tax update for tax season 2026 (2025 tax year)
when are tax returns due for year 2025 in 2026?
1065, FTB 565, 1120S FTB 100S any 2 member+ LLC all due 3.15.26
time limit to form 1120S for 2025 3.15.26
individual 1040 FTB 540 4.15.26
C-Corp due 4.15.2026
990 990N non-profit due 5.15.26
C-Corp Fiscal year due 15th day of the 4th month after the close of the tax year
Non-profit fiscal year due 15th day of 5th month after close of tax year
1041 Trust and Estate returns due 4.15.26 Fiscal trust and estate returns due 15th day of 4th month following close of tax year
706 gift tax return due 9 months after decedents death
The One Big, Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025, and with it comes many new tax provisions that may directly affect you. There are many tax provisions contained in OBBBA beyond the ones we have highlighted here.
Extension of expiring tax provisions
The center point of OBBBA is a permanent extension of most of the provisions of the Tax Cuts and Jobs Act of 2017 that apply to individual taxpayers and were scheduled to expire at the end of 2025. These provisions include, among others:
The itemized deduction for state and local taxes (SALT) is temporarily increased from $10,000 to $40,000 for five years. The increased deduction is reduced for higher earners. Taxpayers who are owners of passthrough business entities and make a passthrough entity elective tax election can still use the election to maximize their SALT deductions.
Itemized deductions and alternative minimum taxes
There are new limits on itemized deductions. The alternative minimum tax is reinstated, which will require planning going forward to minimize future tax increases.
Charitable contribution deductions
Charitable contributions are subject to three new OBBBA provisions:
Three brand new deductions for individual taxpayers are available starting in 2025. These deductions may be known better by what they’ve been called in the news: No tax on tips, no tax on overtime, and no tax on qualified car loan interest. For each of these items, new income tax deductions are available for taxpayers who receive certain tip income, are paid overtime by their employers, and who incur interest on the purchase of a new vehicle assembled in the United States. Each of these provisions contains multiple limitations that we should discuss if any of these potentially apply to you.
Disaster relief
Taxpayers impacted by federally declared disasters in 2025 may qualify for additional tax relief.
Energy credits going away
OBBBA repeals many energy credits, including all three clean vehicle credits for vehicles acquired after September 30, 2025. Additionally, both of the energy credits available to homeowners who make certain energy efficient improvements or install solar property, home batteries, and heat pumps, among other items are no longer available after December 31, 2025.
Business provisions
In addition to the tax provisions applicable for individual taxpayers, OBBBA contains many business provisions, including:
Highlights of Key OBBBA Provisions
Topic Provision Individual tax provisions timeline
TCJA revised tax rates and brackets Makes TCJA changes permanent
Increase TCJA standard deduction amounts to $31,500 (MFJ/SS);
$23,625 (HOH), and $15,750 (Single/MFS) beginning with 2025 tax
year and permanently repeal personal exemptions, other than the
senior deduction discussed below
Personal exemption deduction for seniors Allows for a personal exemption deduction of up to $6,000 for
seniors (age 65 and up) for 2025 through 2028 tax years that begins
to phase out when the taxpayer’s modified AGI exceeds $75,000
($150,000 MFJ)
Itemized deduction phase-outs Caps the benefit of itemized deductions for taxpayers in the 37%
bracket at 35%, effective beginning with the 2026 taxable year
AMT exemption amounts and phaseouts The TCJA’s increased exemption and phaseout amounts are generally made permanent, but, beginning with the 2026 tax year,
the exemption phaseout amount for MFJ and surviving spouse
filers reverts back to the 2018 $1 million threshold and the rate at
which the exemption is phased out is doubled from 25% to 50%
SALT limitation Increases the SALT deduction to $40,000 for the 2025 tax year and
increases it by 1% through the 2029 tax year. Reverts back to
$10,000 after 2029. No changes to passthrough entity tax treatment
Disaster relief Retroactively extends the enhanced personal casualty loss
deductions available for federal disasters declared prior to
September 2, 2025, if the disaster incident period ends by August 3,
2025. This means non-itemizers can claim a qualified disaster loss
and the 10% AGI threshold is waived.
In addition, personal casualty losses can be claimed for Statedeclared
disasters beginning with the 2026 taxable year
Charitable contributions deduction Makes the following changes:
• Allows non-itemizers to claim charitable deductions of up to
$1,000 ($2,000 MFJ);
• Permanently extends the 60% deduction for cash contributions; and
• Imposes a 0.5% floor for individuals who itemize
Excess business loss limitation for nonitemizers
Permanently extends the excess business loss limitation
Credit (CTC) and Other
Dependent Credit
Increases the CTC to $2,200 beginning with the 2025 tax year and
provides for inflation adjustments thereafter.
Social Security number required for child(ren) and one parent for
purposes of CTC
No tax on tips Provides an above-the-line deduction of up to $25,000 for cash tips
provided voluntarily to taxpayers in an “occupation that
traditionally and customarily receive tips” (to be determined by
Treasury Secretary) for the 2025 through 2028 tax years and that
are reported to the IRS on a W-2 or 1099. Deduction begins to
phase out for taxpayers with modified AGI of $150,000 ($300,000
MFJ)
No tax on overtime Allows an above-the-line deduction for overtime pay of up to
$12,500 ($25,000 MFJ) that begins to phase out for taxpayers with
modified AGI above $150,000 ($300,000 MFJ)
No tax on qualified car loan interest Allows an above-the line deduction of up to $10,000 for qualified
passenger vehicle interest paid during the 2025 through 2028 tax
years on loans incurred (including refinancing) after 2024.
