Every OBBBA Tax Change at a Glance

OBBBA touched more than a dozen individual provisions. The table below is the full map: what changed, how much it’s worth, who qualifies, how long it lasts, and where to read the in-depth guide. The most important distinction to keep in mind is permanent versus temporary — the four headline deductions and the SALT increase expire, while the standard deduction, Child Tax Credit, estate exemption, QBI deduction, and the personal-exemption repeal are now permanent.

Quick Answers to the Top Questions

What are the new deductions?

There are four brand-new deductions for tips, overtime, car loan interest, and seniors, all claimed on the new Schedule 1-A. OBBBA also enhanced the SALT, charitable, and PMI deductions, and permanently repealed the personal exemption. The four headline deductions reduce taxable income whether or not you itemize.

Who qualifies?

Most working and retired taxpayers qualify for at least one new break, but each has its own income phase-out. Tips and overtime start phasing out at $150,000 (single) / $300,000 (joint); the car loan and senior deductions phase out at lower incomes. Married taxpayers generally must file jointly to claim them.

How do I claim them?

The four new deductions go on Schedule 1-A, which attaches to Form 1040. You do not have to itemize. Your W-2 (and, for some workers, Form 1099) will report the qualified amounts. See the how-to-claim section for step-by-step details.

Did the standard deduction change?

Yes. OBBBA made the larger standard deduction permanent and indexed it upward. For 2026 it is $32,200 (married filing jointly), $16,100 (single or married filing separately), and $24,150 (head of household).

Are these permanent or temporary?

Mixed. The four new deductions are temporary (2025–2028), and the SALT increase runs through 2029. The bigger standard deduction, the $2,200 Child Tax Credit, the permanent personal-exemption repeal, the $15 million estate exemption, the 20% QBI deduction, and the non-itemizer charitable deduction are permanent.

The 4 New Schedule 1-A Deductions

The “big four” are the heart of OBBBA for most households. They are claimed on a new IRS form, Schedule 1-A (Additional Deductions), which the IRS released for the 2026 filing season and which first applies to 2025 returns. The crucial feature: you can take all four whether you itemize or claim the standard deduction. One nuance worth knowing — these are claimed below the line, so they cut your taxable income but do not lower your adjusted gross income (AGI), which still governs other income-based benefits.

No tax on tips

Eligible workers can deduct up to $25,000 of qualified tips, regardless of filing status, with the benefit phasing out above $150,000 (single) or $300,000 (joint) MAGI. Tips must be reported, and tips earned in certain specified service businesses don’t qualify — a common question is whether tips still count as taxable income at all under the new 2026 tax law: they do, they’re simply offset by this new deduction. Read the full guide to claiming no tax on tips.

No tax on overtime

This deduction covers only the FLSA-required premium portion of overtime pay — the extra “half” in time-and-a-half, not your full overtime wages. The cap is $12,500 (single) or $25,000 (joint), with the same $150,000 / $300,000 phase-out as tips. See how no tax on tips and overtime works.

No tax on car loan interest

You can deduct up to $10,000 of interest on a loan for a new, personal-use vehicle with final assembly in the United States, taken out after December 31, 2024 — yes, car loan interest is deductible under OBBBA, but only under these specific conditions. Note the lower phase-out here: it begins at $100,000 (single) / $200,000 (joint) — not the $150,000 / $300,000 used for tips and overtime — and disappears entirely by $150,000 / $250,000. Used cars, leases, and refinanced pre-2025 loans don’t qualify. Read the car loan interest deduction guide.

Enhanced senior deduction

Taxpayers 65 and older can deduct an extra $6,000 each ($12,000 if both spouses qualify), on top of the existing age-65 standard deduction add-on — this is an additional deduction, not a replacement for it. It phases out starting at $75,000 (single) / $150,000 (joint) MAGI. This is a deduction, not a repeal of tax on Social Security benefits. Read the full $6,000 senior deduction guide.

The Bigger SALT Deduction ($40,400 Cap)

For years, the deduction for state and local taxes (SALT) was capped at $10,000. OBBBA quadrupled it to $40,000 for 2025, and the cap is indexed 1% higher for 2026, to $40,400 ($20,200 for married filing separately). It keeps rising 1% a year through 2029. The catch is a phase-down for high earners: for 2026, the cap is reduced by 30% of the amount your MAGI exceeds $505,000 ($252,500 if filing separately), though it never drops below the old $10,000 floor — so by roughly $606,000 of MAGI you’re back to the pre-OBBBA limit. In 2030, the cap reverts to $10,000 for everyone.

