Your comprehensive guide to the latest IRS updates and the One Big Beautiful Bill Act
Last Updated: January 2026
The One Big Beautiful Bill Act (OBBBA), signed by President Trump on July 4, 2025, represents the most significant tax legislation since the 2017 Tax Cuts and Jobs Act. The bill permanently extends many TCJA provisions that were set to expire at the end of 2025 and introduces several new tax benefits.
The OBBBA makes permanent the seven tax brackets (10%, 12%, 22%, 24%, 32%, 35%, 37%), increases the standard deduction, raises the child tax credit to $2,200, permanently increases the estate tax exemption to $15 million, and introduces new temporary deductions for tips, overtime, and seniors.
The OBBBA creates several new above-the-line deductions available to both itemizers and non-itemizers:
The OBBBA added an extra 5% increase to the inflation-adjusted standard deduction for 2025:
| Filing Status | 2025 | 2026 |
|---|---|---|
| Single | $15,750 | $16,100 |
| Married Filing Jointly | $31,500 | $32,200 |
| Head of Household | $23,625 | $24,150 |
| Married Filing Separately | $15,750 | $16,100 |
Additional Standard Deduction for Seniors (65+) and Blind:
A new retirement savings vehicle for children under 18. The federal government will contribute $1,000 for U.S.-born citizen children born between January 1, 2025 and December 31, 2028. Parents can file Form 4547 with their tax return to enroll.
The OBBBA permanently increases the estate, gift, and generation-skipping transfer (GST) tax exemption to $15 million per individual ($30 million for married couples) starting in 2026. This replaces the TCJA provisions that were set to sunset, which would have dropped the exemption to approximately $7 million.
| Year | Individual Exemption | Married Couple |
|---|---|---|
| 2025 | $13,990,000 | $27,980,000 |
| 2026 | $15,000,000 | $30,000,000 |
| 2027+ | Indexed for inflation | Indexed for inflation |
The OBBBA temporarily increases the SALT deduction cap:
For taxpayers with modified adjusted gross income over $500,000 ($250,000 for married filing separately), the deduction phases out but will not be reduced below $10,000 ($5,000 MFS).
| Account Type | 2025 Limit | 2026 Limit |
|---|---|---|
| 401(k), 403(b), 457 | $23,500 | $24,500 |
| 401(k) Catch-up (Age 50+) | $7,500 | $8,000 |
| 401(k) Super Catch-up (Age 60-63) | $11,250 | $11,250 |
| Traditional/Roth IRA | $7,000 | $7,500 |
| IRA Catch-up (Age 50+) | $1,000 | $1,100 |
| SIMPLE IRA | $16,500 | $17,000 |
| HSA (Self-only) | $4,300 | $4,400 |
| HSA (Family) | $8,550 | $8,750 |
High-income earners (those who earned more than $150,000 in the prior year) must make all catch-up contributions on a Roth (after-tax) basis only. Pre-tax catch-up contributions will no longer be permitted for these individuals.
For the first time since 1977, the IRS has increased the slot machine jackpot reporting threshold from $1,200 to $2,000. This threshold will be indexed for inflation starting in 2027.
Important Change: Beginning in 2026, gambling losses can only offset up to 90% of gambling winnings (down from 100%). This means even gamblers who break even may owe taxes on 10% of their winnings.
Example: A taxpayer with $100,000 in gambling winnings and $100,000 in losses can only deduct $90,000, leaving $10,000 subject to tax.
Starting in 2025, the IRS has implemented Form 1099-DA for digital asset transactions. Centralized crypto exchanges like Coinbase will report your crypto transactions to both you and the IRS.
Reminder: All cryptocurrency transactions are taxable and must be reported, whether or not you receive a 1099-DA.
| Year | Exclusion Amount |
|---|---|
| 2025 | $130,000 |
| 2026 | $132,900 |
International reporting requirements remain unchanged:
The new clean vehicle tax credit (up to $7,500) and used clean vehicle credit (up to $4,000) have been accelerated to expire. Neither credit is available for vehicles purchased after September 30, 2025.
The tax landscape is more complex than ever. Our experienced team at Vega & Company CPAs can help you navigate these changes and develop strategies to minimize your tax burden while maintaining compliance. Contact us to schedule a consultation.
Tax law changes can significantly impact your financial situation. Let our experts help you make the most of new deductions and credits while avoiding costly mistakes.