Deduction phases out for taxpayers with modified AGI above
$100,000 ($200,000 MFJ)
Student loan interest Permanently extends COD exclusion for student loans forgiven
due to student’s death or disability. American Rescue Plan Act full
exclusion of student loan forgiveness sunsets at end of 2025 tax year
Other TCJA individual provisions such as:
• $750,000 mortgage interest deduction
cap;
• Suspension of 2% miscellaneous
itemized deductions;
• Personal casualty losses limited to
casualty gains, except for federal
disasters;
• Increased AMT exemption and phaseout
thresholds;
• Elimination of moving expense
deduction other than for military; and
• Limiting professional gambler’s losses
These provisions are permanently extended with modifications
that:
• Treat mortgage insurance premiums as acquisition
indebtedness for purposes of the $750,000 mortgage interest
deduction;
• Exclude educator expenses from the definition of 2%
miscellaneous itemized deductions; and
• Beginning with the 2026 tax year, limit gambling losses to 90%
of losses incurred up to the amount of any gambling gains
IRC §199A qualified business income
Deduction
Makes the 20% deduction permanent, increases the phase-out
range by $25,000 ($50,000 for MFJ), and provides a minimum $400
deduction for small business owners
IRC §1202 qualified small business stock
exclusion
Allows partial exclusion for stock held less than five years (50% if
held three years and 75% if held four years), increases the gain cap
from $10 million to $15 million, and increases the small business
asset test from $50 million to $75 million
IRC §529 plans Allows tax-free distributions for:
• Qualified credential program expenses; and
• Additional expenses associated with primary and secondary
education
Trump accounts Establishes new IRA-like savings vehicle called “Trump accounts”
for children born in 2025 through 2028 to be seeded with $1,000
contribution from the federal government if parents elect to have
an account established. Thereafter, parents can make after-tax
contributions of up to $5,000 per year
Credit for contributions to scholarshipgranting
organizations
Effective beginning with the 2027 tax year, provides for a credit of
up to $1,700 to scholarship-granting organizations that provide
scholarships for children to attend public, private, or religious
schools in the organization’s state. The credit is in lieu of an IRC
§170 charitable contributions deduction. States would have to
voluntarily choose to provide a list of qualifying scholarship
granting organizations in their state
Estate and gift tax exclusion Resets the unified exclusion at $15 million per taxpayer and adjusts for inflation beginning with 2026 tax year
Business tax provisions
Bonus depreciation generally Permanently extends the 100% bonus depreciation for property
acquired after January 19, 2025, and allows election for lower
percentages for property placed in service during the first taxable
year ending after January 19, 2025
Bonus depreciation for qualified production
property
Creates a new class of 100% bonus-eligible property for
nonresidential real property in the U.S. used in manufacturing,
agricultural or chemical production, or certain refining operations
if construction begins after January 19, 2025, and before January 1,
2029, and is placed in service after July 4, 2025, and before January
1, 2031
IRC §179 expensing Permanently increases the IRC §179 expense limitation to $2.5
million and the phaseout threshold to $4 million, applicable to
property placed in service in taxable years beginning after 2024,
and adjusted for inflation beginning with the 2026 tax year
Research expenditures Permanently reinstates current expensing for domestic IRC §174
expenditures beginning with the 2025 taxable year and applies the
changes retroactively to the 2022 tax year for small taxpayers. Other
taxpayers can elect to accelerate remaining deductions for expenses
incurred during the 2022 through 2024 tax years over a one- to two-year
period
Business interest limitation Permanently reinstates the exclusion of depreciation, amortization,
and depletion deductions for purposes of the adjusted taxable
income limitation beginning with the 2025 taxable year
Charitable contributions deduction Corporate charitable deductions are subject to a 1% floor,
applicable to taxable years beginning after December 31, 2025
Employee Retention Credit Disallows claims for credit or refunds for wages paid after June 30,
2025, if the claims have not processed by July 4, 2025
Employer-Provided Child Care Credit Increases the credit percentage from 25% to 40% and increases the
cap from $150,000 to $500,000 (600,000 for eligible small
businesses), effective for amounts paid after 2025
Paid Family and Medical Leave (PFML)
Credit
Permanently extends the credit and allows taxpayers to elect to
base the credit on PFML insurance premiums paid rather than
qualifying wages paid
Energy credits and incentives
IRC §25E Previously Owned Clean Vehicle
Credit
Repealed for vehicles acquired after September 30, 2025
IRC §30D Clean Vehicle Credit Repealed for vehicles acquired after September 30, 2025
IRC §45W Qualified Commercial Clean
Vehicle Credit
Repealed for vehicles acquired after September 30, 2025
IRC §30C Alternative Fuel Vehicle
Refueling Property Credit
Repealed for property placed in service after June 30, 2026
IRC §25C Energy Efficient Home
Improvement Credit
Repealed for property placed in service after December 31, 2025
IRC §25D Residential Clean Energy Credit
(aka Home Solar Credit)
Repealed for expenditures made after December 31, 2025
(continued
Energy credits and incentives (continued)
IRC §45L New Energy Efficient Home
Credit
Repealed for homes acquired after June 30, 2026
IRC §45E Clean Electricity Investment
Credit and IRC §45Y Clean Electricity
Production Credit
Applicable to facilities for which construction begins after July 4,
2026, the credits are repealed for wind and solar technology for
facilities placed in service after 2027. This means the post-2027
repeal date does not apply if the construction of the facility begins
no later than July 4, 2026. However, the early termination does not
apply to energy storage technology for purposes of the IRC §48E
Investment Credit.
In addition, the OBBBA tightens restrictions regarding sourcing
supplies from foreign entities of concern for facilities that begin
construction after December 31, 2025. Finally, the credit is no
longer available to taxpayers who lease the property to a thirdparty,
applicable to taxable years beginning after July 4, 2025
(OBBBA §70502; IRC §30D(h))
Information Reporting Requirements
1099-K reporting thresholds Increases the Form 1099-K threshold to $20,000 and more than 200 transactions
1099-NEC and 1099-MISC thresholds Increases other information reporting thresholds (1099-NEC, 1099-
MISC, etc.) to $2,000 from $600 and adjusts the threshold for
inflation after 2026
Retroactive to 2022 calendar year
Third-party settlement organizations don’t have to issue Forms 1099-K to
a taxpayer unless the taxpayer earned more than $20,000 and had more
than 200 separate transactions during the calendar year
OBBBA §70432; IRC
§6050W(e)
TCJA provisions made permanent for post-2025 taxable years
Individual rates, standard and exemption deductions, AMT
TCJA tax rates and brackets made permanent
OBBBA §70101; IRC §1(j)
Increased standard deduction amounts (with minor modification) OBBBA §70102; IRC §63(c)(7)
Increased AMT exemption amounts, including its annual inflation
adjustments (except as noted below)
OBBBA §70107; IRC §55(d)
Itemized deductions
Charitable contribution 60% cap for cash contributions OBBBA §70425(b); IRC
§170(b)(1)(G)
The $750,000 ($375,000 MFS) cap on qualified residence mortgage interest
deduction and the elimination of the interest deduction for home equity
debt
OBBBA §70108; IRC
§163(h)(3)(F)
Gambling loss limitations OBBBA §70114; IRC §165(d)
§199A qualified business income
20% IRC §199A qualified business income deduction OBBBA §70105; IRC §199A
Exclusions from gross income
COD exclusion for student loan forgiveness due to the student’s death or
Disability OBBBA §70119; IRC §108(f)(5)
Expansion of the $5,250 educational assistance program exclusion to
include an employer’s payment on an employee’s student loan
OBBBA §70412; IRC
§127(c)(1)(B)
Tax relief for certain military service members
