Written by: Brandon Echelard
The One Big Beautiful Bill Act (OBBBA), signed on July 4, 2025, introduces significant and permanent reforms to U.S. tax provisions beginning in the 2026 tax year. These adjustments affect tax deductions, credits, and thresholds. This article will provide an outline of details, key implications, and action steps for the current and future tax years.
The topics to be covered will derive from Sections 70101, 70102, 70107, 70401, and 70402. Each section introduces changes to standard deductions, tax brackets, Alternative Minimum Tax (AMT) exemptions, employer-provided childcare credits, and adoption credits. These adjustments will impact all taxpayers ranging from individuals to businesses. Some of these changes may influence market trends, as well as industry standards.
Section 70101 will permanently extend the lower individual income tax rates from the Tax Cuts and Jobs Act of 2017, while increasing the income threshold for each rate. This provision provides filers with the ability to receive more advantageous rates at their current income level.
Section 70102 increases the standard deduction amounts for taxpayers. This provision increases the thresholds as follows: $16,100 for single and married filing separately, $32,200 for married filing joint and surviving spouses, and $24,150 for head of household. This provision will benefit all individual filers by providing each of them with a larger deduction of their taxable income.
Section 70107 extends the increased Alternative Minimum Tax Exemption (AMT) amounts, as well as adjusts phaseout thresholds from the Tax Cuts and Jobs Act of 2017. This provision sets the 2026 tax year’s exemption amount to $90,100 for single filers and $140,200 for married filling joint filers. The phaseout for filers begins at $500,000 for single and $1,000,000 for married filing joint filers. These AMT exemption phaseouts will reduce 50 cents of every dollar once AMT income surpasses the income threshold. In other words, the AMT exemption will be phased out faster. High-income taxpayers should seek assurance on whether their AMT exposure is eliminated, and if adjusting to AMT strategies like timing of incentive stock option exercises would be in the taxpayers’ best interest.
Section 70401 pertains to the enhancement of employer provided childcare credit. This provision increases the maximum amount of employers provided childcare tax credit from $150,000 to $500,000 and $600,000 if the employer is an eligible small business. Taxpayers should determine whether their business qualifies as a small business and inquire on whether using external childcare providers or educational programs will be in the taxpayers’ best interest.
Section 70402 allows up to $5,000 of the adoption credit to be refundable. Any amount above the $5,000 cap can be carried forward for up to five years. Taxpayers should confirm whether their deduction in their tax liability will be low enough to receive a cash refund for qualified adoption expenses up to this limit.
It is essential to stay informed on the quickly changing environment of tax provisions. It is important to consult with a tax professional you can trust which is why we are committed to providing you with insights on the impact of this tax bill in hope that you may make confident decisions that fit your best interest. Thank you for trusting our firm as your partner, which we deeply value. Please reach out if you would like to discuss the impact of these provisions with your certified tax professional today.
Source
(Source: H.R.1 – One Big Beautiful Bill Act) - https://www.congress.gov/bill/119th-congress/house-bill/1/text
(Source: One, Big, Beautiful Bill Provisions – Individuals and workers) - https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions-individuals-and-workers