Key Changes Under the “One Big Beautiful Bill Act” for 2025 & 2026 Highlights

February 10, 2026

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2025 Highlights

New Senior & Household Deductions

New Senior Deduction: $6,000 / $12,000 (Single(S) / Married Filed Jointly (MFJ))


  • Must be age 65 or older
  • Income < $75,000 / $150,000 (S/MFJ)
  • Phased out at $175,000 / $250,000 (S/MFJ)


State And Local Tax (SALT)


  • Limit increase to $40,000, prior year was $10,000
  • Income < 500,000, phased out ~$600,000 (Both Single and MFJ)
  • Increased Standard Deduction - $15,750 / $31,500 (S/MFJ)


Additional Standard Deduction - $2,000 for 65 or older

Federal “No Tax” Deductions

Tips - Applies to service industry, rideshare, hotel personal and others


  • Maximum Deduction $25,000
  • Income < $150,000 / $300,000 (S/MFJ)


Overtime - Deduct the premium portion of overtime pay


  • Maximum deduction $12,500 / $25,000 (S/MFJ)
  • Income < $150,000 / $300,000 (S/MFJ)
  • Phased out at $275,000 / $550,000 (S/MFJ)


Car Loan Interest - New cars with final assembly in the U.S.



  • Maximum deduction $10,000
  • Income < $100,000 / $200,000 (S/MFJ)
  • Phased out $150,000 / $250,000 (S/MFJ)

Children & Family

Child Tax Credit - $2,200 per child, under 17 and $500 for all others

New born baby - $1,000 government deposit into a savings account

  • Born between 1/2025 and 12/2028
  • Converted to an IRA in 18 years

Other 2025 Items

Form 1099-K Reporting


  • Threshold for receiving a 1099-K form has reverted to the pre-tax year 2021 conditions
  • Gross amount must exceed $20,000 and more than 200 transactions


HSA Contribution Limits Increase


  • $4,300 for self-only coverage
  • $8,550 for family coverage


401(k) Contribution Limits Increase


  • $23,500 for employee contributions
  • $7,500 for catch-up contributions for individuals 50 or older


Standard Business Mileage Rate - 70 cents per mile

Standard Medical Mileage Rate - 21 cents per mile

Standard Charitable Mileage Rate - 14 cents per mile

2026 Highlights

Charitable Donations

  • Non-itemizers may take $1,000/2,000 (Single/MFJ) in addition to the standard deduction
  • Itemizers now face a 0.5% AGI floor - only donations exceeding .5% of income are deductible

Retirement Contribution Limits

401k, 403b

  • Employee contribution limit: $24,500
  • Catch-up: (Age 50+) $8,000 (Total $32,500)
  • “Super” Catch-up (Age 60-63): $11,250 (Total $35,750)

IRA

  • Standard contribution: $7,500
  • Catch-Up (Age 50+): $1,100
  • Single: full deduction income up to $77,000
  • MFJ: full deduction income up to $123,000

ROTH IRA

  • Standard contribution: $7,500
  • Catch-Up (Age 50+): $1,100
  • Single: full deduction income up to $153,000
  • MFJ: full deduction income up to $242,000

Backdoor Roth strategy

  • This strategy allows higher income taxpayers to fund a Roth account by first making a non-deductible traditional IRA contribution, then converting that amount to a Roth IRA.

Expanded K-12 Benefits using 529 funds

  • Withdrawal Limit - increased from $10,000 to $20,000
  • Expanded Qualified Expenses - materials, tutoring, standardized testing, homeschooling
  • Continuing Education - adults can use 529 funds for their own career changes and certificates at eligible institutions
  • Professional Licensing - funds can be used for preparation and exam fees for professional licenses such as the CPA exam or the Bar exam