One Big Beautiful Bill: US Tax Changes for 2026
Published: 2026-03-24
The One Big Beautiful Bill Act (OBBB) represents the most significant US tax legislation since the Tax Cuts and Jobs Act of 2017. Signed into law in 2025, the OBBB permanently extends the TCJA's individual tax provisions that were originally set to expire after December 31, 2025. For the 2026 tax year, this means continued lower rates, higher standard deductions, and several new benefits including an expanded SALT cap and increased Child Tax Credit.
1. OBBB Act Overview
The core of the OBBB Act is the permanent extension of TCJA provisions. Without this legislation, the 2026 tax year would have reverted to pre-2018 rules — higher rates, lower standard deductions, and the return of personal exemptions. Instead, the OBBB maintains the streamlined seven-bracket system and adds several taxpayer-friendly enhancements:
- Permanent TCJA extension: The seven tax brackets (10/12/22/24/32/35/37%) are made permanent with annual inflation adjustments.
- SALT cap increase: State and local tax deduction cap raised from $10,000 to $40,000.
- Child Tax Credit boost: Increased from $2,000 to $2,200 per qualifying child.
- Senior standard deduction: New additional $4,000 deduction for taxpayers aged 65 and older.
- No tax on tips: Tip income excluded from federal income tax for eligible workers.
- No tax on overtime: Overtime pay excluded from federal income tax through 2028.
2. Standard Deduction for 2026
The OBBB permanently maintains the nearly doubled standard deduction introduced by the TCJA. For 2026, inflation adjustments push the amounts slightly higher:
| Filing Status | 2025 | 2026 |
|---|---|---|
| Single | $15,750 | $16,100 |
| Married Filing Jointly | $31,500 | $32,200 |
| Head of Household | $23,625 | $24,150 |
Additionally, taxpayers aged 65 and older receive a new senior standard deduction of up to $4,000. Combined with the existing additional standard deduction for seniors ($1,600 for single, $1,300 for married), this provides substantial tax relief for retirees.
3. 2026 Federal Tax Brackets
The OBBB maintains the same seven marginal rates from the TCJA. For 2026, the bracket thresholds are inflation-adjusted:
| Rate | Single | Married Filing Jointly |
|---|---|---|
| 10% | $0 – $12,150 | $0 – $24,300 |
| 12% | $12,151 – $49,475 | $24,301 – $98,950 |
| 22% | $49,476 – $105,500 | $98,951 – $211,000 |
| 24% | $105,501 – $201,350 | $211,001 – $402,700 |
| 32% | $201,351 – $255,925 | $402,701 – $511,850 |
| 35% | $255,926 – $639,750 | $511,851 – $767,700 |
| 37% | Over $639,750 | Over $767,700 |
4. Key Changes in Detail
SALT Deduction Cap: $10,000 → $40,000
One of the most impactful changes is the quadrupling of the state and local tax (SALT) deduction cap. Since 2018, taxpayers who itemize could only deduct up to $10,000 in state and local income, sales, and property taxes combined. The OBBB raises this cap to $40,000 for single filers and married couples filing jointly. This is particularly beneficial for homeowners in high-tax states such as California, New York, New Jersey, and Connecticut.
Child Tax Credit: $2,200 per Child
The Child Tax Credit increases from $2,000 to $2,200 per qualifying child under age 17. The refundable portion (Additional Child Tax Credit) is also enhanced, allowing lower-income families to receive more of the credit as a refund even if they owe little or no tax.
Senior Standard Deduction: $4,000
A new provision adds an extra $4,000 to the standard deduction for taxpayers aged 65 and older with income below $75,000 (single) or $150,000 (married filing jointly). This effectively means a single senior with income under $75,000 could have a standard deduction of approximately $21,700 ($16,100 + $1,600 additional + $4,000 senior).
5. Impact Example: $100,000 Single Filer
Let's calculate the 2026 federal income tax for a single filer earning $100,000 annually:
Step 1: Calculate Taxable Income
Gross Income: $100,000
Standard Deduction: −$16,100
Taxable Income: $83,900
Step 2: Apply Tax Brackets
10% on $12,150 = $1,215.00
12% on ($49,475 − $12,150) = 12% on $37,325 = $4,479.00
22% on ($83,900 − $49,475) = 22% on $34,425 = $7,573.50
Federal Income Tax: $13,267.50
Step 3: Add FICA Taxes
Social Security (6.2%): $6,200.00
Medicare (1.45%): $1,450.00
Total FICA: $7,650.00
Summary
Federal Income Tax: $13,267.50
FICA: $7,650.00
Total Federal Taxes: $20,917.50
Effective Federal Tax Rate: 20.9%
Take-Home (before state tax): $79,082.50
Note: This calculation excludes state income tax, local taxes, and any pre-tax deductions (401(k), HSA, etc.) that would further reduce taxable income.
6. What This Means for You
If the TCJA provisions had expired, the same $100,000 single filer would have faced a standard deduction of only $8,650 (2017 level, inflation-adjusted) and higher rates in a four-bracket structure. The OBBB saves this taxpayer an estimated $2,000–$3,000 per year compared to pre-TCJA rules. For families with children, the increased CTC provides additional savings.
Use our salary calculator to see your personalized 2026 take-home pay with the latest brackets.
Calculate your 2026 take-home pay with the latest OBBB tax changes:
US Salary Calculator →Sources: IRS Revenue Procedure, Tax Foundation "One Big Beautiful Bill Act" analysis, Congressional Budget Office (CBO) score.
Frequently Asked Questions
What is the One Big Beautiful Bill Act?
The One Big Beautiful Bill Act (OBBB) is legislation that permanently extends the Tax Cuts and Jobs Act (TCJA) provisions that were set to expire after 2025. It maintains the seven-bracket structure with the same rates (10%, 12%, 22%, 24%, 32%, 35%, 37%) and includes inflation-adjusted thresholds for 2026, along with new benefits like an expanded SALT cap and increased Child Tax Credit.
What is the 2026 standard deduction under the OBBB Act?
For 2026, the standard deduction is $16,100 for single filers and $32,200 for married filing jointly, up from $15,750 and $31,500 in 2025. These amounts reflect inflation adjustments under the permanently extended TCJA framework.
What is the new SALT deduction cap for 2026?
The OBBB Act raises the state and local tax (SALT) deduction cap from $10,000 to $40,000 for most filers. This is a significant change that benefits taxpayers in high-tax states like California, New York, and New Jersey who itemize their deductions.