The new OBBBA became law this year, and while some headlines have focused on a few flashy provisions, the more meaningful impact for most households is subtler — and more planning-related. 

Some changes affect 2025 returns, while others begin in 2026. The bigger takeaway is that tax planning is becoming more nuanced, and small decisions may matter more than they used to. 

Here are a few highlights worth knowing. 

Changes to Tax Brackets (and Why Inflation Matters) 

While the tax brackets themselves haven’t changed dramatically, the way the IRS calculates inflation has. Beginning in 2026, more income will fall into the 10% bracket rather than the 12% bracket, which may result in modest tax savings over time. 

New Deductions Getting the Headlines 

Several new deductions have received attention, including the tip deduction, overtime pay deduction, and car loan interest deduction. These are available whether you take the standard deduction or itemize. 

Each deduction comes with its own income limits and phase-outs, and each uses a different definition of Modified Adjusted Gross Income (MAGI). In other words, “your MAGI” now depends on what it’s being used for, rather than being an easy definition. This makes thoughtful planning more important than ever. 

The Senior Deduction: Helpful, With Important Caveats 

For individuals who turn age 65 or older during the tax year, the new law adds a $6,000 per-person deduction. 

A few things to be aware of: 

• This deduction may not be claimed if you are Married Filing Separately. 

• It is subject to income-based phase-outs: 

• • For Married Filing Jointly: the phase-out begins over $150,000 of MAGI. The deduction is eliminated over $250,000. 
  • For Single Filers: the phase-out begins over $75,000 and the deduction is eliminated over $175,000.

This makes income and tax-bracket management increasingly important going forward. 

A Meaningful (and Conditional) Change to the SALT Deduction 

For those who itemize, the State and Local Tax (SALT) deduction cap has increased from $10,000 to $40,000. 

There are income limits: 

• For Married Filing Jointly households, the deduction begins to phase out over $500,000 of income and returns to the $10,000 limit at $600,000. 

Even with these limitations, this change can create planning opportunities, particularly around the timing of property tax payments between December and January to potentially maximize deductions in certain years. 

Some Potential Good News for Educators 

Educators can continue to deduct classroom-related expenses up to $300 regardless of whether they itemize. In addition, if you spend more than $300 and itemize, those additional expenses may also be deducted. 

For example: you spend $1,200 on items for your classroom. In 2025, $300 may be deducted. In 2026, the $300 is still deductible if not itemizing, while the full $1,200 may be deductible if itemizing. 

Stepping Back 

This is only a snapshot of a long and complicated tax bill. You may want to consider working with a qualified tax professional to understand how these changes apply to your specific situation. 

We don’t prepare individual tax returns, but we’re always happy to work alongside you and your tax professional to make sure your financial plan continues to support the life you’re building, both now and in the years ahead. We’re here to support you with clarity and care. Talk to us if you have questions!  

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