You’ve probably heard the name by now. It’s hard to miss. The One, Big, Beautiful Bill (OBBB)—or as some call it, the Working Families Tax Cut—was signed into law on July 4, 2025. It’s a massive piece of legislation, Public Law 119-21, that basically overhauled the tax landscape just as the old 2017 rules were about to expire. Honestly, there’s a lot of noise out there about who actually wins and who loses.
Most people think these big beautiful bill tax changes are just a copy-paste of the old Trump tax cuts. That’s not quite right. While it does make the 2017 tax brackets permanent, it adds a bunch of new, weirdly specific deductions that you probably haven't seen on a tax form before. We’re talking about things like "no tax on tips" and even a deduction for car loan interest. It’s a lot to keep track of, especially with the IRS opening the 2026 filing season on January 26th.
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The Big Shift: What’s Actually Changing in 2026?
For starters, let’s talk about the brackets. If the OBBB hadn't passed, we’d be looking at a major tax hike right about now because the old Tax Cuts and Jobs Act (TCJA) was a "ticking clock" law. It was designed to disappear. Now, those seven tax brackets are here to stay. For the 2026 tax year, the top rate is locked in at 37% for single filers making over $640,600. On the other end, the lowest rate stays at 10% for those earning up to $12,400.
But the real story isn't just the rates; it's the standard deduction. For married couples filing jointly in 2026, that number jumps to $32,200. If you’re single, it’s $16,100. Basically, more of your money is shielded from the taxman before you even start looking for extra deductions.
The "Schedule 1-A" Crowd: Tips, Overtime, and Cars
This is where it gets interesting—and a little complicated. The IRS introduced a brand new form called Schedule 1-A. If you work a job with tips or you’re pulling massive overtime, you’re going to want to know this form very well.
- No Tax on Tips: You can now deduct up to $25,000 in qualified tip income. But there’s a catch. This phases out if your modified adjusted gross income (MAGI) hits $150,000 (or $300,000 for couples).
- Overtime Pay: Similar deal here. You can deduct the "premium" part of your overtime pay—basically the extra half in "time-and-a-half"—up to $12,500.
- Car Loan Interest: This is a weird one. You can deduct up to $10,000 in interest on a loan for a vehicle, but only if that vehicle's final assembly happened in the U.S. It’s a clear push for domestic manufacturing.
Seniors and the "Bonus" Deduction
If you're 65 or older, the big beautiful bill tax changes have a specific "thank you" for you. It’s an additional $6,000 deduction on top of the standard senior deduction you already get. Think of it as a bonus. However, if you’re a high-earner senior, you might be out of luck. This bonus starts to disappear once your income crosses $75,000 for single filers or $150,000 for joint filers.
Daniel Willing, a strategist at U.S. Bank, noted that these changes bring some much-needed certainty to estate planning too. The lifetime gift and estate tax exemption is now permanent and sitting at $15 million per person for 2026. That’s a massive number. It means wealthy families can move serious money to the next generation without the IRS taking a giant bite out of it.
The SALT Cap: A Temporary Relief?
One of the biggest points of contention in the old law was the SALT cap—the limit on how much State and Local Tax you could deduct. It was stuck at $10,000, which felt like a punch in the gut to people in high-tax states like California or New York.
The OBBB gives some breathing room here, but only for a few years. For taxpayers earning under $500,000, the SALT cap has been raised to $40,000 through 2029. If you make more than $500k, that cap starts shrinking back down toward $10,000. It’s a "middle-class" relief measure that actually helps a lot of suburban families who were previously getting squeezed.
Business Owners: QBI and Depreciation
If you run a small business or a pass-through entity (like an S-Corp or a Partnership), the news is mostly good. The Section 199A deduction, which lets you take 20% of your qualified business income right off the top, is now permanent. No more worrying about whether it’s going to expire next year.
Also, 100% bonus depreciation is back. This means if you buy a big piece of equipment for your business, you can write off the whole cost in year one rather than spreading it out over a decade. It’s a huge cash-flow booster for companies looking to expand.
The Downside: What Got Cut?
It’s not all sunshine. To pay for these cuts, the government went after the green energy credits from the previous administration. The New Clean Vehicle Credit and the Used Clean Vehicle Credit (the EV tax credits) are officially dead for any car bought after September 30, 2025.
Residential energy credits for solar panels, insulation, and heat pumps also took a hit. Most of those are expiring or have been severely limited for 2026. If you didn't get your solar panels installed by the end of 2025, you’re likely out of luck on that 30% credit.
Trump Accounts and the $1,000 Kickstart
One of the more unique parts of the big beautiful bill tax changes is the "Trump Account" program. It’s basically a new type of savings account for children. The government is promising a one-time $1,000 contribution for each eligible child.
Parents and employers can add up to $5,000 a year to these accounts. The catch is that the money is tax-deferred, and the kids can't touch it until they turn 18. It’s sort of like a Roth IRA but for kids, and with a little seed money from the feds to get it started. Enrollment starts in the summer of 2026, so you can't actually fund it quite yet.
Making Sense of the Math
Honestly, the impact of these changes depends entirely on your paycheck. The Tax Policy Center found that while the average tax cut in 2026 is about $2,900, the biggest winners are households in the 95th to 99th percentile—those making between $460,000 and $1.1 million. They’re seeing their after-tax income jump by about 4.4%.
For a middle-income family making around $100,000, the cut is more like **$1,800**. It’s still money in your pocket, but it’s not exactly "buy a new boat" money. And if you rely on programs like SNAP or Medicaid, there are some serious concerns. The bill cut about $1.1 trillion from those programs to help balance the books.
Actionable Steps to Take Now
Don't wait until April to figure this out. The rules have shifted enough that your usual "autopilot" filing might miss out on thousands of dollars.
- Check Your Car’s Origin: If you bought a car in 2025 or plan to in 2026, look at the VIN or the door sticker. If it wasn't assembled in the U.S., you can't claim that loan interest deduction.
- Track Every Tip and OT Hour: Since the "no tax on tips" and overtime deductions are capped, you need precise records. Don't just guess at the end of the year. Use an app or a logbook to separate your "base pay" from your "premium" pay.
- Consult a Pro on SALT: If you live in a high-tax state, that jump from a $10k cap to a $40k cap is massive. You might want to adjust your withholding now so you’re not giving the government an interest-free loan all year.
- Update Your Estate Plan: With the $15 million exemption now permanent, those complex "bypass trusts" might be overkill for many families. It’s time to simplify.
- Look for Schedule 1-A: When you log into your tax software this year, specifically look for the section on OBBB provisions. If the software doesn't ask you about tips, overtime, or American-made car loans, it might not be updated yet.
The 2026 filing season is going to be a bit of a scramble as the IRS and tax prep companies catch up to these changes. Get your paperwork in order early, especially if you're planning to use those new "Working Family" deductions.