Combat zone tax relief expanded to apply to military members serving in
a “qualified hazardous duty area”
OBBBA §70118; P.L. 115-97
§11026
Other TCJA extenders for individuals
Elimination of 2% miscellaneous itemized deductions OBBBA §70110(a); IRC §67(g)
Personal casualty losses limited to individual’s personal casualty gains,
except for losses attributable to federally declared disasters
OBBBA §70109; IRC
§163(h)(5)
Excess business loss limitation for noncorporate taxpayers OBBBA §70601; IRC §461(l)
Elimination of the deduction for moving expenses and moving expense
reimbursement exclusion (except for active-duty military)
OBBBA §70113; IRC §§132(g),
217(k)
(continued)
Authorizing beneficiaries who are working to contribute additional
amounts to their ABLE accounts
OBBBA §70115; IRC
§529A(b)(2)(B)
Nontaxable rollovers allowed from §529 accounts to ABLE accounts
provided certain conditions are met
OBBBA §70117; IRC
§529(c)(3)(C)(i)(III)
Elimination of the qualified bicycle commuting reimbursement exclusion OBBBA §70112; IRC §132(f)
Individual non–energy-related credits
Increased Child Tax Credit and Other Dependent Credit (other changes
noted below)
OBBBA §70104; IRC §24(h)
Estate and gift tax exclusion
Permanently increases the uniform estate and gift tax exclusion and
generation-skipping transfer tax exemption to $15 million per taxpayer
with inflation adjustments, applicable to estates of decedents dying and
gifts made after December 31, 2025
OBBBA §70106; IRC
§2010(c)(3)
Permanently extends the IRC §45S Paid Family and Medical Leave Credit OBBBA §70304; IRC §45S
Effective September 30, 2025
Energy credits and incentives
Previously Owned Clean Vehicle Credit repealed for vehicles acquired
after September 30, 2025
OBBBA §70501; IRC §25E(g)
Clean Vehicle Credit repealed for vehicles acquired after September 30,
2025
OBBBA §70502; IRC §30D(h)
Qualified Commercial Clean Vehicle Credit repealed for vehicles acquired
after September 30, 2025
OBBBA §70503; IRC §45W(g)
Effective beginning with the 2025 taxable year
Individual rates, standard and exemption deductions, AMT
Increase in standard deduction amount OBBBA §70102; IRC §63(c)(7)
Senior personal exemption deduction of $6,000 per spouse age 65+(only
available for 2025 through 2028 taxable years)
OBBBA §70103(a)(3); IRC
§151(d)(5)(C)
Itemized deductions
SALT limitation increased to $40,000 and increases 1% per year through
the 2029 taxable year; reverts to $10,000 ($5,000 MFS) beginning with the
2030 taxable year
OBBBA §70120; IRC
§164(b)(6))
Extension of TCDTRA and FDTRA disaster relief provisions for disasters
declared prior to 9/2/25 for specified incidents. Casualty losses that fall
within the extended period:
• The 10% floor on net casualty losses is not applicable;
• The $100 limit per casualty is increased to $500; and
• Taxpayers can claim the personal casualty loss deduction even if they
use the standard deduction
OBBBA §70438
New above-the-line deductions
“No tax” on tips deduction (capped at $25,000), for the 2025 through 2028
taxable years
OBBBA §70201; IRC
§§63(b)(5), 224
“No tax” on overtime deduction (capped at $12,500 ($25,000 MFJ)), for the
2025 through 2028 tax years
OBBBA §70202; IRC
§§63(b)(6), 225
Above-the-line deduction for interest on post-2024 qualified passenger
vehicle loans, for the 2025 through 2028 taxable years
OBBBA §70203; IRC
§§63(b)(7), 163(h)(4)
Exclusions from gross income
Applicable to taxable years beginning after July 4, 2025, the IRC §1202
qualified small business stock exclusion is expanded by:
• Applying a new tiered exclusion to qualified stock acquired after July
4, 2025, and held for at least three years; and
• The $10 million gain cap is increased to $15 million ($7.5 million MFS)
The $50 million gross asset test for a business to be considered a qualified
small business is also increased to $75 million for stock issued after July 4,
2025
OBBBA §70431; IRC §1202
Education-related tax provisions
Applicable to distributions made after July 4, 2025, tax-free distributions
from §529 accounts can be made to cover additional K-12 expenses beyond
tuitions costs and qualified postsecondary credentialing expenses
OBBBA §70413, 70414; IRC
§529(c)(7) and(f)(1)
Individual non–energy-related credits
TCJA $2,000 Child Tax Credit further increased to $2,200; Social Security
number required for taxpayer filing the return in addition to the child’s
SSN
OBBBA §70104; IRC §24(h)
Up to $5,000 of the Adoption Credit made refundable and allows Indian
tribal government to determine whether a child is a special needs child
eligible for an increased credit
OBBBA §§70402, 70403; IRC
§23
Energy credits and incentives
Repeals the five-year recovery period for energy property applicable to
property the construction of which begins after December 31, 2024
OBBBA §70509; IRC
§168(e)(3)(B)(vi)
Business provisions
Extends 100% bonus depreciation permanently for property acquired after
January 19, 2025 (with option to elect 40% bonus depreciation in first
taxable year after January 19, 2025)
OBBBA §70301; IRC
§168(k)(10)
(continued)
No longer allows millionaires to claim unemployment benefits OBBBA §73001
Effective June 30, 2026
Energy credits and incentives
Alternative Fuel Vehicle Refueling Property Credit repealed for property
placed in service after June 30, 2026
OBBBA §70504; IRC §30C(i)
Energy Efficient Commercial Buildings Deduction repealed with respect to
property the construction of which begins after June 30, 2026
OBBBA §70507; IRC §179D(i)
New Energy Efficient Home Credit repealed for homes acquired after June
30, 2026
OBBBA §70508; IRC §45L(h)
Effective beginning with the 2026 taxable year
Individual rates, standard and exemption deductions, AMT
Resets the AMT exemption amount for MFJ and surviving spouse filers
back to its $1 million 2018 amount and increases the exemption phaseout
rate for all taxpayers from 25% to 50%
OBBBA §70107; IRC §55(d)
New above-the-line-deductions
Members of the intelligence community may deduct moving expenses and
exclude moving expense reimbursements
OBBBA §70113; IRC §§132(g),
217(k)
Itemized deductions
Imposes a 0.5% AGI floor on the charitable contribution deduction for
individual itemizers OBBBA §70425; IRC §170(b)(I)
Charitable contribution deduction for non-itemizers of up to $1,000 ($2,000
MFJ) for cash contributions made to charitable organizations for the 2025
through 2028 tax years
OBBBA §70424; IRC §170(p)
Charitable contribution deduction available to whaling captains for
subsistence bowhead whale hunting activities sanctioned by the Alaska
Eskimo Whaling Commission is increased from $10,000 to $50,000
OBBBA §70429; IRC
§170(n)(1)
Personal casualty losses attributable to a state-declared disaster may be
claimed in addition to losses attributable to federally declared disasters
OBBBA §70109(b); IRC
§165(h)(5)
Mortgage insurance premiums treated as deductible mortgage interest OBBBA §70108; IRC
§163(h)(3)(F)
Educator expenses treated as non-2% miscellaneous itemized deductions
with additional educators and items eligible for deduction
OBBBA §70110; IRC
§67(b)(13) and (g)
Gambling losses that may be deducted are limited to 90% of the losses
incurred but only to the extent of the gains from such transactions during
the taxable year
OBBBA §70114; IRC §165(d)
Revised limitation on itemized deductions reinstated that caps the benefit
of itemized deductions for taxpayers in the 37% bracket at 35%
OBBBA §70111; IRC §68
IRC §199A:
• Phase out ranges for purposes of computing the §199A deduction is
increased from $50,000 ($100,000 MFJ) to $75,000 ($150,000 MFJ); and
• New, inflation-adjusted, minimum deduction of $400 for qualified
small businesses
OBBBA §70105; IRC §199A
Exclusions from gross income
Expanded COD exclusion enacted by the American Rescue Plan Act
sunsets (this provision was scheduled to expire under pre-OBBBA law and
was not addressed in OBBBA, so is expiring as scheduled)
OBBBA §70119; IRC §108(f)(5)
Increases the $5,000 ($2,500 for MFS) exclusion of employer-provided
dependent care assistance to $7,500 ($3,750 for MFS)
OBBBA §70404; IRC
§129(a)(2)(A)
Tax relief for certain military service members
Expands available tax relief for military service members by including
additional areas in the definition of a qualified hazardous duty area
OBBBA §70118; P.L. 115-97
§11026
Trump Accounts
