Advance planning works best when you understand the rules before they take effect. On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law, bringing a number of tax changes that will impact individuals, families, and business owners beginning in 2025 and 2026. Some provisions create new opportunities, while others eliminate familiar benefits. Below is a practical overview of the changes our clients should be aware of as we move toward 2026.
A Filing Change That May Surprise You
Beginning December 24, 2025, the U.S. Postal Service will no longer accept standard postmarks as proof of the mailing date for tax filings unless the envelope is hand-stamped at the post office. This means the old “April 15 postmark” strategy will no longer work unless you personally go to the post office and request a hand-stamped postmark. For many clients, electronic filing or earlier mailing will be the safer option.
Key Individual Income Tax Updates
The new law permanently extends the top individual federal income tax rate of 37 percent. Starting in 2026, the standard deduction will increase to $16,100 for single filers and $32,200 for married couples filing jointly or surviving spouses. Taxpayers age 65 and older will also receive an additional $6,000 standard deduction through 2028.
At the same time, personal exemptions and miscellaneous itemized deductions have been eliminated. The law also introduces a new deduction of up to $10,000 in interest on qualifying new car loans, which can be claimed whether you itemize or use the standard deduction. However, electric vehicle tax credits will be repealed for vehicles acquired after September 30, 2025.
There is also a change to Form 1099-K reporting. Beginning in 2025, third-party payment platforms will issue a 1099-K only when payments exceed $20,000 and involve more than 200 transactions. Even if no form is issued, taxpayers are still responsible for reporting all taxable income.
New Deductions for Wage Earners
The law introduces two new deductions designed to provide relief for working individuals.
Taxpayers may deduct up to $25,000 of qualifying tip income. Tip income is not fully tax-exempt, but this deduction provides meaningful tax relief. In addition, overtime compensation is deductible up to $12,500 for single filers and $25,000 for married couples filing jointly, subject to income phaseouts. Employees should confirm that their payroll and withholding are being handled correctly under the new rules.
Changes to Charitable Deductions
Beginning in 2026, itemized charitable cash contributions will only be deductible to the extent they exceed 0.5 percent of adjusted gross income. Contributions above applicable limits will still follow the existing carryforward rules, and the 60 percent AGI cap for cash contributions remains in place.
The law also creates a new above-the-line charitable deduction of up to $1,000 for single filers and $2,000 for married couples filing jointly. For taxpayers in the highest tax bracket, the value of charitable deductions will be capped at 35 percent.
A Major Estate Planning Opportunity
One of the most significant provisions of the OBBBA affects estate and gift taxes. Beginning January 1, 2026, the federal estate, gift, and generation-skipping transfer tax exemption will increase to $15 million per individual and $30 million for married couples. These amounts will be adjusted annually for inflation, and the generation-skipping transfer exemption will remain tied to the same threshold. Portability rules, which allow a surviving spouse to use a deceased spouse’s unused exemption, remain unchanged.
Although the law does not include a scheduled expiration, it is still subject to future legislative changes. A future Congress could reduce or repeal these exemption levels, so it is important not to assume they will remain in place indefinitely. For many families, this creates an opportunity to revisit lifetime gifting and trust planning strategies.
Updates for Business Owners and Investors
The law expands the benefits of qualified small-business stock for shares issued after July 4, 2025. It introduces a new tiered exclusion system if the five-year holding period is not met, increases the capital gains exclusion cap from $10 million to $15 million, and raises the gross assets limit from $50 million to $75 million. Shares issued before July 4, 2025, remain subject to the prior rules.
Changes to Energy Credits
The OBBBA narrows several clean-energy incentives. For wind and solar projects, construction must begin on or before July 4, 2026, to qualify under current rules. Projects starting after that date must be placed in service by the end of 2027. Other technologies, such as geothermal, nuclear, and hydrogen, have longer timelines but begin phasing out in 2034.
The deduction for energy-efficient commercial building improvements will end for construction beginning after June 30, 2026. Clean production fuel credits remain available through 2029 but with stricter eligibility requirements.
Temporary Increase to the SALT Deduction
The state and local tax deduction cap will increase from $10,000 to $40,000 for tax years 2025 through 2029. However, the benefit phases out for higher-income taxpayers beginning at $250,000 of adjusted gross income for single filers and $500,000 for married couples. Unless further legislation is passed, the cap will return to $10,000 after 2029.
What This Means for You
The One Big Beautiful Bill Act creates both opportunities and new planning challenges. Some provisions are permanent, others are temporary, and additional guidance is expected. The most important takeaway is that 2026 planning should begin now.
You may need to review your estate plan, charitable giving strategy, payroll withholding, business structure, or long-term tax planning in light of these changes. Our firm is closely monitoring these developments and helping clients evaluate their options.
If you would like to review your current plan or discuss how these changes may affect you, we are here to help.
- 2026 Taxes: What You Need to Know About the One Big Beautiful Bill Act - February 18, 2026
- Planning for the Future: What America’s 250-Year Legacy Teaches Us About Estate Planning - February 11, 2026
- A New Year, A Clear Plan: Why Now Is the Right Time to Review Your Estate Plan - January 7, 2026