If you’ve been scrolling through the news lately, you’ve probably seen a dozen different names for the same thing. Some call it the "Working Families Tax Cut." Others call it H.R. 7006. But let’s be real—most people just want to know: what is Trump’s bill, and how much of my money is it actually taking (or giving back)?
Honestly, it’s a lot to process. On July 4, 2025, President Trump signed the One Big Beautiful Bill (OBBB) into law. It wasn't just a catchy name for a rally; it’s a massive piece of legislation that effectively rewrote the rules for the 2026 tax season.
The biggest thing to understand is that this bill wasn't just about "new" ideas. It was a rescue mission for the 2017 tax cuts that were literally days away from disappearing. If this bill hadn't passed, your taxes likely would have spiked automatically on January 1st.
The Core of the One Big Beautiful Bill
The heart of the One Big Beautiful Bill is making the 2017 Tax Cuts and Jobs Act (TCJA) permanent. For years, we lived with the "sunset" hanging over our heads. Basically, the old law had an expiration date.
Trump’s new bill killed that expiration date.
Income Tax Brackets and the Standard Deduction
For the 2026 tax year, the seven federal income tax brackets we've gotten used to are staying put. You aren't going to see that sudden "rate creep" people were worried about. Even better for most folks, the standard deduction got a healthy bump.
For 2026, the numbers look like this:
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- Married filing jointly: $32,200
- Single filers: $16,100
- Head of household: $24,150
If you’re 65 or older, there’s an extra "bonus" deduction of $6,000 that runs through 2028. It's a pretty significant chunk of change that you don't have to pay taxes on.
What’s Actually New in the 2026 Tax Rules?
This is where it gets interesting. Trump’s bill didn't just copy-paste the old laws. It added some specific perks that target very specific groups of people.
No Tax on Tips and Overtime
If you work in a service job—think bartenders, servers, or hair stylists—you can now exclude up to $25,000 of your tips from federal income tax. This is huge. It applies for tax years 2025 through 2028. There’s also a new provision that excludes overtime pay from federal tax for certain hourly workers.
There are "gotchas," though. If you make over $150,000 (single) or $300,000 (joint), these benefits start to phase out. And sorry, freelancers—if you're self-employed in a tipped trade, you're currently excluded from this specific perk.
The Car Loan Interest Deduction
For the first time in a long time, you can deduct interest on a car loan. But—and this is a big but—the vehicle has to be "qualified," meaning it was assembled in the U.S. and purchased after the start of 2025. You can deduct up to $10,000 a year. It's a clear "Buy American" play baked right into the tax code.
Trump Accounts for Kids
This is a brand-new experiment. For children born between 2025 and 2028, the government "seeds" a tax-exempt account with $1,000. Parents can add up to $5,000 more per year. Once the kid hits 18, they can use that money for a house, education, or even retirement. It’s sort of like a super-charged 529 plan with a head start from the feds.
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The SALT Shake-up
If you live in a high-tax state like New York, California, or New Jersey, you've probably spent the last few years complaining about the $10,000 SALT (State and Local Tax) cap.
The One Big Beautiful Bill actually listened.
For 2025 and 2026, the SALT deduction cap has been raised to $40,000 for married couples. It’s not a permanent fix—it’s scheduled to drop back down in 2030—but for the next few years, it offers a massive relief for homeowners in those states.
Healthcare and the "Great Healthcare Plan"
Just yesterday, on January 15, 2026, the administration dropped the framework for the Great Healthcare Plan. This is the legislative follow-up to the tax bill.
The goal here is a bit different. It’s trying to handle the fact that the enhanced ACA (Obamacare) subsidies just expired. Instead of just letting premiums skyrocket, the plan proposes sending subsidy money directly to "eligible Americans" to put into Health Savings Accounts (HSAs) or FSAs.
Basically, instead of the government paying the insurance company directly, they want to give you the money to choose your own plan.
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Major Healthcare Changes to Watch:
- HSA Expansion: Starting now in 2026, all Bronze and Catastrophic health plans are HSA-compatible. This means you can use pre-tax dollars for your deductible and co-pays, which was previously a huge headache to figure out.
- Over-the-Counter Drugs: The bill pushes to make more drugs available without a prescription. The logic is that it cuts out the expensive doctor visit just to get a refill, though it does mean you'll be paying for those drugs out-of-pocket.
- Rural Health: There is a $50 billion investment (spread over five years) specifically for rural hospitals. If you live in a small town where the nearest ER is an hour away, this is the part of the bill that actually matters for your physical safety.
The Trade-Offs: What’s Being Cut?
You don't get all these tax breaks and spending without cutting something else. That’s just how the math works.
To pay for the One Big Beautiful Bill, the government is taking a hatchet to several green energy programs. The federal EV tax credit? Gone. The Residential Clean Energy Credit? It’s not allowed for any work done after December 31, 2025.
There are also significant cuts to the SNAP program (food stamps)—about 20% over the next decade. Work requirements have been tightened, now covering adults up to age 64.
Tariffs: The "Invisible" Tax
You can't talk about Trump’s bill without talking about the tariffs that often move alongside it via executive action.
The Tax Policy Center estimates that by the end of 2026, the average tariff rate on all imported goods will hit about 21%. For the average household, this acts like an "indirect" tax of about $2,100 per year. You don't see it on your IRS form, but you see it at the grocery store and the car dealership.
Currently, there are 25% tariffs on things like kitchen cabinets and upholstered furniture. While a planned increase to 30% was delayed this month, the existing costs are baked into the prices you're seeing in showrooms right now.
Actionable Steps for the 2026 Tax Season
Knowing what the bill is doesn't help if you don't change your behavior to match the new rules. Here is what you should actually do:
- Check your W-4: If you're a tipped worker or you clock heavy overtime, you need to adjust your withholdings immediately. You don't want the IRS holding onto money that is now legally tax-free.
- Open an HSA: If you are on a Bronze or Catastrophic plan, 2026 is the year to open a Health Savings Account. It’s the single best way to lower your taxable income while covering medical costs.
- Document your car purchase: If you bought a U.S.-assembled car recently, dig up those papers. That $10,000 interest deduction is a "low-hanging fruit" for your next return.
- Review your 1099-K: Good news for side-hustlers—the reporting threshold was moved back up to $20,000 and 200 transactions. You won't get a form for that $600 sofa you sold on Facebook Marketplace anymore.
- Apply for the "Trump Account": If you have a newborn in 2026, don't leave that $1,000 on the table. The registration process is handled through the Social Security Administration during the birth registration process.
The OBBB is a massive shift toward "America First" economics, favoring domestic manufacturing and service-sector workers while pulling back on environmental incentives. Whether you love the policy or hate it, the 2026 tax landscape is officially different.