Creates IRA-like Trump Accounts for children under age 18 that will be
funded with $1,000 in federal government seed money
OBBBA §70204; IRC §530A
Excludes up to $2,500 of employer contributions to a Trump Account on
behalf of their employee or employee’s dependent
OBBBA §70204(b); IRC §128
Education-related tax expenses
Increases the $10,000 limit for tax-free withdrawals from §529 accounts for
primary and secondary school expenses to $20,000
OBBBA §70413(b); IRC
§529(e)(3)
Individual non–energy-related credits
$2,200 Child Tax Credit increased for inflation annually OBBBA §70104(c); IRC §24(i)
Increases the Child and Dependent Care Credit from a maximum of 35%
to 50% of eligible costs, with an accelerated phasedown of the credit for
taxpayers with AGI in excess of $75,000 ($150,000 MFJ)
OBBBA §70405; IRC §21(a)
Requires taxpayers to provide their and their child’s Social Security
number to claim the American Opportunity and Lifetime Learning Credits
and the school’s EIN to claim the American Opportunity Credit
OBBBA §70606; IRC
§25A(g)(1)
American Rescue Plan Act subsidies sunset, meaning taxpayers above
400% of the federal poverty line (FPL) no longer eligible for the Premium
Tax Credit and others below 400% must pay increased premiums (this
provision was scheduled to expire under pre-OBBBA law and was not
addressed in OBBBA, so is expiring as scheduled)
IRC §36B(3)(A)
Recapture amount of excess advance Premium Tax Credits no longer
limited for taxpayers whose household income is below 400% of the
federal poverty line
OBBBA §71305; IRC
§36B(f)(2)
Lawfully present aliens who are ineligible for Medicaid due to their alien
status are no longer eligible for the Premium Tax Credit
OBBBA §71302; IRC
§36B(c)(1)
Permanently extends the ability of ABLE account beneficiaries to qualify
for the Saver’s Credit for contributions made to their ABLE account
OBBBA §70116; IRC
§25B(d)(1)
Energy credits and incentives
Repeals Energy Efficient Home Improvement Credit for property placed
in service after December 31, 2025
OBBBA §70505; IRC §25C(h)
Repeals Residential Clean Energy Credit (aka Home Solar Credit) with
respect to any expenditures made after December 31, 2025
OBBBA §70506; IRC §25D(h)
Business provisions
Adjusts annually for inflation the maximum IRC §179 deduction of $2.5
million and the phaseout threshold amount of $4 million
OBBBA §70306; IRC §179
De minimis employee meals and meals provided for the convenience of the
employer are no longer deductible except for meals provided for the
convenience of the employer for crews of certain commercial vessels, oil
platform/drilling rig workers, and crews of certain fishing vessels and
processing facilities, which will continue to be 50% deductible
OBBBA §70305; IRC §274(n)
and (o)
Subjects corporate taxpayers to a 1% floor for charitable contributions OBBBA §70426; IRC
§170(b)(2)(A)
Provides that the business interest expense limitation is calculated prior to
the application of any interest capitalization provision
OBBBA §70341; IRC §163(j)
Allows employers to compute the Paid Family and Medical Leave Credit
based on insurance premiums paid rather than the amount of wages paid
to employees during their covered leave
OBBBA §70304; IRC §45S
Increases the Employer-Provided Child Care Credit from 25% to 40% (50%
for eligible small businesses) of the employer’s qualified child care
expenditures and increases the cap from $150,000 to $500,000 ($600,000 for
eligible small employers)
OBBBA §70401; IRC §45F
Permanently increases the state credit allocation by 12% to fund the 9%
credit and lowers the bond-financing threshold from 50% to 25% for the
4% credit
OBBBA §70422; IRC §42
Permanently extends the New Markets Tax Credit OBBBA §70423; IRC §45D
Miscellaneous
Increases the REIT asset test 20% limit to 25% OBBBA §70439; IRC
§856(c)(4)(B)(ii)
Effective beginning with the 2027 taxable year
Exclusions from gross income
Annual inflation adjustments applied to increased $15 million qualified
small business stock gain cap and the increased $75 million small business
gross asset test
OBBBA §70431(b) and (c);
IRC §1202(b)(1) and (d)(1)
The $5,250 employer education assistance exclusion cap increased for
inflation
OBBBA §70412(b); IRC
§127(d)
Education-related tax provisions
Applicable to taxable years ending after December 31, 2026, U.S. citizens
or residents may claim a nonrefundable charitable contribution credit of
up to $1,700 for qualified contributions of cash to a scholarship-granting
organization
OBBBA §70411; IRC §25F
For amounts received after December 31, 2026, individual taxpayers may
exclude scholarships provided to eligible K-12 student dependents by a
scholarship-granting organization
OBBBA §70411(b); IRC §139K
Individual non–energy-related credits
Premium Tax Credit is no longer available to individuals who are lawfully
present in the U.S. unless they are “eligible aliens”
OBBBA 71301(a); IRC
§36B(e)(1)
Repeals the SECURE 2.0 Saver’s Credit provision that would have
replaced the credit with a government matching program, but limits the
credit to only apply to amounts contributed by ABLE account beneficiaries
to their ABLE account and increases the maximum contribution base from
$2,000 to $2,100
OBBBA §70116; IRC
§25B(d)(1)
Qualified Opportunity Zone tax incentives
Numerous changes to the QOZ program, including:
• Election to defer the gain is available indefinitely and applies to
property sold after December 31, 2026;
• Date by which deferred gain must be recognized;
• Amount of gain that must be included when gain is recognized;
• Partial step-up in basis for investments held at least five years is 10%
(30% if invested in a qualified rural opportunity fund); and
• If property is held for at least 30 years, only the post-acquisition gain
from the first 30 years of investment is excluded
OBBBA §70421(c); IRC
§1400Z-2
Annual credit cap for the Employer-Provided Child Care Credit adjusted
annually for inflation
OBBBA §70401; IRC §45F
Effective beginning with the 2028 taxable year
Trump Accounts
The $5,000 aggregate annual contribution limit for Trump Accounts and
$2,500 employer contribution exclusion limit will be adjusted annually for
inflation
OBBBA §70204; IRC §128,
§530A
Individual non–energy-related credits
Imposes pre-enrollment verification requirements for taxpayers to
participate in a plan through a health exchange to receive any Advanced
Premium Tax Credit
OBBBA §71303; IRC §36B
§48E Clean Electricity Investment Credit and IRC §45Y Clean
Electricity Production Credit are repealed for wind and solar technology
for facilities placed in service after 2027, applicable only to facilities for
which construction begins after July 4, 2026. Repeal does not apply to
energy storage technology for purposes of IRC §48E credit
OBBBA §§70512, 70513; IRC
§§45Y, 48E
Effective beginning with the 2029 taxable year
Individual rates, standard and exemption deductions, AMT
$6,000 senior exemption deduction sunsets OBBBA §70103(a)(3); IRC
§151(d)(5)(C)
Itemized deductions
$1,000 ($2,000 MFJ) charitable contribution deduction for nonitemizers
sunsets
OBBBA §70424; IRC §170(p)
New above-the-line deductions
No tax on tips deduction sunsets OBBBA §70201; IRC
§§63(b)(5), 224
No tax on overtime sunsets OBBBA §70202; IRC
§§63(b)(6), 225
Interest deduction on qualified passenger vehicle loans sunsets OBBBA §70203; IRC
§§63(b)(7), 163(h)(4)
Effective beginning with the 2030 taxable year
Itemized deductions
SALT limitation reverts to $10,000 ($5,000 MFS) OBBBA §70120; IRC
§164(b)(6))
tax update for tax season 2026 (2025 tax year)
when are tax returns due for year 2025 in 2026?
1065, FTB 565, 1120S FTB 100S any 2 member+ LLC all due 3.15.26
time limit to form 1120S for 2025 3.15.26
individual 1040 FTB 540 4.15.26
C-Corp due 4.15.2026
990 990N non-profit due 5.15.26
C-Corp Fiscal year due 15th day of the 4th month after the close of the tax year
Non-profit fiscal year due 15th day of 5th month after close of tax year
1041 Trust and Estate returns due 4.15.26 Fiscal trust and estate returns due 15th day of 4th month following close of tax year
706 gift tax return due 9 months after decedents death
The One Big, Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025, and with it comes many new tax provisions that may directly affect you. There are many tax provisions contained in OBBBA beyond the ones we have highlighted here.
