Numerous tax law changes went into effect in 2025 under the legislation commonly known as the One Big Beautiful Bill Act (OBBBA). But some OBBBA provisions don’t take effect until 2026, and there are also changes under previous legislation that go into effect this year.

Changes Affecting Individuals

Here’s a sampling of some significant tax law changes going into effect for individuals this year:

  • New charitable contribution deduction for nonitemizers. If you claim the standard deduction rather than itemizing deductions, you can also deduct cash donations to qualified charities, subject to an annual limit of $1,000, or $2,000 for joint filers.
  • New floor on the charitable deduction for itemizers. If you itemize deductions rather than claiming the standard deduction, your otherwise allowable charitable deductions for the year will be limited to the amount that exceeds 0.5% of your adjusted gross income.
  • New limit on itemized deductions for taxpayers in the 37% tax bracket. Generally, the limitation will mean that the tax benefit from itemized deductions for taxpayers in the 37% bracket will be as if they were in the 35% bracket.
  • Alternative minimum tax (AMT) exemption changes. The income thresholds for the AMT exemption phaseouts revert back to their 2018 levels for 2026 and then will be annually adjusted for inflation again in subsequent years. Also, the exemption will phase out more quickly.
  • New tax advantaged Trump accounts to benefit children under age 18. Contributions, generally up to $5,000 per year, to Trump accounts can begin on July 4, 2026. Although contributions aren’t tax deductible, the accounts can grow tax deferred until the child is 18, when the account converts into a traditional IRA. Eligible children born between Jan. 1, 2025, and Dec. 31, 2028, whose parents have elected to participate in a pilot program, will receive a one time, tax free $1,000 federal contribution to their account.
  • Increase in tax free 529 plan withdrawal limit for qualified elementary and secondary school expenses. In recent years, certain elementary and secondary school expenses of up to $10,000 per year per beneficiary have been considered qualified and thus eligible for tax free treatment. Beginning in 2026, this limit increases to $20,000.
  • New Roth requirement for higher income taxpayers’ catch up contributions. New rules under the SECURE 2.0 Act, signed into law in 2022, will require higher income participants in 401(k), 403(b) and 457(b) retirement plans to make any catch up contributions as after tax Roth contributions. For 2026, this requirement applies to participants with 2025 Social Security wages exceeding $150,000.
  • Elimination of certain energy efficiency credits for homeowners. The Energy Efficient Home Improvement Credit and the Residential Clean Energy Credit aren’t available for any property placed in service after Dec. 31, 2025.

Changes Affecting Businesses

Here are some significant tax law changes going into effect for businesses and their owners this year:

  • Expansion of the income ranges over which the Section 199A qualified business income deduction limitations phase in. Instead of the distance from the bottom of the range, the threshold, to the top, the amount at which the limit fully applies, being $50,000, or, for joint filers, $100,000, it will be $75,000, or, for joint filers, $150,000. For 2026, the ranges are $201,750 to $276,750, up from $197,300 to $247,300 for 2025, double those amounts for married couples filing jointly.
  • Reduction of the threshold for the excess business loss limitation. The deductions for current year business losses incurred by noncorporate taxpayers generally can offset income from other sources only up to the annual limit. For 2026, the threshold at which the limitation goes into effect is $256,000, down from $313,000 for 2025, double those amounts for joint filers.
  • New option for claiming the family and medical leave credit. The employer tax credit for paid family and medical leave, which had been scheduled to expire on Dec. 31, 2025, has been made permanent. Beginning in 2026, employers have the option of claiming the credit for insurance premiums paid for family and medical leave coverage rather than for eligible wages paid to employees on leave.
  • Elimination of certain clean energy incentives. The Section 179D energy efficient commercial buildings deduction won’t be available for property that begins construction after June 30, 2026. The Section 30C alternative fuel vehicle refueling property credit won’t be available for property placed in service after June 30, 2026.

Changes Ahead

As you can see, many new changes are going into effect in 2026. Combined with all of the changes that went into effect in 2025, that’s a lot to consider in your tax planning. Contact us to discuss how these or other changes might affect you and your tax strategies for 2026.