know about. First, your charitable deductions now have a small "floor" — you subtract 0.5% of your income before the deduction counts. Second, if you're in the top 37% bracket, your charitable deduction is capped at getting you 35 cents back per dollar donated (instead of 37 cents). Neither is a big deal for most people, but it's good to know your numbers might look slightly different than in past years.

If You Itemize and You're a High Earner

If you're in the top 37% bracket and you itemize deductions, there's a new rule: your itemized deductions are capped at delivering a 35-cent tax benefit per dollar deducted, instead of the full 37 cents. 

Bigger SALT Deduction Cap (Temporary)

If you itemize and deduct state and local taxes (income tax, property tax), the cap jumps from $10,000 to $40,000 for 2025 through 2029. This mostly helps homeowners in higher-tax states. Heads up: this reverts back down after 2029 unless Congress acts again, so don't build long-term plans around it.

Self-Employed? The QBI Deduction Is Now Permanent

If you're a freelancer, independent contractor, or small business owner, the 20% Qualified Business Income Deduction is here to stay — no more worrying about it expiring. There's also a new minimum deduction amount for smaller business owners, which helps even if your profit margins are thin.

Mortgage Interest & PMI

• The mortgage interest deduction cap stays where it's been: interest on the first $750,000 of mortgage debt ($375,000 if Married Filing Separately). Visit Publication 936 to determine how much of your interest is deductible (over $750,000 MFJ).
• New for 2026: Private mortgage insurance (PMI) and FHA mortgage insurance premiums count as deductible mortgage interest again — something that expired years ago. The catch: you have to itemize to use it, and it phases out if your income (AGI) is between $100,000 and $110,000.

AMT (Alternative Minimum Tax) — Fewer People Owe It

The income you can earn before the AMT kicks in stays high:

Translation: most regular filers will never bump into the AMT at all. Your tax software will flag it automatically if you're close.

 A Few More Changes Worth Knowing

• Tips and overtime pay: New, temporary deductions exist for qualifying tip income and overtime pay. If you earn either, it's worth checking your specific eligibility, since the rules have income limits and caps.
• Car loan interest: A new, temporary deduction may apply if you took out a loan for a U.S.-assembled vehicle.
• Casualty losses: You can now deduct losses from state-declared disasters, not just federally declared ones — helpful if your area got hit by something that didn't rise to a federal disaster declaration.
• Educators: If you itemize, there's no longer a $300 cap on deducting classroom supplies you paid for out of pocket.
• Gambling losses: You can only deduct the lesser of 90% of your losses or your total winnings — a bit less generous than before.
• 1099 forms: If you're a freelancer or side-gig worker, you'll only get a 1099-NEC or 1099-MISC if you were paid $2,000 or more (up from $600).
• Energy credits: Credits for things like solar panels and other home energy upgrades have ended for 2026. If you were planning a green home upgrade, do your homework on current incentives before assuming a tax credit applies.