Many of the provisions included in the One Big Beautiful Bill Act (OBBBA) took effect for the 2025 tax year, but several important changes don't begin until 2026. Whether you're an individual taxpayer or a business owner, now is the time to understand what's ahead and prepare accordingly.
Here are some of the most significant tax changes taking effect in 2026.
Key Changes for Individuals
Several taxpayer-friendly provisions begin next year, including:
- New charitable giving rules. Non-itemizers may deduct up to $1,000 ($2,000 for married couples filing jointly) for qualifying charitable contributions. Itemizers should also be aware of a new 0.5% floor on charitable deductions.
- Estate and gift tax exemption increases. The federal estate and gift tax exclusion rises to $15 million, with future inflation adjustments.
- Trump Accounts become fully operational. Eligible children under age 18 may receive contributions beginning in 2026, subject to annual contribution limits.
- Expanded 529 education savings benefits. Qualified K-12 withdrawals increase to $20,000 annually.
- Higher dependent care benefits. Both the Dependent Care Assistance Program limit and the Child and Dependent Care Credit become more generous.
- Health Savings Account flexibility. More health insurance plans will qualify for HSA eligibility, including certain Bronze and Catastrophic plans.
Important Business Changes
Business owners should also prepare for several notable updates:
- Higher Form 1099 reporting thresholds. The reporting threshold for Forms 1099-NEC and 1099-MISC increases from $600 to $2,000.
- Payroll reporting requirements. Employers should ensure payroll systems are ready to separately report qualified tips and qualified overtime under the new IRS rules.
- Expanded Section 179 expensing. The maximum deduction increases to $2.5 million, allowing businesses to immediately expense more qualifying equipment purchases.
- Corporate charitable deduction changes. New limitations will affect how corporations calculate charitable contribution deductions.
- Clean energy tax incentives continue to phase out. Several credits established under prior legislation will be reduced or eliminated beginning in 2026.
Planning Ahead
Although many of these changes don't become effective until next year, proactive planning can help individuals and businesses maximize available tax benefits while avoiding surprises.
If you'd like to discuss how these changes could impact your personal or business tax strategy, the professionals at Reagan & Reagan CPA are here to help.
Read the Full Article
For a more detailed look at all of the upcoming OBBBA provisions, read the original article from Accounting Today:
OBBBA Changes to Keep an Eye on for 2026
https://www.accountingtoday.com/list/obbba-changes-to-keep-an-eye-on-for-2026/
Source summary based on Accounting Today and related tax guidance.
