The One Big Beautiful Bill Act: What Takes Effect Starting in 2026
- Marc Lowe
- Jan 26
- 4 min read
Updated: Jan 30
Over the last decade, the tax laws have been changing at a much quicker pace than ever before. In meetings with business owners and folks nearing retirement, the questions around how these tax changes will impact their plan has been top of mind. I personally have seen some opportunities and roadblocks come up from the passing of the bill. I wanted to share some quick insights of provisions that start to take affect this year 2026.
The One Big Beautiful Bill Act (OBBA) reshapes the tax code in ways that will affect planning decisions for decades. While some provisions begin earlier, this article focuses only on the rules that apply starting in 2026—when the long-term structure of the tax system fully locks in.
For high earners, business owners, and pre‑retirees, 2026 is the year where tax planning changes things a bit.
2026 Is the End of the Countdown Clock
For the last few years, tax planning revolved around one question:
What happens when the Tax Cuts and Jobs Act expires?
Starting in 2026, that question disappears.
OBBA makes the core provisions of the 2017 Tax Cuts and Jobs Act (TCJA) permanent. That single change dramatically improves the ability to plan income, wealth transfers, and retirement decisions over long time horizons.
Estate and Gift Taxes: A Permanently Higher Exemption
Beginning in 2026, the federal estate and gift tax exemption increases and becomes permanent:
$15 million for single filers
$30 million for married couples filing jointly
This matters for folks with estates worth more than these thresholds as they may be subject to estate taxes depending on their filing status.
Instead of rushing to gift assets before a sunset provision, families can now:
Spread gifts over time
Use trusts with intention rather than urgency
Coordinate estate planning with charitable and family goals
For wealthy households, estate planning in 2026 becomes a little bit easier.
Income Taxes in 2026: Lower Brackets Are Locked In
Starting in 2026, the lower individual income tax brackets introduced under TCJA remain in place indefinitely.
That permanence creates opportunity.
It allows for smarter decisions around:
Roth conversions
Timing of business income and bonuses
Retirement income sequencing
Two other key rules also become permanent in 2026:
The $750,000 cap on deductible mortgage debt
The Qualified Business Income (QBI) deduction
Business Owners: QBI Becomes a Long-Term Planning Tool
From 2026 forward, owners of pass‑through businesses—sole proprietors, partnerships, S‑corporations, and certain trusts—retain the ability to deduct up to 20% of qualified
business income.
With QBI no longer temporary, business planning changes:
Entity structure decisions carry more weight
Salary vs. distribution strategies matter more
Income smoothing becomes a multi‑year lever
For entrepreneurs and solopreneurs, this is one of the most valuable provisions in the bill.
Families Starting in 2026: A Higher Child Tax Credit
Beginning in 2026, the Child Tax Credit increases to:
$2,200 per qualifying child under age 17
The income thresholds remain:
$200,000 for single filers
$400,000 for married filing jointly
The credit phases out gradually above those levels.
For families near the cutoff, managing income—through retirement contributions, business deductions, or timing bonuses—can be the difference between capturing the credit or losing it entirely.
Filing Strategy in 2026: Standard Deduction Dominates, but Not Always
OBBA cements the simplified tax structure created under TCJA.
In 2026, the standard deduction stands at:
$15,750 for individuals
$31,500 for married couples filing jointly
For many households, this keeps filing straightforward.
But 2026 is also a year where itemizing deserves a second look.
SALT Deduction: A Temporary Opportunity in 2026
In 2026, the State and Local Tax (SALT) deduction cap remains elevated:
Up to $40,000 of SALT deductions allowed
Phases out between $500,000 and $600,000 of modified adjusted gross income
Reverts to $10,000 for incomes above $600,000
This higher cap is scheduled to expire after 2029.
For taxpayers in high‑tax states—especially those with significant property taxes—2026 may be one of the last years where itemizing materially reduces taxes.
Seniors in 2026: Expanded Age‑Based Deduction
Starting in 2026, the enhanced senior deduction remains in effect:
$7,600 for taxpayers age 65 and older
$8,000 for unmarried individuals or those without a surviving spouse
The deduction phases out at:
$75,000 for single filers
$150,000 for married filing jointly
While this doesn’t technically eliminate taxes on Social Security, it meaningfully reduces taxable income for many retirees.
The Bottom Line: 2026 Is a Planning Year, Not a Filing Year
The biggest mistake taxpayers make is thinking about taxes one year at a time.
The changes that begin in 2026 reward households that plan across decades—not deductions.
Lower tax brackets, permanent business deductions, higher estate exemptions, and targeted credits all create opportunity. But only when they’re coordinated with:
Retirement contribution strategy
Roth conversion planning
Charitable giving
Estate and legacy design
OBBA basically extends what was in place which allows for folks to plan with more confidence knowing tax laws will stay the same for at least the next few years. What you do with your tax strategy will determine how much of your wealth you keep over a lifetime.
About the Author
Marc Lowe, CFP® is a fee-only fiduciary advisor based in Waterford, CT, helping pre-retirees & small business owners make smarter financial decisions.
The information presented in this article is the opinion of the author and does not reflect the views of any other person or entity unless specified. The information provided is believed to be reliable and obtained from reliable sources, but no liability is accepted for inaccuracies. The information provided is for informational purposes and should not be construed as advice. Advisory services offered through In The Money Retirement, an investment adviser registered with the state of Connecticut. The information linked to on third-party sites is being provided strictly as a courtesy and convenience. We make no representation as to the completeness or accuracy of information provided at these websites. When you access these websites, you are leaving our website and assume any and all responsibility and risk for use of the web sites you are visiting.The tax and estate planning information offered by the advisor is general in nature. It is provided for informational purposes only and should not be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.
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