Extension of expiring tax provisions
The center point of OBBBA is a permanent extension of most of the provisions of the Tax Cuts and Jobs Act of 2017 that apply to individual taxpayers and were scheduled to expire at the end of 2025. These provisions include, among others:
- Lower income tax brackets with the top rate at 37% instead of 39.6%;
- The higher standard deduction, with an additional $6,000 deduction for taxpayers age 65 and over ($12,000 for married taxpayers who are both age 65 and older);
- The $750,000 mortgage interest limitation, with a renewed deduction for mortgage insurance premiums;
- The elimination of 2% miscellaneous itemized deductions, which includes investment advisor fees, tax preparation fees, and unreimbursed employee business expenses (except that qualified educators will be allowed to deduct many of their unreimbursed expenses);
- The increased Child Tax Credit, with modifications that make the credit more attractive;
- Permanent extension of the §199A 20% qualified business income deduction for business owners, with minor modifications; and
- The increased unified estate and gift tax exclusion, with a bump up to $15 million on January 1, 2026.
The itemized deduction for state and local taxes (SALT) is temporarily increased from $10,000 to $40,000 for five years. The increased deduction is reduced for higher earners. Taxpayers who are owners of passthrough business entities and make a passthrough entity elective tax election can still use the election to maximize their SALT deductions.
Itemized deductions and alternative minimum taxes
There are new limits on itemized deductions. The alternative minimum tax is reinstated, which will require planning going forward to minimize future tax increases.
Charitable contribution deductions
Charitable contributions are subject to three new OBBBA provisions:
- Non-itemizers can claim a $1,000 charitable deduction ($2,000 for married taxpayers filing jointly);
- Charitable contribution itemized deductions are now subject to a one half of one percent of AGI floor, providing another limitation to claiming the deduction; and
- Taxpayers who make charitable contributions to certain scholarship granting organizations that fund scholarships for K-12 students can choose to claim either an itemized deduction or a new tax credit of up to $1,700.
Three brand new deductions for individual taxpayers are available starting in 2025. These deductions may be known better by what they’ve been called in the news: No tax on tips, no tax on overtime, and no tax on qualified car loan interest. For each of these items, new income tax deductions are available for taxpayers who receive certain tip income, are paid overtime by their employers, and who incur interest on the purchase of a new vehicle assembled in the United States. Each of these provisions contains multiple limitations that we should discuss if any of these potentially apply to you.
Disaster relief
Taxpayers impacted by federally declared disasters in 2025 may qualify for additional tax relief.
Energy credits going away
OBBBA repeals many energy credits, including all three clean vehicle credits for vehicles acquired after September 30, 2025. Additionally, both of the energy credits available to homeowners who make certain energy efficient improvements or install solar property, home batteries, and heat pumps, among other items are no longer available after December 31, 2025.
Business provisions
In addition to the tax provisions applicable for individual taxpayers, OBBBA contains many business provisions, including:
- Permanent 100% bonus depreciation rate for assets acquired after January 19, 2025;
- An increased §179 expensing limitation for assets placed in service after December 31, 2024;
- Immediate expensing of research expenses with a special election to immediately deduct previously amortized research expenses; and
- An easing of the business interest limitation rules.
Highlights of Key OBBBA Provisions
Topic Provision Individual tax provisions timeline
TCJA revised tax rates and brackets Makes TCJA changes permanent
Increase TCJA standard deduction amounts to $31,500 (MFJ/SS);
$23,625 (HOH), and $15,750 (Single/MFS) beginning with 2025 tax
year and permanently repeal personal exemptions, other than the
senior deduction discussed below
Personal exemption deduction for seniors Allows for a personal exemption deduction of up to $6,000 for
seniors (age 65 and up) for 2025 through 2028 tax years that begins
to phase out when the taxpayer’s modified AGI exceeds $75,000
($150,000 MFJ)
Itemized deduction phase-outs Caps the benefit of itemized deductions for taxpayers in the 37%
bracket at 35%, effective beginning with the 2026 taxable year
AMT exemption amounts and phaseouts The TCJA’s increased exemption and phaseout amounts are generally made permanent, but, beginning with the 2026 tax year,
the exemption phaseout amount for MFJ and surviving spouse
filers reverts back to the 2018 $1 million threshold and the rate at
which the exemption is phased out is doubled from 25% to 50%
SALT limitation Increases the SALT deduction to $40,000 for the 2025 tax year and
increases it by 1% through the 2029 tax year. Reverts back to
$10,000 after 2029. No changes to passthrough entity tax treatment
Disaster relief Retroactively extends the enhanced personal casualty loss
deductions available for federal disasters declared prior to
September 2, 2025, if the disaster incident period ends by August 3,
2025. This means non-itemizers can claim a qualified disaster loss
and the 10% AGI threshold is waived.
In addition, personal casualty losses can be claimed for Statedeclared
disasters beginning with the 2026 taxable year
Charitable contributions deduction Makes the following changes:
• Allows non-itemizers to claim charitable deductions of up to
$1,000 ($2,000 MFJ);
• Permanently extends the 60% deduction for cash contributions; and
• Imposes a 0.5% floor for individuals who itemize
Excess business loss limitation for nonitemizers
Permanently extends the excess business loss limitation
Credit (CTC) and Other
Dependent Credit
Increases the CTC to $2,200 beginning with the 2025 tax year and
provides for inflation adjustments thereafter.
Social Security number required for child(ren) and one parent for
purposes of CTC
No tax on tips Provides an above-the-line deduction of up to $25,000 for cash tips
provided voluntarily to taxpayers in an “occupation that
traditionally and customarily receive tips” (to be determined by
Treasury Secretary) for the 2025 through 2028 tax years and that
are reported to the IRS on a W-2 or 1099. Deduction begins to
phase out for taxpayers with modified AGI of $150,000 ($300,000
MFJ)
No tax on overtime Allows an above-the-line deduction for overtime pay of up to
$12,500 ($25,000 MFJ) that begins to phase out for taxpayers with
modified AGI above $150,000 ($300,000 MFJ)
No tax on qualified car loan interest Allows an above-the line deduction of up to $10,000 for qualified
passenger vehicle interest paid during the 2025 through 2028 tax
years on loans incurred (including refinancing) after 2024.
