As 2025 draws to a close, American families, workers, and entrepreneurs have plenty to celebrate on the tax front. The One Big Beautiful Bill Act (OBBB) was signed into law by President Donald Trump on July 4, 2025, and delivered a suite of reforms that take full effect or continue to shine in 2026. From permanent tax incentive boosts to estate exemptions that safeguard family legacies to expanded credits easing the pinch for parents and seniors, these changes promise more money in pockets, stronger businesses, and a brighter economic path ahead. Whether you’re a homeschooling mom juggling curricula costs, a tipped server hustling for that down payment, or a small business owner eyeing new equipment, 2026 brings tangible wins designed to empower American taxpayers.
Child Tax Credit Evolution: More Support for Growing Families
The Child Tax Credit (CTC) sees its inflation adjustments debut in 2026, building on the permanent bump to $2,200 per qualifying child under 17 established. Of that, $1,700 is refundable via the Additional Child Tax Credit, with phaseouts at new permanent income thresholds of $200,000 for singles and $400,000 for joint filers. Eligibility ties to at least one parent having a valid Social Security number, ensuring this credit benefits families here legally.
As United Way Worldwide CEO Angela F. Williams put it, an expanded CTC “would not only improve families’ ability to put food on the table, but also benefit the economy and spur job growth.” In 2026, these tweaks mean rising credits that keep pace with costs, handing families an extra buffer for everything from braces to ballet lessons.
In addition to the CTC, the Trump administration has started “Trump accounts”: a one-time $1,000 federal contribution for children born between 2025 and 2028. These accounts are tax-deferred and grow similarly to starter IRA accounts and are accessible at age 18 for education, homebuying, or business start-ups. What’s more, donors like Michael and Susan Dell are stepping up to the plate to give toward these accounts. The Dells have committed $6.25 billion of their fortune to help children receive a head start. The CTC and Trump accounts will help give young families a needed boost in the coming year.
SALT Deduction Surge: Relief for High-Tax State Dwellers
The State and Local Tax (SALT) deduction cap jumps to $40,000 in 2026 (from $10,000 pre-OBBB), with a 1% annual bump through 2029 before reverting in 2030. Married couples filing separately get $20,000 each, but phaseouts begin above $500,000 modified adjusted gross income, dropping the benefit by 30 cents per excess dollar down to a $10,000 baseline. This tempers double taxation on property, sales, and income taxes for itemizers, putting real dollars back into coastal and urban budgets.
Pass-through entity workarounds are an added bonus for business owners, letting some sidestep the cap altogether. It’s a pragmatic nod to the 40% of Americans in high-tax states, freeing up funds for local investments that ripple through communities.
Everyday Earners’ Breaks: Tips, Overtime, and Senior Savings
Frontline workers get a triple play in 2026. Tipped workers like servers and stylists can deduct up to $25,000 in qualified tips from federal income taxes through 2028, sparing payroll taxes but boosting take-home pay by an average of $1,800 yearly. The IRS finalized eligible roles in October 2025, covering W-2 and 1099 filers with phaseouts for those making $150,000 annually. Arizona bartender Megan Rothgeb nailed the sentiment: “If a server at a bar is making less than minimum wage as their salary, you’re going to then take the money they get for doing a good job?”
Those who work overtime can now deduct up to $12,500 ($25,000 joint) in FLSA-mandated extra pay, also through 2028, with W-2 tracking and phaseouts above annual income of $150,000. Savings could hit $2,000 annually.
Seniors aged 65+ also score a $6,000 deduction individually ($12,000 joint) on Social Security benefits through 2028, often zeroing out federal taxes for those making under $75,000/$150,000. Affecting 88% of the 51.4 million recipients, it’s a lifeline for those on Social Security, especially amid rising costs.
Education and Business Boosts: 529s, Small Business Credit, & Bonus Depreciation
For homeschool families, 2026 ushers in tax-free 529 withdrawals for curricula, tutoring, therapies, dual enrollment, and exams—plus workforce training and apprenticeships. Rollovers to ABLE accounts for disabilities become permanent, leveling the field for 4 million homeschooled children and beyond. Paired with MAGA accounts ($5,000 annual contributions with a $1,000 government kickstart), it’s a toolkit for flexible futures.
Entrepreneurs also get a win through 100% bonus depreciation. This stays alive permanently for assets placed in service through 2029 (and production property to 2031), letting business-owners write off full costs upfront—from machinery to factory builds. A Michigan pastry empire credits similar breaks for its growth spurt, hiring more and raising wages. The Tax Foundation pegs a 1.8% long-term GDP lift.
Small business owners and pass-through entities—like sole proprietors, partnerships, and S corps—gain lasting certainty with the permanent extension of the Section 199A Qualified Business Income (QBI) deduction, effective for tax years beginning after December 31, 2025. This makes the 20% deduction permanent on eligible business income, providing stability for the 30 million pass-through businesses that rely on it. OBBB also eases phase-in limitations, expanding the buffer zone for married filing jointly taxpayers to $150,000 above the threshold (up from $100,000), so the full deduction phases out more gradually between $394,600 and $544,600 in 2026. This benefits more consultants, real estate pros, and service-based entrepreneurs without the wage or capital caps biting as hard. As RSM US notes, this permanence “provides long-term tax planning certainty” for non-corporate taxpayers, potentially saving qualifying owners thousands annually and fueling reinvestment in growth. For women entrepreneurs, who make up nearly half of new business starts, it’s a game-changer that rewards hustle without the expiration cliff.
Permanent Estate Tax Lift-Off: Securing Legacies for Generations
One of the crown jewels of OBBB begins on January 1, 2026: a permanent hike in the federal estate and gift tax exemption to $15 million per individual, or $30 million for married couples. This isn’t just a temporary fix—it eliminates the sunset clause from the 2017 Tax Cuts and Jobs Act. Before this change, the threshold was set to drop to around $7 million, which threatened family farms and businesses. The 40% tax rate on amounts above the exemption remains, but for most households, this means dodging a massive hit on inherited assets like land or enterprises.
Imagine Iowa corn farmer Jolene Reissen, whose family operation could have faced selling half the farmland just to cover “death taxes.” “If that exemption drops back down, my boys would have to sell half the ground and all the equipment just to be able to pay the death tax,” she shared with IW Features. “That would make it much harder for them to continue farming.” Garrett Watson of the Tax Foundation echoes the relief: “A permanent expanded estate tax exemption reduces the complications associated with the tax for most households.”
For women-led family businesses, this permanence offers peace of mind to build and pass on wealth without the shadow of uncertainty.
A Year of Empowerment and Growth
The OBBB’s reforms, from legacy protections to worker rewards, inject vitality into households and the economy, with projections of 1.2% GDP growth by mid-decade. Yet, with phaseouts and expirations (like many through 2028), savvy planning is key: Consult a tax professional or a financial planner, track your W-2s, and explore 529s early. As we step into this promising chapter, remember—these changes are built for you. Here’s to thriving, not just surviving, in 2026.
For more information on how Americans will earn more and pay less thanks to the OBBB, check out iwf.org/tax-cuts.