This is federal law, so it applies in every state — but its impact is concentrated. The old $10,000 cap hit hardest in high-tax states like California, New York, New Jersey, Illinois, and Connecticut, where combined state income and property taxes routinely blew past that limit. Homeowners in those states are the biggest beneficiaries of the jump to $40,400, and are the group most likely to find that itemizing now beats the standard deduction for the first time since 2017.

Because SALT is only available to itemizers, the bigger cap is a strong reason to re-run the standard-versus-itemize math for 2026. A household that was just under the old $10,000 cap may now clear the standard deduction once $40,400 of state income and property taxes are back in play. (A dedicated SALT guide is on the way.)

Standard Deduction & Tax Brackets for 2026

OBBBA made the TCJA-era tax rates permanent and locked in a larger standard deduction, then applied the normal inflation adjustment for 2026. The familiar seven federal income tax brackets (10% to 37%) remain. One change aimed at the top: starting in 2026, the value of itemized deductions is capped at 35% for filers in the 37% bracket, so each dollar deducted is worth slightly less for the highest earners.

The bigger SALT cap and the permanent standard deduction interact directly: with up to $40,400 of SALT plus mortgage interest and charitable gifts, more middle- and upper-middle-income households will find that itemizing beats the standard deduction for the first time in years. Run both numbers before you file.

Permanent Changes: Child Tax Credit, Estate Tax, QBI, AMT & the Personal Exemption

While the headline deductions sunset in 2028, several of OBBBA’s most consequential provisions are permanent.

The Child Tax Credit was increased to $2,200 per qualifying child and made permanent, with phase-outs holding at $200,000 (single) / $400,000 (joint) and inflation indexing going forward. Read the Child Tax Credit 2026 guide.

The personal exemption — suspended at $0 by the 2017 TCJA and scheduled to snap back to roughly $5,300 per person in 2026 — is now permanently repealed. In its place, taxpayers rely on the larger standard deduction described above. Personal exemptions still matter for a handful of other purposes, such as determining Child Tax Credit and head-of-household eligibility, even though the dollar amount is zero.

The estate, gift, and generation-skipping transfer (GST) exemption rose to $15 million per individual ($30 million per couple), effective January 1, 2026, and indexed for inflation from 2027 — eliminating the scheduled drop to roughly $7 million. The 40% top estate-tax rate is unchanged.

The 20% qualified business income (QBI) deduction for pass-through and self-employed owners is now permanent, as are the TCJA individual rate cuts and the higher alternative minimum tax (AMT) exemption amounts — though the AMT exemption phase-out threshold resets to 2018 levels ($500,000 single / $1 million joint, indexed from 2027) and phases out faster than before, so high earners with large itemized deductions should still check whether the AMT applies to them in 2026.

New Charitable Deduction for Non-Itemizers

Beginning in 2026, taxpayers who take the standard deduction can deduct cash gifts to public charities — up to $1,000 (single) or $2,000 (joint) — without itemizing. This permanent above-the-line deduction does not apply to gifts to donor-advised funds or private foundations, and it isn’t reduced by the new floor described below.

For those who do itemize, OBBBA added a 0.5% of AGI floor on charitable contributions starting in 2026 — the first 0.5% of your AGI in donations is no longer deductible — while making the 60%-of-AGI limit on cash gifts permanent. Top-bracket donors also feel the 35% itemized-deduction cap noted above.

ACA Health Insurance Subsidy Changes (Premium Tax Credit)

Two separate changes are colliding in 2026, and together they’re a bigger deal for marketplace (ACA/Obamacare) enrollees than almost anything else on this page.

First, the enhanced premium tax credit subsidies created by the American Rescue Plan and extended by the Inflation Reduction Act expired on December 31, 2025, and Congress did not renew them. That means 2026 marketplace coverage reverts to the older, pre-2021 rules: the 400%-of-federal-poverty-level “subsidy cliff” is back. Earn even one dollar over that line and your premium tax credit drops to zero, rather than gradually shrinking as it did from 2021 through 2025.

Second — and this is the part tied directly to OBBBA — the law eliminated the repayment caps on excess advance premium tax credits starting with the 2026 tax year (the return filed in spring 2027). Previously, if your actual income came in higher than what you estimated when you enrolled, your repayment was capped at a few hundred to a few thousand dollars, depending on income. Under OBBBA, that cap is gone: if your income ends up higher than estimated, you must repay the full excess credit, with no ceiling.

The practical takeaway: if you buy insurance through HealthCare.gov or a state exchange, estimate your 2026 income carefully — and update it with the marketplace the moment it changes. Self-employed people and anyone claiming the new tips or overtime deductions should be especially careful, since those deductions apply after MAGI is calculated for other purposes and can leave your marketplace estimate out of sync with your actual tax return.