Deduction phases out for taxpayers with modified AGI above
$100,000 ($200,000 MFJ)
Student loan interest Permanently extends COD exclusion for student loans forgiven
due to student’s death or disability. American Rescue Plan Act full
exclusion of student loan forgiveness sunsets at end of 2025 tax year
Other TCJA individual provisions such as:
• $750,000 mortgage interest deduction
cap;
• Suspension of 2% miscellaneous
itemized deductions;
• Personal casualty losses limited to
casualty gains, except for federal
disasters;
• Increased AMT exemption and phaseout
thresholds;
• Elimination of moving expense
deduction other than for military; and
• Limiting professional gambler’s losses
These provisions are permanently extended with modifications
that:
• Treat mortgage insurance premiums as acquisition
indebtedness for purposes of the $750,000 mortgage interest
deduction;
• Exclude educator expenses from the definition of 2%
miscellaneous itemized deductions; and
• Beginning with the 2026 tax year, limit gambling losses to 90%
of losses incurred up to the amount of any gambling gains
IRC §199A qualified business income
Deduction
Makes the 20% deduction permanent, increases the phase-out
range by $25,000 ($50,000 for MFJ), and provides a minimum $400
deduction for small business owners
IRC §1202 qualified small business stock
exclusion
Allows partial exclusion for stock held less than five years (50% if
held three years and 75% if held four years), increases the gain cap
from $10 million to $15 million, and increases the small business
asset test from $50 million to $75 million
IRC §529 plans Allows tax-free distributions for:
• Qualified credential program expenses; and
• Additional expenses associated with primary and secondary
education
Trump accounts Establishes new IRA-like savings vehicle called “Trump accounts”
for children born in 2025 through 2028 to be seeded with $1,000
contribution from the federal government if parents elect to have
an account established. Thereafter, parents can make after-tax
contributions of up to $5,000 per year
Credit for contributions to scholarshipgranting
organizations
Effective beginning with the 2027 tax year, provides for a credit of
up to $1,700 to scholarship-granting organizations that provide
scholarships for children to attend public, private, or religious
schools in the organization’s state. The credit is in lieu of an IRC
§170 charitable contributions deduction. States would have to
voluntarily choose to provide a list of qualifying scholarship
granting organizations in their state
Estate and gift tax exclusion Resets the unified exclusion at $15 million per taxpayer and adjusts for inflation beginning with 2026 tax year
Business tax provisions
Bonus depreciation generally Permanently extends the 100% bonus depreciation for property
acquired after January 19, 2025, and allows election for lower
percentages for property placed in service during the first taxable
year ending after January 19, 2025
Bonus depreciation for qualified production
property
Creates a new class of 100% bonus-eligible property for
nonresidential real property in the U.S. used in manufacturing,
agricultural or chemical production, or certain refining operations
if construction begins after January 19, 2025, and before January 1,
2029, and is placed in service after July 4, 2025, and before January
1, 2031
IRC §179 expensing Permanently increases the IRC §179 expense limitation to $2.5
million and the phaseout threshold to $4 million, applicable to
property placed in service in taxable years beginning after 2024,
and adjusted for inflation beginning with the 2026 tax year
Research expenditures Permanently reinstates current expensing for domestic IRC §174
expenditures beginning with the 2025 taxable year and applies the
changes retroactively to the 2022 tax year for small taxpayers. Other
taxpayers can elect to accelerate remaining deductions for expenses
incurred during the 2022 through 2024 tax years over a one- to two-year
period
Business interest limitation Permanently reinstates the exclusion of depreciation, amortization,
and depletion deductions for purposes of the adjusted taxable
income limitation beginning with the 2025 taxable year
Charitable contributions deduction Corporate charitable deductions are subject to a 1% floor,
applicable to taxable years beginning after December 31, 2025
Employee Retention Credit Disallows claims for credit or refunds for wages paid after June 30,
2025, if the claims have not processed by July 4, 2025
Employer-Provided Child Care Credit Increases the credit percentage from 25% to 40% and increases the
cap from $150,000 to $500,000 (600,000 for eligible small
businesses), effective for amounts paid after 2025
Paid Family and Medical Leave (PFML)
Credit
Permanently extends the credit and allows taxpayers to elect to
base the credit on PFML insurance premiums paid rather than
qualifying wages paid
Energy credits and incentives
IRC §25E Previously Owned Clean Vehicle
Credit
Repealed for vehicles acquired after September 30, 2025
IRC §30D Clean Vehicle Credit Repealed for vehicles acquired after September 30, 2025
IRC §45W Qualified Commercial Clean
Vehicle Credit
Repealed for vehicles acquired after September 30, 2025
IRC §30C Alternative Fuel Vehicle
Refueling Property Credit
Repealed for property placed in service after June 30, 2026
IRC §25C Energy Efficient Home
Improvement Credit
Repealed for property placed in service after December 31, 2025
IRC §25D Residential Clean Energy Credit
(aka Home Solar Credit)
Repealed for expenditures made after December 31, 2025
(continued
Energy credits and incentives (continued)
IRC §45L New Energy Efficient Home
Credit
Repealed for homes acquired after June 30, 2026
IRC §45E Clean Electricity Investment
Credit and IRC §45Y Clean Electricity
Production Credit
Applicable to facilities for which construction begins after July 4,
2026, the credits are repealed for wind and solar technology for
facilities placed in service after 2027. This means the post-2027
repeal date does not apply if the construction of the facility begins
no later than July 4, 2026. However, the early termination does not
apply to energy storage technology for purposes of the IRC §48E
Investment Credit.
In addition, the OBBBA tightens restrictions regarding sourcing
supplies from foreign entities of concern for facilities that begin
construction after December 31, 2025. Finally, the credit is no
longer available to taxpayers who lease the property to a thirdparty,
applicable to taxable years beginning after July 4, 2025
(OBBBA §70502; IRC §30D(h))
Information Reporting Requirements
1099-K reporting thresholds Increases the Form 1099-K threshold to $20,000 and more than 200 transactions
1099-NEC and 1099-MISC thresholds Increases other information reporting thresholds (1099-NEC, 1099-
MISC, etc.) to $2,000 from $600 and adjusts the threshold for
inflation after 2026
Retroactive to 2022 calendar year
Third-party settlement organizations don’t have to issue Forms 1099-K to
a taxpayer unless the taxpayer earned more than $20,000 and had more
than 200 separate transactions during the calendar year
OBBBA §70432; IRC
§6050W(e)
TCJA provisions made permanent for post-2025 taxable years
Individual rates, standard and exemption deductions, AMT
TCJA tax rates and brackets made permanent
OBBBA §70101; IRC §1(j)
Increased standard deduction amounts (with minor modification) OBBBA §70102; IRC §63(c)(7)
Increased AMT exemption amounts, including its annual inflation
adjustments (except as noted below)
OBBBA §70107; IRC §55(d)
Itemized deductions
Charitable contribution 60% cap for cash contributions OBBBA §70425(b); IRC
§170(b)(1)(G)
The $750,000 ($375,000 MFS) cap on qualified residence mortgage interest
deduction and the elimination of the interest deduction for home equity
debt
OBBBA §70108; IRC
§163(h)(3)(F)
Gambling loss limitations OBBBA §70114; IRC §165(d)
§199A qualified business income
20% IRC §199A qualified business income deduction OBBBA §70105; IRC §199A
Exclusions from gross income
