So, it actually happened. After months of back-and-forth and enough "will-they-won't-they" to fill a soap opera, the new Trump tax bill—officially called the "One Big Beautiful Bill Act" (OBBBA)—is the law of the land. It was signed into law on July 4, 2025, and honestly, if you haven’t looked at your paycheck lately, you might be in for a surprise.
The big cliff everyone was worried about? It’s gone. Basically, the 2017 tax cuts were set to expire at the end of 2025, which would have meant a massive tax hike for almost everyone. This new bill made those lower rates permanent. But it didn't just stop there. It added a bunch of new stuff, like weirdly specific deductions for car loans and overtime, while quietly killing off those EV tax credits you might have been eyeing.
The "One Big Beautiful Bill" Breakdown
Let's get into the weeds. The main thing to understand is that the seven tax brackets we’ve been using since 2018 aren't going anywhere. They are permanent now. For 2026, the IRS just adjusted these for inflation, so the numbers look a little different than last year.
If you're single and making $50,000, you're sitting in the 12% bracket. If you're a high-flyer making over $640,600, you’re hitting that top 37% rate. It sounds high, but remember, without this bill, that top rate was headed back to 39.6%.
The standard deduction got a boost too. For 2026, married couples filing jointly get a $32,200 deduction. Single filers get $16,100. It’s a bit higher than the 2025 numbers ($31,500 and $15,750) because of inflation, but the OBBBA actually baked in a specific increase on top of the usual adjustments.
No Tax on Tips and Overtime?
This was the big campaign promise, right? "No Tax on Tips." Well, it’s in there, but there’s some fine print you’ve gotta see. Starting with the 2025 tax year (the returns you’re filing right now in early 2026), you can use the new Schedule 1-A to claim these.
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But here is the catch: it only applies to federal income tax. You still have to pay Social Security and Medicare taxes on those tips. Also, if you’re self-employed in a tipped trade, you're unfortunately out of luck; the law excludes you.
The "No Tax on Overtime" thing works similarly. You basically get to deduct the "extra" part of your overtime pay—the "half" in "time-and-a-half"—from your taxable income. It’s a massive win for hourly workers, but it’s technically a temporary provision that runs through 2028 unless the next Congress extends it.
The Winners and Losers of the 2026 Rules
Some people are getting a much better deal than others under this new Trump tax bill.
- Seniors: There is a new "bonus" deduction of $6,000 for anyone 65 or older. If you and your spouse are both over 65, that’s an extra $12,000 off your taxable income on top of the standard deduction.
- Parents: The Child Tax Credit (CTC) is now $2,200 per child, up from the old $2,000. It’s also finally indexed for inflation.
- Car Buyers: You can now deduct up to $10,000 in interest on a car loan. But—and it’s a big but—it only applies to "qualified passenger vehicles" and phases out if you make more than $100,000 ($200,000 for couples).
- EV Owners: This is where the "loser" category starts. The bill permanently killed the Clean Vehicle Credit. If you bought an EV after September 30, 2025, you aren't getting that $7,500 federal credit.
What happened to the SALT Cap?
If you live in a high-tax state like New York or California, you've probably spent the last eight years complaining about the $10,000 limit on State and Local Tax (SALT) deductions.
The new bill actually listened. Kinda.
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For the years 2025 through 2029, the SALT cap has been raised to $40,000. It’s a huge relief for middle-class homeowners in those states. However, it’s not for everyone. If your Modified Adjusted Gross Income (MAGI) is over $500,000, that $40,000 limit starts to phase back down.
Business Owners and the "Trump Accounts"
For the small business owners out there, the 20% pass-through deduction (Section 199A) is now permanent. This was a major point of contention during the 2025 debates. Making it permanent gives a lot of certainty to LLCs and S-corps that were worried about their tax bills spiking in 2026.
Then there is the "Trump Account." This is a brand-new type of tax-advantaged savings account for kids. The government is even tossing in a one-time $1,000 contribution for babies born between 2025 and 2028. You can contribute up to $5,000 a year, and it basically acts like a specialized IRA for minors. You’ll be able to open these at most banks starting in July 2026.
Real-World Impact: A Quick Look
To see how this actually hits a wallet, let’s look at a hypothetical couple, "The Miller family." They make $110,000 a year, have two kids, and live in a house with a car loan.
Under the old rules that were supposed to kick in for 2026, their taxes would have jumped significantly because the standard deduction would have been cut in half and their tax rates would have gone up. Instead, under the new Trump tax bill, they keep the higher standard deduction ($32,200), get $4,400 in child credits, and can likely deduct their car loan interest since they're near the income threshold.
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They are actually paying less in 2026 than they did in 2024.
Don't Miss the New Filing Deadlines
The IRS has been pretty vocal about the 2026 filing season. It officially opened on January 26, 2026. You have until April 15, 2026, to get everything in.
One thing that might trip you up is the 1099-K. Remember the drama about the $600 threshold for Venmo and PayPal? The new bill fixed that. For the 2025 tax year (the one you're filing now), you only get a 1099-K if you made over $20,000 and had more than 200 transactions. It’s a huge relief for people just selling a few things on eBay or splitting dinner tabs.
Actionable Steps for Your 2026 Taxes
Taxes are never fun, but you can't just ignore these changes. Here is what you should actually do right now:
- Check your paystub. Make sure your employer is accounting for the "No Tax on Overtime" rules if you're an hourly worker. If your withholding looks weird, talk to HR.
- Look into Trump Accounts. If you have a kid born in 2025 or early 2026, you've got $1,000 sitting on the table. Keep an eye on
trumpaccounts.govfor the official rollout in July. - Use the new Schedule 1-A. If you work in the service industry, don't just file your standard 1040. You need that specific schedule to claim the tip deduction.
- Re-evaluate your itemizing. With the SALT cap up to $40,000, you might actually benefit from itemizing again instead of taking the standard deduction, especially if you have high property taxes.
- Ditch the paper checks. The IRS is phasing out paper refund checks thanks to the "Modernizing Payments" executive order. If you want your money, set up direct deposit.
The 2026 tax landscape is basically a "greatest hits" of the 2017 law, with some new populist sweeteners thrown in. It's complicated, sure, but for most people, the fact that the "tax cliff" was avoided is the only news that really matters. Just make sure you aren't leaving money on the table by ignoring the new deductions.