The One Big Beautiful Bill impact on your 2026 taxes

• The One Big Beautiful Bill Act (2025 Tax Act) was signed into law on July 4, 2025, extending some provisions from the 2017 Tax Cuts and Jobs Act (TCJA) and introducing some new tax policies beginning in both tax  years 2025 and 2026.
• Some of the key changes in the 2025 Tax Act included increases to the standard deduction, Child Tax Credit, and SALT deduction, as well as new temporary deductions for overtime pay and tips.
• The One Big Beautiful Bill Act provided an initial additional dollar bump to the standard deduction.
• The One Big Beautiful Bill impacts the gambling (wagering) tax by lowering the amount of an itemized deduction you can take for gambling losses to 90% from 100% starting in 2026.
• The One Big Beautiful Bill Act increased the Child Tax Credit by $200 per child under the age of 17, to $2,200 from $2,000 for 2025 and 2026.
• The best way to prepare for the 2027 tax season with all its changes is to plan ahead and file with your local Jackson Hewitt Tax Pro.

What is the One Big Beautiful Bill Act (2025 Tax Act)?

The One Big Beautiful Bill Act (OBBBA), also known as the 2025 Tax Act, was signed into law by President Trump on July 4, 2025. This tax bill extends and modifies some of the provisions of the 2017 Tax Cuts and Jobs Act (TCJA), and it also introduces some new tax policies.

Key 2026 tax changes from the One Big Beautiful Bill Act 

• Standard deduction: Increasing to $16,100 from $15,750 for single filers, to $32,200 from $31,500 for those filing jointly and to $24,150 from $23,625 for heads of household.
• Child Tax Credit: Increased to $2,200 per child under age 17 for 2025 and 2026.
• Child and Dependent Care Deduction: The maximum percentage of credit for qualified expenses has been increased to 50% from 35%. 
• State and local tax deduction (SALT): Limit increasing to $40,400 from $40,000  for 2025, then by 1% each year through 2029. In 2030, the limit reverts to $10,000.
• Trump Accounts for child savings: New, temporary, one-time account funding of $1,000 per child born in 2025 through 2028. The federal government account funding begins in mid-2026.
• Senior deduction: New temporary $6,000 additional deduction for taxpayers 65 and older tax years 2025-2028.
• Tips deduction: New temporary deduction worth up to $25,000 in qualifying tips through 2028.
• Overtime pay deduction: New temporary deduction worth up to $12,500 in overtime pay through 2028.
• Auto loan interest deduction: New temporary deduction worth up to $10,000 of annual interest on new auto loans through 2028.
• 1099-K reporting threshold: Required at $20,000 and 200 transactions starting in tax year 2025.
• Full expensing of certain business property: Allows businesses to take a 100% bonus depreciation expense deduction for certain property purchased during the tax year.

2025 tax credits and deductions from the One Big Beautiful Bill Act

The tax bill increases some credits and deductions. As noted above, the Child Tax Credit is increased to $2,200 from $2,000 per child under 17. The OBBBA increases the standard deduction for all taxpayers and the SALT deduction, and introduces some new temporary deductions, including the deduction for overtime pay and tips.

The 2025 Tax Act retired the clean vehicle and residential clean-energy tax credits by speeding up the “placed-in-service” deadline to December 31, 2025. 

Key tax changes

How does the One Big Beautiful Bill Act impact the 2026 standard deduction?

The OBBBA increases the standard deduction to $16,100 for single and married filing separately, $24,150 for head of household, and to $32,200 for those who are married and filing jointly.

The 2025 Tax Act also introduced a new deduction for seniors 65 and older. This deduction is worth up to $6,000 and available through 2028.

How does the One Big Beautiful Bill Act impact gambling tax? 

The One Big Beautiful Bill impacts gambling tax policy by reducing the deduction amount you can take for gambling losses to an itemized deduction of 90% starting in 2026. Previously, the itemized deduction allowed wagering losses up to the amount of winnings. 

How does the One Big Beautiful Bill Act impact the Child Tax Credit? 

The One Big Beautiful Bill Act increased the Child Tax Credit by $200 per child under the age of 17, to $2,200 from $2,000. This change applied to 2025 and stays the same in 2026. 

The Child Tax Credit is still partially refundable, up to $1,700. That means you could still get some of the money, even if you owe. For example, if you owe $500 in tax and qualify for the full $2,200 credit for your child, you will get up to $1,700 per child back as a tax refund.

How does the One Big Beautiful Bill Act impact the Child and Dependent Care Credit?

The credit percentage for 2026 ranges from 20% to 50% based on adjusted gross income, meaning families could receive between $600 and $1,500 for one dependent, or up to $3,000 for multiple dependents. The previous maximum was 35%. Families with lower adjusted gross incomes qualify for higher credit percentages, while those with higher incomes receive lower percentages. You can claim eligible expenses up to $3,000 for one qualifying dependent, or $6,000 for two or more dependents. 

What you can do to prepare for the 2027 tax season 

With the One Big Beautiful Bill Act signed into law, there are tax changes coming this year and beyond; however, the best way to prepare for the 2027 tax season remains the same: plan ahead. 

If you want the lowest tax bill or the biggest tax refund when you file in 2027, now is the time to talk taxes with your local Jackson Hewitt Tax Pro. Taking a few minutes to think about your taxes now can help ensure that all your ducks are in a row and you’re set up to get every credit, deduction, and dollar of your refund, or a smaller tax bill if you owe.

Talk to a Jackson Hewitt Tax Pro about your situation 

Don’t file alone, and don’t wait until April 2027 to start thinking about your 2026 tax return. We’re open all year, and our Tax Pros are always ready to help. Book your appointment today to talk to a Tax Pro about your situation.

About the Author

Sharon Brucker is a Senior Tax Research Analyst at Jackson Hewitt Tax Services who specializes in consumer income tax and estate and trust issues. A Certified Public Accountant (CPA) with a Master of Business Administration (MBA) and more than 35 years of experience, Sharon helps to ensure that the most current IRS tax information is distributed throughout Jackson Hewitt and its franchisees. She also simplifies complex tax laws for Tax Pros and clients alike.

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