COD exclusion for student loan forgiveness due to the student’s death or
Disability OBBBA §70119; IRC §108(f)(5)
Expansion of the $5,250 educational assistance program exclusion to
include an employer’s payment on an employee’s student loan
OBBBA §70412; IRC
§127(c)(1)(B)
Tax relief for certain military service members
Combat zone tax relief expanded to apply to military members serving in
a “qualified hazardous duty area”
OBBBA §70118; P.L. 115-97
§11026
Other TCJA extenders for individuals
Elimination of 2% miscellaneous itemized deductions OBBBA §70110(a); IRC §67(g)
Personal casualty losses limited to individual’s personal casualty gains,
except for losses attributable to federally declared disasters
OBBBA §70109; IRC
§163(h)(5)
Excess business loss limitation for noncorporate taxpayers OBBBA §70601; IRC §461(l)
Elimination of the deduction for moving expenses and moving expense
reimbursement exclusion (except for active-duty military)
OBBBA §70113; IRC §§132(g),
217(k)
(continued)
Authorizing beneficiaries who are working to contribute additional
amounts to their ABLE accounts
OBBBA §70115; IRC
§529A(b)(2)(B)
Nontaxable rollovers allowed from §529 accounts to ABLE accounts
provided certain conditions are met
OBBBA §70117; IRC
§529(c)(3)(C)(i)(III)
Elimination of the qualified bicycle commuting reimbursement exclusion OBBBA §70112; IRC §132(f)
Individual non–energy-related credits
Increased Child Tax Credit and Other Dependent Credit (other changes
noted below)
OBBBA §70104; IRC §24(h)
Estate and gift tax exclusion
Permanently increases the uniform estate and gift tax exclusion and
generation-skipping transfer tax exemption to $15 million per taxpayer
with inflation adjustments, applicable to estates of decedents dying and
gifts made after December 31, 2025
OBBBA §70106; IRC
§2010(c)(3)
Permanently extends the IRC §45S Paid Family and Medical Leave Credit OBBBA §70304; IRC §45S
Effective September 30, 2025
Energy credits and incentives
Previously Owned Clean Vehicle Credit repealed for vehicles acquired
after September 30, 2025
OBBBA §70501; IRC §25E(g)
Clean Vehicle Credit repealed for vehicles acquired after September 30,
2025
OBBBA §70502; IRC §30D(h)
Qualified Commercial Clean Vehicle Credit repealed for vehicles acquired
after September 30, 2025
OBBBA §70503; IRC §45W(g)
Effective beginning with the 2025 taxable year
Individual rates, standard and exemption deductions, AMT
Increase in standard deduction amount OBBBA §70102; IRC §63(c)(7)
Senior personal exemption deduction of $6,000 per spouse age 65+(only
available for 2025 through 2028 taxable years)
OBBBA §70103(a)(3); IRC
§151(d)(5)(C)
Itemized deductions
SALT limitation increased to $40,000 and increases 1% per year through
the 2029 taxable year; reverts to $10,000 ($5,000 MFS) beginning with the
2030 taxable year
OBBBA §70120; IRC
§164(b)(6))
Extension of TCDTRA and FDTRA disaster relief provisions for disasters
declared prior to 9/2/25 for specified incidents. Casualty losses that fall
within the extended period:
• The 10% floor on net casualty losses is not applicable;
• The $100 limit per casualty is increased to $500; and
• Taxpayers can claim the personal casualty loss deduction even if they
use the standard deduction
OBBBA §70438
New above-the-line deductions
“No tax” on tips deduction (capped at $25,000), for the 2025 through 2028
taxable years
OBBBA §70201; IRC
§§63(b)(5), 224
“No tax” on overtime deduction (capped at $12,500 ($25,000 MFJ)), for the
2025 through 2028 tax years
OBBBA §70202; IRC
§§63(b)(6), 225
Above-the-line deduction for interest on post-2024 qualified passenger
vehicle loans, for the 2025 through 2028 taxable years
OBBBA §70203; IRC
§§63(b)(7), 163(h)(4)
Exclusions from gross income
Applicable to taxable years beginning after July 4, 2025, the IRC §1202
qualified small business stock exclusion is expanded by:
• Applying a new tiered exclusion to qualified stock acquired after July
4, 2025, and held for at least three years; and
• The $10 million gain cap is increased to $15 million ($7.5 million MFS)
The $50 million gross asset test for a business to be considered a qualified
small business is also increased to $75 million for stock issued after July 4,
2025
OBBBA §70431; IRC §1202
Education-related tax provisions
Applicable to distributions made after July 4, 2025, tax-free distributions
from §529 accounts can be made to cover additional K-12 expenses beyond
tuitions costs and qualified postsecondary credentialing expenses
OBBBA §70413, 70414; IRC
§529(c)(7) and(f)(1)
Individual non–energy-related credits
TCJA $2,000 Child Tax Credit further increased to $2,200; Social Security
number required for taxpayer filing the return in addition to the child’s
SSN
OBBBA §70104; IRC §24(h)
Up to $5,000 of the Adoption Credit made refundable and allows Indian
tribal government to determine whether a child is a special needs child
eligible for an increased credit
OBBBA §§70402, 70403; IRC
§23
Energy credits and incentives
Repeals the five-year recovery period for energy property applicable to
property the construction of which begins after December 31, 2024
OBBBA §70509; IRC
§168(e)(3)(B)(vi)
Business provisions
Extends 100% bonus depreciation permanently for property acquired after
January 19, 2025 (with option to elect 40% bonus depreciation in first
taxable year after January 19, 2025)
OBBBA §70301; IRC
§168(k)(10)
(continued)
No longer allows millionaires to claim unemployment benefits OBBBA §73001
Effective June 30, 2026
Energy credits and incentives
Alternative Fuel Vehicle Refueling Property Credit repealed for property
placed in service after June 30, 2026
OBBBA §70504; IRC §30C(i)
Energy Efficient Commercial Buildings Deduction repealed with respect to
property the construction of which begins after June 30, 2026
OBBBA §70507; IRC §179D(i)
New Energy Efficient Home Credit repealed for homes acquired after June
30, 2026
OBBBA §70508; IRC §45L(h)
Effective beginning with the 2026 taxable year
Individual rates, standard and exemption deductions, AMT
Resets the AMT exemption amount for MFJ and surviving spouse filers
back to its $1 million 2018 amount and increases the exemption phaseout
rate for all taxpayers from 25% to 50%
OBBBA §70107; IRC §55(d)
New above-the-line-deductions
Members of the intelligence community may deduct moving expenses and
exclude moving expense reimbursements
OBBBA §70113; IRC §§132(g),
217(k)
Itemized deductions
Imposes a 0.5% AGI floor on the charitable contribution deduction for
individual itemizers OBBBA §70425; IRC §170(b)(I)
Charitable contribution deduction for non-itemizers of up to $1,000 ($2,000
MFJ) for cash contributions made to charitable organizations for the 2025
through 2028 tax years
OBBBA §70424; IRC §170(p)
Charitable contribution deduction available to whaling captains for
subsistence bowhead whale hunting activities sanctioned by the Alaska
Eskimo Whaling Commission is increased from $10,000 to $50,000
OBBBA §70429; IRC
§170(n)(1)
Personal casualty losses attributable to a state-declared disaster may be
claimed in addition to losses attributable to federally declared disasters
OBBBA §70109(b); IRC
§165(h)(5)
Mortgage insurance premiums treated as deductible mortgage interest OBBBA §70108; IRC
§163(h)(3)(F)
Educator expenses treated as non-2% miscellaneous itemized deductions
with additional educators and items eligible for deduction
OBBBA §70110; IRC
§67(b)(13) and (g)
Gambling losses that may be deducted are limited to 90% of the losses
incurred but only to the extent of the gains from such transactions during
the taxable year
OBBBA §70114; IRC §165(d)
Revised limitation on itemized deductions reinstated that caps the benefit
of itemized deductions for taxpayers in the 37% bracket at 35%
OBBBA §70111; IRC §68
IRC §199A:
• Phase out ranges for purposes of computing the §199A deduction is
increased from $50,000 ($100,000 MFJ) to $75,000 ($150,000 MFJ); and
• New, inflation-adjusted, minimum deduction of $400 for qualified
small businesses
OBBBA §70105; IRC §199A
Exclusions from gross income
Expanded COD exclusion enacted by the American Rescue Plan Act
