The 2026 Tax Revolution: What the 'One Big Beautiful Bill' Means for Your Wallet
- Jan 1
- 2 min read
For years, we’ve been warning our clients about the 2026 "Tax Cliff"—the moment when the 2017 tax cuts were scheduled to expire, sending rates soaring.
That cliff is gone. With the passage of the One Big Beautiful Bill Act (OBBBA), most of those tax cuts are now permanent, and several brand-new deductions have been introduced that could significantly lower your bill this year. At Lattice Group CPA, we’ve analyzed the new code to bring you the five most impactful changes for 2026.
The SALT Cap Revolution: $10,000 is now $40,400
For our clients in high-tax states, this is the headline. The restrictive $10,000 cap on State and Local Tax (SALT) deductions has been raised to $40,400 for 2026.
Who benefits: Homeowners and high-earners who itemize.
The Catch: This benefit begins to phase out if your Modified Adjusted Gross Income (MAGI) exceeds $505,000. If you’re over that limit, your cap gradually reverts toward $10,000.
The $6,000 Senior Bonus Deduction
One of the most surprising additions to the new law is a dedicated deduction for taxpayers aged 65 and older.
The Perk: You can claim an additional $6,000 deduction ($12,000 for couples where both are 65+) on top of the standard deduction.
Income Limits: Full deduction is available for single filers earning under $75,000 and joint filers under $150,000.
No Tax on Overtime and Tips
In an effort to support the "Working Families Tax Cut" initiative, 2026 introduces a major break for hourly and service workers.
Overtime: Certain workers can now deduct up to $12,500 of overtime pay.
Tips: Up to $25,000 in tip income is now deductible for eligible employees.
Pro Tip: Tracking these earnings accurately in your payroll software (like QuickBooks or Xero) is essential to claiming this credit.
Standard Deduction & Brackets for 2026
The IRS has released the new inflation-adjusted amounts. Most taxpayers will still find the standard deduction more beneficial than itemizing:
Single / Married Filing Separately: $16,100
Married Filing Jointly: $32,200
Head of Household: $24,150
The seven tax brackets (10%, 12%, 22%, 24%, 32%, 35%, and 37%) are now permanent, preventing the scheduled jump back to 39.6% for top earners.
The Charitable "Floor" and New Above-the-Line Credit
Charitable giving rules have shifted. If you itemize, you can now only deduct gifts that exceed 0.5% of your AGI. However, to encourage smaller donors, the OBBBA introduced a new $1,000 above-the-line deduction for everyone—even if you take the standard deduction.
2026 Tax Change FAQ
Question | 2026 Answer |
Is the SALT cap still $10,000? | No, it is now $40,400 for most taxpayers. |
Can I deduct my car loan interest? | Yes, under the new law, you can deduct up to $10,000 in personal car loan interest. |
What is the Child Tax Credit for 2026? | It has been increased and made permanent at $2,200 per child. |
Are Personal Exemptions back? | No, they remain at $0 as the higher Standard Deduction was made permanent. |
How Lattice Group CPA Can Help
Tax law hasn't been this volatile in a decade. Whether you're a small business owner trying to navigate the newly permanent Section 199A (QBI) deduction or an individual looking to maximize the new SALT limits, we are here to help. Don’t leave money on the table.
