Overview of Key 2026 Tax Law Updates Under OBBBA
Several provisions from the One Big Beautiful Bill Act (OBBBA), enacted in 2025, are taking effect for the 2026 tax year. While many of these OBBBA tax changes were introduced earlier, their impact becomes more noticeable as key deadlines approach.
Understanding these updates can help taxpayers plan ahead and avoid unexpected tax consequences.
OBBBA Tax Changes for Individuals
Changes that may impact personal tax planning in 2026 include:
Charitable Deduction
For Non-Itemizers
A permanent above-the-line charitable deduction for taxpayers who claim the standard deduction:
- The deduction applies only to qualified cash contributions
- Non-cash donations are not eligible
- The deduction is limited to $1,000 for single filers and $2,000 for joint filers
For Itemizers
A new 0.5% floor will apply to itemized charitable deductions, which may reduce the tax benefit of smaller donations.
Taxpayers may want to revisit their charitable giving strategies under the new rules.
Itemized Deduction Limitation for High-Income Taxpayers
Taxpayers in the 37% federal income tax bracket may see a reduced benefit from itemized deductions, as the tax benefit will generally be limited to the 35% rate.
AMT Exemption and Phaseout
AMT exemption amounts and phaseout thresholds are reduced:
- Exemption amounts are $90,100 for single filers and $140,200 for married filing jointly
- Phaseouts begin at $500,000 for single filers and $1,000,000 for joint filers, significantly lower than prior levels
Retirement Plan Catch-Up Contributions (Roth Requirement)
Higher-income participants in 401(k), 403(b), and 457(b) plans are required to make catch-up contributions as after-tax Roth contributions. For 2026, this applies to individuals with 2025 Social Security wages exceeding $150,000, with the threshold adjusted annually for inflation.
529 Plans
The annual federal withdrawal limit for 529 plans increases from $10,000 to $20,000 per beneficiary.
Section 530A Accounts (“Trump Accounts”)
New savings accounts for children, commonly referred to as “Trump accounts,” are expected to begin rollout on July 4, 2026:
- Contributions may be made annually, subject to limits
- Accounts are intended to support long-term savings for children
Additional guidance is expected to clarify eligibility, contribution limits, and reporting requirements.
Expiration of Certain Energy Credits
Several energy-related tax credits are scheduled to expire:
- Energy Efficient Home Improvement Credit (Section 25C) is not available for property placed in service after December 31, 2025
- Residential Clean Energy Credit (Section 25D) is not available for expenditures made after December 31, 2025
- Alternative Fuel Refueling Property Credit (Section 30C) is not available for property placed in service after June 30, 2026
Gambling Loss Limitations
New limitations may affect taxpayers with gambling activity:
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- Losses are limited to 90% of gambling winnings, reduced from the previous 100% limit
- Recordkeeping requirements remain critical
- All winnings remain fully taxable
These changes may result in higher taxable income for some individuals.
OBBBA Tax Changes for Businesses
Changes affecting business owners and reporting requirements include:
Qualified Business Income (QBI) Deduction
The Qualified Business Income (QBI) deduction is made permanent, and the income phase-in range is expanded:
- Phase-in range increases from $50,000 to $75,000 for single filers
- Phase-in range increases from $100,000 to $150,000 for married filing jointly
Excess Business Loss Limitation (Section 461(l))
The limitation on excess business losses applies once losses exceed certain thresholds:
- $256,000 for single filers
- $512,000 for married filing jointly
Qualified Small Business Stock (QSBS)
For stock issued after July 4, 2025, changes to QSBS rules provide expanded benefits and flexibility:
- The exclusion limit increases to the greater of $15 million (up from $10 million) or 10 times the taxpayer’s basis in the stock sold
- The corporate asset test increases from $50 million to $75 million, with future inflation adjustments, allowing companies to receive larger amounts of venture capital while maintaining QSBS eligibility
- For shareholders exiting before the five-year holding period, a new tiered system allows partial gain exclusion for shares held at least three or four years
Qualified Opportunity Zone (QOZ) Program
Changes to the Qualified Opportunity Zone program affect both existing and future investments:
- Deferred gains from prior Qualified Opportunity Fund (QOF) investments become taxable no later than December 31, 2026, even if the investment has not been sold
- Beginning in 2027, the program transitions to a permanent structure with a rolling 10-year designation process
- New investments are eligible for a five-year deferral period, with a 10% reduction in deferred gains (rather than 15%)
Energy Incentives
Certain energy-related incentives for commercial property are scheduled to expire:
- Energy Efficient Commercial Buildings (Section 179D) is not available for projects that begin construction after June 30, 2026
- Alternative Fuel Refueling Property (Section 30C) is not available for property placed in service after June 30, 2026
Increased 1099 Reporting Threshold
Changes to information reporting requirements will affect businesses and other organizations:
- The reporting threshold for Forms 1099-NEC and 1099-MISC increases from $600 to $2,000
- Fewer payments will require 1099 reporting
- Income remains taxable regardless of whether a Form 1099 is issued
Despite the higher threshold, maintaining accurate records remains important.
Standard Business Mileage Rate
The standard business mileage rate is 72.5 cents per mile, increased from 70 cents in the prior year.
2026 Planning Considerations
The OBBBA introduced a wide range of tax changes, many of which extend or modify existing provisions from prior legislation.
For 2026, the most important considerations include:
- Monitoring deadlines tied to deferred income
- Reviewing eligibility for new deductions, credits, and accounts
- Adjusting reporting and recordkeeping practices
How These OBBBA Tax Changes May Affect You
With several changes taking effect in 2026, it’s important to understand how OBBBA tax changes, new rules, thresholds, and deadlines may impact your overall tax position. A proactive approach can help you stay ahead of potential issues and take advantage of available opportunities.
If you’d like to review how these updates apply to your situation or discuss planning strategies, contact your W&D advisor at (847) 267-9600 or [email protected].
© 2026
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