sunsets (this provision was scheduled to expire under pre-OBBBA law and
was not addressed in OBBBA, so is expiring as scheduled)
OBBBA §70119; IRC §108(f)(5)
Increases the $5,000 ($2,500 for MFS) exclusion of employer-provided
dependent care assistance to $7,500 ($3,750 for MFS)
OBBBA §70404; IRC
§129(a)(2)(A)
Tax relief for certain military service members
Expands available tax relief for military service members by including
additional areas in the definition of a qualified hazardous duty area
OBBBA §70118; P.L. 115-97
§11026
Trump Accounts
Creates IRA-like Trump Accounts for children under age 18 that will be
funded with $1,000 in federal government seed money
OBBBA §70204; IRC §530A
Excludes up to $2,500 of employer contributions to a Trump Account on
behalf of their employee or employee’s dependent
OBBBA §70204(b); IRC §128
Education-related tax expenses
Increases the $10,000 limit for tax-free withdrawals from §529 accounts for
primary and secondary school expenses to $20,000
OBBBA §70413(b); IRC
§529(e)(3)
Individual non–energy-related credits
$2,200 Child Tax Credit increased for inflation annually OBBBA §70104(c); IRC §24(i)
Increases the Child and Dependent Care Credit from a maximum of 35%
to 50% of eligible costs, with an accelerated phasedown of the credit for
taxpayers with AGI in excess of $75,000 ($150,000 MFJ)
OBBBA §70405; IRC §21(a)
Requires taxpayers to provide their and their child’s Social Security
number to claim the American Opportunity and Lifetime Learning Credits
and the school’s EIN to claim the American Opportunity Credit
OBBBA §70606; IRC
§25A(g)(1)
American Rescue Plan Act subsidies sunset, meaning taxpayers above
400% of the federal poverty line (FPL) no longer eligible for the Premium
Tax Credit and others below 400% must pay increased premiums (this
provision was scheduled to expire under pre-OBBBA law and was not
addressed in OBBBA, so is expiring as scheduled)
IRC §36B(3)(A)
Recapture amount of excess advance Premium Tax Credits no longer
limited for taxpayers whose household income is below 400% of the
federal poverty line
OBBBA §71305; IRC
§36B(f)(2)
Lawfully present aliens who are ineligible for Medicaid due to their alien
status are no longer eligible for the Premium Tax Credit
OBBBA §71302; IRC
§36B(c)(1)
Permanently extends the ability of ABLE account beneficiaries to qualify
for the Saver’s Credit for contributions made to their ABLE account
OBBBA §70116; IRC
§25B(d)(1)
Energy credits and incentives
Repeals Energy Efficient Home Improvement Credit for property placed
in service after December 31, 2025
OBBBA §70505; IRC §25C(h)
Repeals Residential Clean Energy Credit (aka Home Solar Credit) with
respect to any expenditures made after December 31, 2025
OBBBA §70506; IRC §25D(h)
Business provisions
Adjusts annually for inflation the maximum IRC §179 deduction of $2.5
million and the phaseout threshold amount of $4 million
OBBBA §70306; IRC §179
De minimis employee meals and meals provided for the convenience of the
employer are no longer deductible except for meals provided for the
convenience of the employer for crews of certain commercial vessels, oil
platform/drilling rig workers, and crews of certain fishing vessels and
processing facilities, which will continue to be 50% deductible
OBBBA §70305; IRC §274(n)
and (o)
Subjects corporate taxpayers to a 1% floor for charitable contributions OBBBA §70426; IRC
§170(b)(2)(A)
Provides that the business interest expense limitation is calculated prior to
the application of any interest capitalization provision
OBBBA §70341; IRC §163(j)
Allows employers to compute the Paid Family and Medical Leave Credit
based on insurance premiums paid rather than the amount of wages paid
to employees during their covered leave
OBBBA §70304; IRC §45S
Increases the Employer-Provided Child Care Credit from 25% to 40% (50%
for eligible small businesses) of the employer’s qualified child care
expenditures and increases the cap from $150,000 to $500,000 ($600,000 for
eligible small employers)
OBBBA §70401; IRC §45F
Permanently increases the state credit allocation by 12% to fund the 9%
credit and lowers the bond-financing threshold from 50% to 25% for the
4% credit
OBBBA §70422; IRC §42
Permanently extends the New Markets Tax Credit OBBBA §70423; IRC §45D
Miscellaneous
Increases the REIT asset test 20% limit to 25% OBBBA §70439; IRC
§856(c)(4)(B)(ii)
Effective beginning with the 2027 taxable year
Exclusions from gross income
Annual inflation adjustments applied to increased $15 million qualified
small business stock gain cap and the increased $75 million small business
gross asset test
OBBBA §70431(b) and (c);
IRC §1202(b)(1) and (d)(1)
The $5,250 employer education assistance exclusion cap increased for
inflation
OBBBA §70412(b); IRC
§127(d)
Education-related tax provisions
Applicable to taxable years ending after December 31, 2026, U.S. citizens
or residents may claim a nonrefundable charitable contribution credit of
up to $1,700 for qualified contributions of cash to a scholarship-granting
organization
OBBBA §70411; IRC §25F
For amounts received after December 31, 2026, individual taxpayers may
exclude scholarships provided to eligible K-12 student dependents by a
scholarship-granting organization
OBBBA §70411(b); IRC §139K
Individual non–energy-related credits
Premium Tax Credit is no longer available to individuals who are lawfully
present in the U.S. unless they are “eligible aliens”
OBBBA 71301(a); IRC
§36B(e)(1)
Repeals the SECURE 2.0 Saver’s Credit provision that would have
replaced the credit with a government matching program, but limits the
credit to only apply to amounts contributed by ABLE account beneficiaries
to their ABLE account and increases the maximum contribution base from
$2,000 to $2,100
OBBBA §70116; IRC
§25B(d)(1)
Qualified Opportunity Zone tax incentives
Numerous changes to the QOZ program, including:
• Election to defer the gain is available indefinitely and applies to
property sold after December 31, 2026;
• Date by which deferred gain must be recognized;
• Amount of gain that must be included when gain is recognized;
• Partial step-up in basis for investments held at least five years is 10%
(30% if invested in a qualified rural opportunity fund); and
• If property is held for at least 30 years, only the post-acquisition gain
from the first 30 years of investment is excluded
OBBBA §70421(c); IRC
§1400Z-2
Annual credit cap for the Employer-Provided Child Care Credit adjusted
annually for inflation
OBBBA §70401; IRC §45F
Effective beginning with the 2028 taxable year
Trump Accounts
The $5,000 aggregate annual contribution limit for Trump Accounts and
$2,500 employer contribution exclusion limit will be adjusted annually for
inflation
OBBBA §70204; IRC §128,
§530A
Individual non–energy-related credits
Imposes pre-enrollment verification requirements for taxpayers to
participate in a plan through a health exchange to receive any Advanced
Premium Tax Credit
OBBBA §71303; IRC §36B
§48E Clean Electricity Investment Credit and IRC §45Y Clean
Electricity Production Credit are repealed for wind and solar technology
for facilities placed in service after 2027, applicable only to facilities for
which construction begins after July 4, 2026. Repeal does not apply to
energy storage technology for purposes of IRC §48E credit
OBBBA §§70512, 70513; IRC
§§45Y, 48E
Effective beginning with the 2029 taxable year
Individual rates, standard and exemption deductions, AMT
$6,000 senior exemption deduction sunsets OBBBA §70103(a)(3); IRC
§151(d)(5)(C)
Itemized deductions
$1,000 ($2,000 MFJ) charitable contribution deduction for nonitemizers
sunsets
OBBBA §70424; IRC §170(p)
New above-the-line deductions
No tax on tips deduction sunsets OBBBA §70201; IRC
§§63(b)(5), 224
No tax on overtime sunsets OBBBA §70202; IRC
§§63(b)(6), 225
Interest deduction on qualified passenger vehicle loans sunsets OBBBA §70203; IRC
§§63(b)(7), 163(h)(4)
Effective beginning with the 2030 taxable year
Itemized deductions
SALT limitation reverts to $10,000 ($5,000 MFS) OBBBA §70120; IRC
§164(b)(6))