529 Plans and Workforce Pell Grants

OBBBA didn’t just change deductions — it expanded what tax-advantaged education savings can pay for, and opened federal financial aid to a new group of students.

For 529 college savings plans, two changes matter most. Effective for withdrawals after July 4, 2025, the list of qualified K-12 expenses grew well beyond tuition to include tutoring, curriculum materials, standardized test and AP exam fees, dual-enrollment costs, and therapies for students with disabilities. Separately, starting with tax year 2026, the annual K-12 withdrawal cap doubles from $10,000 to $20,000 per student. On the higher-education side, 529 funds can now also cover postsecondary credentialing expenses — tuition, fees, books, and exam costs for registered apprenticeships and recognized certificate or licensing programs, not just traditional degrees — making the account useful for career-changers and trade-school students, not only four-year college.

Separately, the law created Workforce Pell Grants, opening federal Pell Grant aid for the first time to short-term job-training programs (roughly 8 to 15 weeks) at institutions that meet job-placement and other quality requirements. Implementation begins in the summer of 2026. This isn’t a 529 provision, but it’s part of the same push toward funding faster, non-degree paths into skilled work, and it’s worth knowing about alongside the 529 changes above.

Other Key Changes: 1099-K, Gambling Losses, Trump Accounts & PMI

The 1099-K reporting threshold was restored to the old dual test — more than $20,000 and more than 200 transactions — so most casual online sellers will receive far fewer forms (though all income remains taxable whether or not a form arrives). See the 1099-K threshold 2026 guide.

Gambling losses are tougher starting in 2026: itemizers can deduct only 90% of losses, up to winnings. A bettor who wins and loses $10,000 in the same year can deduct just $9,000, creating taxable “phantom” income even when they broke even. (A dedicated guide is planned.)

Trump Accounts are a new tax-deferred account for children under 18, with a one-time $1,000 federal seed for U.S.-citizen newborns born 2025–2028 (claimed via Form 4547). Families can contribute up to $5,000 a year. Read the Trump Accounts 2026 guide.

PMI is deductible again. From 2026, mortgage insurance premiums on acquisition debt can be treated as deductible mortgage interest for itemizers. And if you’re weighing whether a discharged balance is taxable, see whether student loan forgiveness is taxable in 2026.

Who Benefits Most (and Who Doesn’t)

OBBBA is broadly favorable, but the gains are uneven. The clearest winners are tipped and overtime workers, who can shelter a large slice of pay; homeowners in high-tax states like California, New York, New Jersey, and Illinois, who regain a meaningful SALT deduction; seniors 65 and older; buyers of new U.S.-assembled vehicles; families, through the permanent $2,200 Child Tax Credit and the bigger standard deduction; and families saving for K-12 or job-training credentials through an expanded 529 plan.

The picture is more mixed for high earners, who run into income phase-outs on nearly every new deduction, the SALT phase-down above $505,000, and the new 35% cap on itemized-deduction value. Gamblers lose ground under the 90% loss limit, ACA marketplace enrollees face the return of the subsidy cliff and uncapped repayment risk, and very high-income filers may see little from the headline breaks at all. As always, the actual effect depends on your income, filing status, and which provisions you can stack. For a wider hunt, see our checklist of tax deductions you’re probably missing and how an HSA can build tax-free wealth.

How to Claim the New Deductions on Your 2026 Return

Claiming OBBBA’s new breaks is more about paperwork than strategy, but a few steps matter:

1. Use Schedule 1-A for the big four. Tips, overtime, car loan interest, and the senior deduction all flow through Schedule 1-A to Form 1040 — no itemizing required. You complete only the parts that apply to you, after the form first figures your MAGI.
2. Check your information returns. For 2026, employers report qualified tips and overtime in dedicated W-2 boxes (the IRS added new codes for the form), and lenders report deductible car loan interest. For the 2025 transition year, the IRS allowed taxpayers to use their own records where employer reporting wasn’t yet available.
3. Re-run standard versus itemized. With the $40,400 SALT cap, itemizing may now win even if it hasn’t for years — and the four new deductions don’t change that decision, since you can take them either way.
4. Mind the SSN and joint-filing rules. Valid Social Security numbers are required, and married taxpayers generally must file jointly to claim the new deductions.
5. Watch your MAGI against each phase-out. The thresholds differ by deduction — especially the lower $100,000 / $200,000 range for car loan interest — so a single income figure can qualify you for some breaks and not others.
6. If you have ACA marketplace coverage, update your income estimate. With repayment caps gone, an outdated income estimate on HealthCare.gov can turn into a large bill at tax time.

