Part 1: Individual Tax Provisions
Who’s tired of hearing about the “One Big Beautiful Bill Act” (OBBBA)? The fatigue is reasonable. After all, the bill was signed into law back on July 4, 2025—why is it still at the center of so many conversations? The reality is that changing tax law is rarely a straightforward process. For one, new tax laws do not usually take effect right away. In the case of the OBBBA, many of the new provisions kick in this year, and others may not apply until 2027 and beyond. On top of that, the IRS may take months to publish guidelines on how to apply new tax laws.
So how can you keep track of this slow rollout of changes—and figure out which ones could actually affect your tax bill? The best tactic is to outsource the analysis and planning work to a Certified Tax Planner. To better understand the scope of the changes you’re facing, read our overview of OBBBA changes that may impact individual tax returns.
If You Donate Cash to Charity
The OBBBA brings about good news and bad news for those who make charitable contributions.
First, taxpayers who claim the standard deduction and donate to charity can now enjoy a new tax benefit. The OBBBA introduced a deduction of up to $1,000 (or $2,000 for married couples filing jointly) for cash charitable contributions. This is good news for those who donate to charity but have not been eligible for a tax deduction because they cannot itemize deductions.
On the flip side, the OBBBA introduced a number of limitations for itemizers. If you itemize your deductions, you can only deduct charitable contributions up to 0.5% of your adjusted gross income (AGI). So if you earn $1 million this year, your first $5,000 in charitable contributions would be non-deductible.
In some cases, deductions that cannot be taken in the current tax year can be “carried forward” and deducted in a future year. Is that the case with charitable contributions? It depends. Because of the limitation mentioned above, you would need to qualify for carryforwards under another tax provision. Here’s an example: Under the OBBBA, deductions for cash charitable contributions cannot exceed 60% of the taxpayer’s AGI. However, this rule also allows carryforwards for up to five years. That means that you can get around the “0.5% of AGI” rule if you donate more than 60% of your income in a year—-that amount can potentially be deducted in a future year.
If You Care for a Dependent
Do you rely on employer-provided child or dependent care assistance? If so, hopefully, you are already taking advantage of the dependent care assistance exclusion, which allows you to exclude care-related expenses from your taxable income. The OBBBA has increased this benefit from $5,000 to $7,500.
A second benefit is available to help cover the cost of care while you or your spouse are actively looking for work: the child and dependent care credit. Here is the breakdown of what you can claim in 2026:
- If your AGI is $15,000 or less: Claim up to 50% of qualified expenses
- If your AGI is over $15,000: The percentage drops by 1% for each $2,000 over the threshold (not to fall below 35%)
- If your AGI is between $43,001 and $75,000: Claim up to 35% of qualified expenses
- If your AGI is between $75,001 and $105,000: Claim up to 20% of qualified expenses
If You Itemize Your Deductions
The OBBBA introduced a new limitation on itemized deductions. Now wait—you might say—wasn’t there already something called the “Pease limitation” that was supposed to kick back in this year? Yes and no.
Yes, the Pease limitation was scheduled to return in 2026 and would reduce the value of itemized deductions for higher-income taxpayers. However, under the OBBBA, the Pease limitation has been permanently terminated. Instead, the new limitation relies on marginal tax rates instead of a set income threshold. What does this look like?
- For taxpayers in the 37% income tax bracket, itemized deductions will be reduced so that the net tax reduction never exceeds 35%
- Itemized deductions will be reduced by 2/37 of the lesser of these two values:
- The total amount or itemized deductions, or
- The taxable income for that tax year that exceeds the amount at which the 37% tax bracket begins for that taxpayer
The calculation here is a little complicated, so consult your tax planner if you expect that this change might affect your deductions.
If You Would Benefit from a Health Savings Account
Do you have recurring medical expenses but find yourself ineligible to set up a health savings account (HSA)? That could change in 2026. Previously, taxpayers needed to have a high-deductible health plan (HDHP) to qualify. Now taxpayers with a bronze-level or catastrophic plan on the marketplace can access an HSA.
The OBBBA also added a benefit for taxpayers with a direct primary care service arrangement (DPCSA), which allows you to pay a doctor a monthly fee and receive services from the doctor outside of the health insurance system. DPCSA expenses now count as qualified medical expenses and can be paid for with HSA funds. If you are enrolled in a DPCSA, it is not treated as being enrolled in a health plan as long as the total fees do not exceed $150 a month (or $1,800 a year). Why does this matter? If you are enrolled in an HSA qualified plan and another health plan at the same time, you cannot make HSA contributions.
If You Get Health Insurance Through a Marketplace or Exchange
The premium tax credit helps lower the cost of health insurance purchased through a marketplace or exchange. After months of congressional debates, a number of changes were confirmed to this tax credit that significantly limit who can qualify.
Starting in 2026, taxpayers cannot claim the credit if:
- Their income is over 400% of the federal poverty line
- They are lawfully present immigrants who are ineligible for Medicaid and whose income is below 100% of the federal poverty line
- They enrolled in a plan during an income-based special enrollment period—and not because of changes in other circumstances
Additionally, there is no longer a limitation on repayments. So if you received premium tax credits that you no longer qualify for, you must repay them fully, no matter your income level.
Lastly, starting in 2027, most non-citizens will not be able to claim the premium tax credit, though there are a few exceptions for green card holders and several other groups.
Summary
Tax benefits come and tax benefits go—the key is making sure your tax plan reflects the current policies. Though the OBBBA introduced new limitations and eliminated tax breaks for some taxpayers, the new tax provisions provide ample opportunities to lower your tax bill. Familiarizing yourself with this year’s changes is only the first step. Work with a professional to determine which credits and deductions could be available to you for 2026. To get started, reach out to a Certified Tax Planner today.
