Navigating the OBBBA: What You Should Know for 2026
As we dive deeper into 2026, there’s a lot of buzz around a new piece of legislation called the One Big Beautiful Bill Act, or OBBBA for short. It became law back in July 2025, but this year is when many of its changes really start to shape how people file their taxes. And while tax law doesn’t usually top anyone’s favorite‑reading list, OBBBA is something worth understanding because it affects nearly every household in one way or another.
A big part of what OBBBA does is bring some certainty back into the tax world. Many of the rules introduced in the 2017 Tax Cuts and Jobs Act were originally set to expire at the end of 2025. Instead of letting things revert to older, less favorable rules, OBBBA made several of those changes permanent. That includes keeping the larger standard deduction and maintaining the current lower tax brackets, which top out at 37 percent.
You’ll also see some adjusted numbers for 2026 thanks to inflation adjustments the IRS issued following the Act’s passage. The standard deduction is getting a bump, rising to $32,200 for married couples filing jointly, $16,100 for single filers, and $24,150 for heads of household. These increases help counter rising costs of living, and more importantly, they make it even more likely that the standard deduction will remain the simpler and more beneficial option for most taxpayers. Personal exemptions are still gone—another permanent shift under OBBBA—but the bigger deduction may fill that gap for many households.
If you enjoy giving to charity, OBBBA brings a couple of interesting twists. Starting this year, even if you don’t itemize your deductions, you can still take a small charitable deduction—up to $1,000 for individuals or $2,000 for married couples filing jointly—so long as the gifts are cash contributions to qualifying public charities. For those who do itemize, your donations still follow the usual rules, but now there’s a small floor: only the portion of your charitable giving that exceeds 0.5 percent of your adjusted gross income will count toward a deduction. It’s a subtle change, but one that may influence how you plan your giving throughout the year.
There’s also a notable update that affects higher‑income taxpayers. Until now, itemized deductions have reduced taxable income at your full marginal rate. But under OBBBA, starting in 2026, the value of those itemized deductions is capped at the 35 percent rate for the highest earners. It’s essentially a soft version of the old Pease Limitation that would have returned this year, and while it’s not as restrictive, it does change the math for people who are used to receiving a larger tax benefit from itemizing.
One of the more widely discussed updates is the expansion of the SALT deduction, which covers state and local taxes. The previous $10,000 cap has been a sore spot for many since it was introduced. OBBBA increased that cap to $40,000 starting in 2025, and that new higher limit is in full effect for 2026. The cap will continue to rise slowly each year through 2029, although it does start to phase out for higher‑income earners. Still, for many households—especially those in states with higher taxes—the new SALT limit could make a meaningful difference and might even tip the scale toward itemizing.
Beyond the headline provisions, OBBBA included several niche but potentially valuable deductions. Service workers can now deduct up to $25,000 of tip income. Individuals 65 and older get a “senior deduction” of $6,000 through 2028. And people earning qualifying overtime wages can deduct up to $12,500, or $25,000 if married filing jointly, depending on their income level.
Because of all these moving pieces, 2026 tax returns could be a bit more complicated than in previous years. But with more complexity also comes more opportunity—especially if you start thinking about your planning early rather than waiting for tax season.
The bottom line is that the OBBBA brings a mix of stability, new opportunities, and fresh considerations. Whether you benefit most from the expanded standard deduction, the SALT changes, the charitable giving updates, or one of the more specialized deductions, the key is understanding how these rules fit together for your particular situation. The more informed you are now, the smoother your 2026 filing experience will be—and the more confidently you can make decisions throughout the year.
This article was curated by Signature Wealth Concepts and is being provided for informational purposes only based on our general understanding of the subject matter. This article does not offer or constitute, and should not be relied upon, as tax, accounting, or financial advice. Your unique needs, goals and circumstances require the individualized attention of your own tax and accounting professionals whose advice and services will prevail over any information provided in this article. Equitable Advisors, LLC and its associates and affiliates do not provide tax or legal advice or services. Duly registered and licensed associates of Signature Wealth Concepts offer securities through Equitable Advisors, LLC (NY, NY 212-314-4600), member FINRA/SIPC (Equitable Financial Advisors in MI & TN), offer investment advisory products and services through Equitable Advisors, LLC, an SEC-registered investment advisor, and offer annuity and insurance products through Equitable Network, LLC (Equitable Network Insurance Agency of California, LLC; Equitable Network Insurance Agency of Utah LLC; Equitable Network of Puerto Rico, Inc.). Signature Wealth Concepts is not owned or operated by Equitable Advisors or Equitable Network. PPG-8725392.1 (01/26) (exp.01/30)