Planning your cash flow around the refund? See the 2026 tax refund schedule.

Frequently Asked Questions

What new tax deductions are available in 2026 under OBBBA?

Four new deductions for tips (up to $25,000), overtime (up to $12,500 single / $25,000 joint), car loan interest (up to $10,000), and seniors (up to $6,000 per person), all on Schedule 1-A — plus enhanced SALT, charitable, and PMI deductions.

How does the One Big Beautiful Bill affect individual taxes for 2026?

It lowers taxable income for most households through new deductions, a larger permanent standard deduction, a $40,400 SALT cap, and a $2,200 Child Tax Credit, while adding income phase-outs, a 35% itemized-deduction cap for top earners, and a tougher premium-tax-credit repayment rule for ACA marketplace enrollees.

What changed in the Trump tax law for 2026?

OBBBA created the four Schedule 1-A deductions, quadrupled the SALT cap, made the standard deduction and Child Tax Credit permanent, permanently repealed the personal exemption, set the estate exemption at $15 million, restored the $20,000/200 1099-K threshold, limited gambling-loss deductions to 90%, and expanded 529 plans and Pell Grant eligibility.

How do I claim the new OBBBA deductions on my return?

Complete the new Schedule 1-A and attach it to Form 1040. You don’t need to itemize. Use the qualified amounts reported on your W-2 or 1099, and check each deduction’s income phase-out against your MAGI.

Did the standard deduction change for 2026?

Yes. It’s now $32,200 for married filing jointly, $16,100 for single and married filing separately, and $24,150 for head of household — higher amounts that OBBBA made permanent.

Are the new deductions permanent or temporary?

The four headline deductions are temporary (2025–2028), and the SALT increase runs through 2029. The standard deduction, Child Tax Credit, personal-exemption repeal, estate exemption, QBI deduction, and non-itemizer charitable deduction are permanent.

Is the 2026 SALT cap $40,000 or $40,400?

$40,400. OBBBA set the cap at $40,000 for 2025 and indexes it 1% higher each year through 2029, which brings 2026 to $40,400 ($20,200 married filing separately).

Who qualifies for the new SALT cap, and which states benefit most?

Any taxpayer who itemizes can use the $40,400 cap, but it phases down by 30% of MAGI above $505,000 ($252,500 if filing separately) and never falls below $10,000. The benefit is concentrated in high-tax states such as California, New York, New Jersey, Illinois, and Connecticut, where the old $10,000 cap hit hardest.

Do I have to itemize to claim tips, overtime, car loan, or senior deductions?

No. All four are claimed on Schedule 1-A and are available whether you take the standard deduction or itemize. They reduce taxable income but not your AGI.

Is the personal exemption coming back in 2026?

No. It was suspended at $0 by the 2017 TCJA and was scheduled to return in 2026; OBBBA permanently repealed it instead, so it stays at $0.

Does the OBBBA senior deduction replace the existing age-65 standard deduction add-on?

No. The new $6,000 (per person) senior deduction on Schedule 1-A is in addition to the existing extra standard deduction that taxpayers 65 and older already receive.

Can I deduct the interest on a used car loan under OBBBA?

No. The car loan interest deduction applies only to new, personal-use vehicles with final assembly in the United States, financed with a loan taken out after December 31, 2024. Used vehicles, leases, and refinanced pre-2025 loans don’t qualify.

If I break even gambling in 2026, will I still owe tax?

Potentially, yes. Because itemizers can deduct only 90% of gambling losses (up to winnings), the remaining 10% can create taxable “phantom income” even when your net result for the year was zero.

Do I have to repay my entire ACA premium tax credit if my income changes in 2026?

Possibly. Starting with the 2026 tax year, OBBBA eliminated the caps that used to limit how much excess advance premium tax credit you had to repay. If your actual income comes in higher than your marketplace estimate, you may owe back the full excess amount.

Did 529 plans change under OBBBA?

Yes. Qualified K-12 expenses expanded (tutoring, testing fees, therapies, and more) for withdrawals after July 4, 2025; the annual K-12 withdrawal cap doubles to $20,000 starting in 2026; and 529 funds can now pay for postsecondary credentialing and registered apprenticeship expenses, not just traditional degree programs.

Does OBBBA raise or lower my refund?

For most households it lowers tax and raises refunds — early 2026 IRS data showed the average refund up about 10.6% year over year (roughly $3,700 in late-February figures). Your result depends on income, filing status, and which deductions you qualify for.