One Big Beautiful Bill Act (OBBBA) removes some uncertainty.
Planning your future tax obligations was tough. That’s because when the last major tax legislation passed in 2017, Congress made much of it temporary because of the extra debt burden it placed on the federal government. That all changed (plus the debt ceiling) with the passage of the One Big Beautiful Bill Act (OBBBA).
Here is a list of the temporary tax laws that will now create more certainty for 2026 and beyond.
Tax rates remain unchanged. They were scheduled to be increased with the top rate returning to 39.6 percent. Instead, it stays at 37 percent.
Personal exemptions are now gone permanently.
The higher child tax credit stays in place. It was scheduled to go back to $1,000 per qualifying child. Instead, it not only remains high, but it sees an increase for 2025 and beyond as it is set to $2,200 per qualifying child.
The changes in itemized deductions remain in place. This includes the $750,000 limit on mortgage interest deduction. The tax limitation for those who itemize also increases from $10,000 to $40,000 for most taxpayers.
Higher standard deductions stay in place and are indexed for inflation. This should continue to reduce the burden of itemizing deductions for most.
The Qualified Business Income deduction, commonly known as the QBI, is also continued. This deduction for small businesses whose profits are taxed on their personal tax return will make tax planning more predictable for solo practitioners and other small businesses.
Higher Estate and Gift tax exemptions remain. They were scheduled to drop from over $15 million single ($30 million joint) to approximately half that amount.
This is just a small portion of the expiring tax rules that are being extended. While most of the above provisions are permanent, some are not. And projections show that this bill will add to the already growing national debt. This means it could be subject to legislative review in future years.
But for now, use this tax clarity to your advantage with quality tax planning.
