The One Big Beautiful Bill (OBBBA), signed July 4, 2025, is now fully live for the 2026 tax year. Most coverage of it is either a partisan press release or a wall of dollar figures with no context. Here's what it actually changes, who it actually helps, and who it quietly leaves out.
The permanent brackets, finally
The headline nobody's shouting about: the seven TCJA tax brackets (10%, 12%, 22%, 24%, 32%, 35%, 37%) are now permanent. Without this bill, the top rate was scheduled to snap back to 39.6% automatically. That reset is off the table. If you were budgeting around a tax hike that was baked into prior law, stop — it's not happening.
The standard deduction jump
For 2026: $32,200 for married couples filing jointly, $16,100 for single filers, $24,150 for heads of household. If you're 65 or older, add another $2,050 (single) or $1,650 per qualifying spouse (joint) on top of that. This isn't a one-time bump — it's now indexed and locked in as the new baseline going forward.
The deductions with an expiration date
This is the part every "tax cuts for everyone" headline conveniently skips: several of the bill's most talked-about provisions are temporary, running 2025 through 2028 only.
- No tax on tips: a new above-the-line deduction of up to $25,000 for reported tip income, subject to income phaseouts. Above-the-line means you get it whether you itemize or take the standard deduction — but it expires after 2028 unless Congress acts again.
- No tax on overtime: similar structure, similar sunset date.
- Senior bonus deduction: an extra $6,000 per person ($12,000 for a qualifying married couple) if you're 65+ by December 31 of the tax year. It phases out starting at $75,000 MAGI single / $150,000 joint, and disappears entirely above that. Also temporary through 2028.
The catch nobody mentions: "temporary through 2028" means these deductions are a political football for the next two election cycles. Don't build a five-year financial plan assuming the tip deduction or senior bonus still exists in 2029 — plan for the years you're guaranteed, and treat anything beyond as a bonus if it gets extended.
SALT cap: bigger, but not for everyone
The state and local tax deduction cap jumps from $10,000 to $40,000 for joint filers ($20,000 single) — genuinely significant if you live in a high-tax state and itemize. But there's a phase-out starting at $500,000 MAGI that fully claws the benefit back down to the old $10,000 cap by $600,000 MAGI. Translation: this helps upper-middle-income homeowners in high-tax states. It does close to nothing for the very high earners who'd benefit most from a bigger deduction, and it does nothing at all if you take the standard deduction instead of itemizing.
The estate tax number that matters to almost nobody, and enormously to some
The lifetime estate and gift tax exclusion jumps to $15 million per person for 2026 — $30 million for a married couple with proper portability planning. If that's irrelevant to your situation, that's because it's designed for a very small number of very wealthy estates. If it is relevant, this is a meaningfully larger window than you had under the old $13.99 million figure, and it's worth a conversation with an estate attorney sooner rather than later given the same 2028 political uncertainty hanging over everything else in this bill.
Retirement accounts got real upgrades
401(k), 403(b), and government 457 plan limits rise to $24,500 for 2026, with a $8,000 standard catch-up for those 50+. There's also a "super catch-up" under SECURE 2.0 letting those aged 60-63 contribute an extra $11,250. The IRA limit rises to $7,500. One change that will trip people up: if you earned more than $150,000 in 2025, your catch-up contributions in 2026 must go into a Roth account — pre-tax catch-up contributions are no longer an option at that income level. If your payroll system hasn't flagged this for you already, check it yourself before your next paycheck.
The reporting change that actually catches freelancers off guard
Form 1099-K reporting threshold drops to $5,000 in gross payment volume starting this year — down from the much higher thresholds of prior years. If you're getting paid through Venmo, PayPal, or similar platforms for freelance or business work, expect a 1099-K this year even at fairly modest income levels. This ties directly into what we cover in our quarterly estimated tax guide — more income getting formally reported means more scrutiny if your estimated payments don't match.
Bottom line
This bill is not a uniform tax cut. It's a higher standard deduction for almost everyone, several generous but expiring deductions aimed at specific groups (tips, overtime, seniors), a SALT benefit that mostly helps upper-middle earners in high-tax states, and a dramatically larger estate tax shelter for a small number of wealthy households. Know which bucket you're in before you assume this bill "helps" or "doesn't help" you — the honest answer depends entirely on your income, age, and state.