When President Trump signed the One Big Beautiful Bill Act (OBBBA) on July 4, 2025, it marked the culmination of a years-long effort to make the temporary provisions of the 2017 Tax Cuts and Jobs Act permanent while adding several new taxpayer-friendly measures. As Americans begin preparing for the 2026 tax year, understanding these changes has never been more important.

The Standard Deduction Revolution

Perhaps the most immediately impactful change for most Americans is the dramatic increase in the standard deduction. For the 2026 tax year, single filers can now claim $16,100, while married couples filing jointly can deduct $32,200 from their taxable income.

To put this in perspective, before the TCJA took effect in 2018, the standard deduction for married couples was just $12,700. The OBBBA has effectively made this higher threshold permanent and tied it to annual inflation adjustments, providing long-term certainty for tax planning.

"The permanent doubling of the standard deduction will simplify tax filing for roughly 90% of Americans who don't itemize," said Mark Jaeger, vice president of tax operations at TaxAct. "That's approximately 140 million returns that just got simpler."— Mark Jaeger, TaxAct

A Lifeline for Seniors

The OBBBA introduces a particularly generous provision for Americans 65 and older. Effective for tax years 2025 through 2028, seniors can claim an additional $6,000 deduction on top of their standard deduction—or itemized deductions if they choose that route.

This new deduction phases out for single filers with Modified Adjusted Gross Income (MAGI) exceeding $75,000 and married couples above $150,000. Importantly, this benefit stacks with the existing $2,000 additional standard deduction already available to those 65 and older or blind.

For a 67-year-old married couple with income below the phase-out threshold, this means potential deductions totaling $40,200 for 2026:

  • Base standard deduction: $32,200
  • Additional standard deduction (both 65+): $4,000
  • New OBBBA senior deduction: $6,000 (per couple)

Tax Brackets Made Permanent

The legislation permanently codifies the seven tax brackets established by the TCJA: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. These rates, which were originally scheduled to revert to pre-2018 levels in 2026, are now a permanent feature of the tax code.

For 2026, the brackets received an initial inflation adjustment for the first two tiers. A single filer now reaches the 22% bracket at $50,650 of taxable income, up from approximately $48,475 in 2025.

Personal Exemptions: Gone for Good

One change that may surprise some taxpayers: personal exemptions, which were temporarily suspended under the TCJA, have now been permanently eliminated. Before 2018, taxpayers could claim roughly $4,050 per family member as a personal exemption.

However, this elimination is largely offset by the dramatically higher standard deduction. For a family of four, the old system provided about $16,200 in personal exemptions plus a $12,700 standard deduction ($28,900 total), while the new system offers a $32,200 standard deduction—a net improvement of $3,300.

Charitable Giving Gets a Floor

The OBBBA introduces a new wrinkle for charitable donors: a 0.5% floor on the charitable deduction. Taxpayers who itemize can now only deduct charitable contributions that exceed 0.5% of their contribution base (typically adjusted gross income).

For someone with AGI of $200,000, this means the first $1,000 of charitable donations provides no tax benefit. Tax advisors are already recommending strategies like "bunching" donations in alternating years to maximize the deduction.

What It Means for Your 2026 Planning

With tax season for 2025 returns opening on January 26, 2026, the IRS expects refunds totaling approximately $370 billion this year. But savvy taxpayers are already looking ahead to how the OBBBA affects their 2026 planning:

  • Reassess itemizing: With the higher standard deduction, even fewer taxpayers will benefit from itemizing
  • Seniors should calculate carefully: The new $6,000 deduction could save qualifying seniors $1,320 to $2,220 depending on their bracket
  • Charitable strategies matter more: The new 0.5% floor makes strategic giving more important than ever
  • State tax implications: Some states haven't conformed to federal changes, creating potential complications

The Congressional Budget Office estimates the OBBBA's provisions will reduce federal tax revenue by approximately $3.2 trillion over the next decade. For individual taxpayers, however, the changes represent real savings and, perhaps equally important, the certainty needed for long-term financial planning.