On July 4, 2025, the One Big Beautiful Bill Act (OBBBA, Public Law 119-21) was signed into law. It's the most sweeping tax change since 2017. Most of what was scheduled to expire at the end of 2025 is now permanent, and a handful of new deductions and credits start applying for 2026 and beyond. Here's what's actually different on your return.
What got made permanent
- Lower individual rates and the bigger standard deduction from the 2017 law (TCJA). No 2026 snap-back to pre-2018 brackets.
- The 20% QBI deduction for sole props, S-corps, partnerships, and rentals — it was set to die Dec. 31, 2025. It now keeps going.
- 100% bonus depreciation for business equipment purchases — fully back, permanently.
- The estate-tax exemption rises to $15 million per person starting in 2026, with inflation adjustments after.
- The child tax credit is permanently bigger, with new eligibility and inflation indexing.
What's new
- Tip deduction. Tipped workers can deduct qualifying tips from federal taxable income, capped, through 2028.
- Overtime deduction. Overtime premiums get a similar above-the-line deduction.
- Car loan interest. Up to a capped amount of interest on a personal-use auto loan is deductible.
- Senior deduction. An additional above-the-line deduction for taxpayers 65+.
- "Trump Accounts." A new tax-advantaged savings vehicle for children, similar in spirit to a 529 but with broader use.
- SALT cap raised. The $10,000 state-and-local-tax deduction cap is increased (phasing back down at very high income).
What got changed or rolled back
- Energy credits from the 2022 Inflation Reduction Act are modified or phased out faster.
- R&D expensing is restored, undoing the five-year amortization rule from TCJA — small businesses can expense again.
- 1099-K threshold is back to $20,000 / 200 transactions, undoing the earlier $600 trigger.
- Health care subsidies for ACA premium credits and Medicaid eligibility were narrowed.
Why this matters for planning. Many "use it or lose it" 2025 strategies (accelerating QBI, harvesting the higher estate exemption, rushing equipment purchases for bonus depreciation) are no longer time-sensitive. But the new deductions for tips, overtime, and car loans are temporary — those are time-sensitive through 2028.
The bottom line
OBBBA removed most of the 2026 "tax cliff" everyone was planning around. The big TCJA benefits stick. New deductions add planning surface, especially for service workers, retirees, and car buyers. A Breadify membership re-runs your 2026 strategy under the new law.