On July 4th, 2025, the “One Big Beautiful Bill” (OBBB) was signed into law. The key changes were part of a major federal budget and tax package aimed at both extending key tax cuts and introducing new deductions, especially for working families, seniors, and low/middle income workers.
The OBBB made several provisions of the Tax Cuts and Jobs Act (TCJA), originally enacted in 2017, permanent. Before the TCJA, roughly 70% of taxpayers claimed the standard deduction. Today, that figure has risen to nearly 90%.
Both individuals and corporations will be affected by the OBBB, as major tax updates are set to take effect this year.
OBBB Tax Updates For Individuals
Individual Income Tax Changes
Before OBBA made several permanent individual income tax cuts from the Tax Cuts and Jobs Act (TCJA) in 2017, they were set to expire at the end of this year. That means seven tax brackets ranging from 10% to 37% remain in place instead of reverting to higher pre-TCJA rates as originally scheduled.
The standard deduction increases for 2026:
- Single filers: ~$15,750.
- Married filing jointly: ~$31,500.
Both amounts will continue to be indexed for inflation.
Other expanded tax benefits include new expanded tax benefits for workers:
- No tax on qualified tip income.
- No tax on qualified overtime pay.
- Senior bonus deduction (e.g., an extra standard deduction for taxpayers 65+).
- Car loan interest deduction (up to $10,000 on new auto loans).
Family & Household Provisions
The Child Tax Credit has been increased to account for inflation. The new base amount is $2,200 per qualifying child starting in 2026. The increase was $200.
President Trump has created “Trump Accounts,” a new type of savings account for children that allows after-tax contributions of up to $5,000 per year until the child turns 18. In an effort to jump-start the program, every American child born between January 1, 2025, and December 31, 2028, is eligible to receive $1,000 through the Pilot Program Contribution.
The SALT cap is increased to $40,000, a major rise from the previous $10,000 limit, helping taxpayers in high-tax states deduct more.
Charitable deduction changes are affecting both itemizers and non-itemizers. There is a new limit on all itemized deductions. For example, if you are in the 37% federal income tax bracket, the value of your charitable deduction is now capped at 35%. Your donation will still count in full, but your tax break will be slightly smaller. For those who take a standard deduction, you can now deduct up to $1,000 (single filers) or $2,000 (married couples filing jointly).
AMT, Estate and Tax Gift Updates
The Alternative Minimum Estate Tax (AMT) has been adjusted for inflation and extended. This means fewer taxpayers are subject to the ATM.
The estate and gift tax exemption remains high (around $15 million in 2026 and indexed), protecting more of an estate’s value from federal tax.
For individuals, there are multiple tax items to help combat inflation for 2026 and beyond, including:
For most taxpayers, the net effects for the 2026 tax year include:
- Lower or stabilized tax rates compared with what was scheduled
- Bigger standard deduction and child credits
- Looser SALT deduction cap
- Inflation-adjusted brackets and thresholds
- High estate and gift tax exemptions
New Corporate Tax Incentives and Provisions
Businesses were not left out of One Big Beautiful Bill. Instead of an entire overhaul of the corporate tax system, most changes reflect a legislative choice to freeze or soften scheduled adverse rate changes and to preserve business tax features from the 2017 Tax Cuts and Jobs Act.
Beginning with the corporate statutory tax rate, it shall remain at 21% for taxable years beginning in 2026.
Business Deductions & Investment Incentives
100% bonus depreciation is made permanent, meaning corporations can write off the full cost of most new and used qualifying business assets (machinery, equipment, etc.) immediately rather than amortizing them over years.
A new rule on charitable deductions goes into effect: a deduction is allowed only if contributions exceed 1% of taxable income, and excess amounts may be carried forward in limited circumstances.
International Corporate Tax Provisions
The OBBB maintains and refines the GILTI and FDII regimes that were designed to balance U.S. corporate competitiveness with anti-profit-shifting safeguards. Key deductions were preserved that help manage tax exposure on foreign earnings while incentivizing U.S. based intellectual property and export income.
BEAT (Base Erosion and Anti-Abuse Tax) continues into 2026 with a slight increase (around 10.1% – 10.5%), lower than the originally scheduled 12.5% jump. This will primarily affect large multinationals with significant related-party payments, such as interest and royalties.
Other Business-Related Provisions
The 20% Qualified Business Income (QBI) deduction for pass-through businesses such as S-corps, LLCs, and partnerships is made permanent. Those with a small corporation or pass-through tax entities will be taxed at the owner level.
A 15% corporate Alternative Minimum Tax (AMT) still applies to large corporations (generally those with high financial statement income). This provision was enacted earlier and continues to affect big, profitable companies.
Within the OBBB, the Advanced Manufacturing Investment Credit will continue to provide a refundable tax credit for qualified investments in the U.S. based advanced manufacturing facilities, particularly semiconductors and critical supply chain technologies to support domestic production, resilience, and long-term competitiveness in the industry.
The Low Income Housing Tax Credit now offers expanding incentives for private investment in affordable housing development and preservation, with the goal of accelerating low-income housing supply and easing constraints for those seeking affordable housing options.
Key Updates for Large Corporations:
- Rate stability: No statutory rate jump; stays at 21%.
- Stronger incentives for investment (bonus depreciation, R&D expensing).
- International tax relief relative to what would have happened without the legislation (GILTI/FDII deductions remain).
- Continuing minimum tax regimes (BEAT, corporate AMT) still bite at the larger end.
- Some deduction rules (e.g., charitable contributions) become more complex.
Conclusion
Ultimately, the 2026 tax landscape will favor those who plan deliberately. The One Big Beautiful Bill brings clarity and durability to the U.S. tax framework by making key provisions permanent while expanding targeted relief to the average American worker. With rate stability, elevated exemptions, and expanded deductions now locked in, both individuals and businesses are better positioned to make informed decisions around income, investment, estate planning, and growth.
The challenge, and opportunity, will be translating these provisions into proactive strategies that align tax efficiency with broader financial goals.
