As 2026 approaches, the One Big Beautiful Bill Act (OBBBA) keeps many familiar Tax Cuts and Jobs Act (TCJA)-era rules in place—but it also reshapes several areas that can materially change what families can deduct and when it’s smartest to claim those benefits.
The change that applies most broadly to taxpayers involves charitable giving. Under prior law, taxpayers who itemized could deduct charitable gifts (subject to existing percentage-of-AGI limits) with no additional floor. Beginning in 2026, OBBBA adds a 0.5% of AGI floor on itemized charitable deductions, meaning the first 0.5% of AGI in otherwise deductible gifts will not generate a tax benefit. As a result, the same charitable gift may yield a smaller deduction in 2026 than in 2025, even when total giving remains unchanged. These changes place a renewed emphasis on gift timing, bunching strategies, and the use of donor-advised funds. At the same time, OBBBA introduces a new charitable deduction for households who do not itemize. Starting in 2026, taxpayers who claim the standard deduction may deduct up to $1,000 (single) or $2,000 (joint) of cash contributions.
Estate and gift tax planning remains front-and-center as OBBBA increases the historically high lifetime transfer tax exemptions to $15 million per individual and $30 million per married couple in 2026, indexed for inflation. Transfers above these levels remain subject to a 40% federal estate and gift tax. While the immediate threat of a sharp exemption reduction has been deferred, future legislative uncertainty underscores the importance of proactive planning.
State and local tax (SALT) planning becomes more impactful under OBBBA as the SALT deduction cap temporarily increases from $10,000 to $40,000 beginning in 2025, with inflation adjustments through 2029. The expanded cap phases down at higher income levels and is scheduled to revert to $10,000 in 2030 absent further legislation. This creates a planning window for taxpayers in higher-tax jurisdictions to revisit deduction timing, income recognition, and coordination with passthrough entity SALT strategies.
One of the more widely discussed provisions of OBBBA is a new, temporary auto loan interest deduction available for tax years 2025 through 2028. The deduction applies to interest on loans for new personal-use vehicles (including certain cars, vans, SUVs, pickups, and motorcycles under 14,000 pounds) that are final-assembled in the United States. Deductible interest is capped at $10,000 per year and phases out based on modified adjusted gross income, beginning at $100,000 for single filers and $200,000 for joint filers. For some taxpayers, this provision may factor into decisions around vehicle selection, financing structure, and timing of purchases.
Finally, for business owners, OBBBA largely preserves the Section 199A qualified business income (QBI) deduction while expanding planning flexibility for higher-income taxpayers. Beginning in 2026, the QBI phaseout range increases from $50,000 / $100,000 to $75,000 / $150,000 (single/joint), allowing more room to manage taxable income before the deduction is fully limited or eliminated. In addition, OBBBA introduces a minimum $400 QBI deduction for taxpayers with at least $1,000 of active qualified business income, starting in 2026. These changes may create new opportunities to coordinate compensation, distributions, and income timing.
As always, the ultimate impact of these OBBBA changes will depend on your overall financial and tax profile—including income, deductions, business structure, and the timing of major decisions. We strongly encourage reviewing these provisions with your CPA or tax advisor before taking action, as eligibility rules, phaseouts, and documentation requirements may materially affect results. It may also be appropriate to update your financial plan for 2026 to reflect these changes—particularly with respect to charitable giving strategy, SALT coordination, estate planning, vehicle purchase and financing decisions, and income planning related to the QBI deduction—so your tax strategy remains aligned with your long-term objectives.
