The One Big Beautiful Bill Act (OBBBA) introduces some of the most significant changes to deductions we’ve seen in years. As we move into the 2026 filing season, individuals, businesses, schools, nonprofits, and investors will all feel the impact. Planning ahead now can help you make the most of the new tax landscape.
Key Deduction Changes for 2025–2026
Higher Standard Deduction
Beginning in 2025, the standard deduction increases to:
- $15,750 for single filers
- $31,500 for married filing jointly
- $23,625 for head of household
For many taxpayers, this shift may make itemizing less advantageous.
New Above-the-Line Deductions (2025–2028)
Two new deductions will be available—even for taxpayers who do not itemize:
1. Senior Deduction
- Up to $6,000 for taxpayers age 65+
- Subject to income limits:
- $150,000 for joint filers
- $75,000 for single filers
2. Vehicle Loan Interest Deduction
- Up to $10,000 of interest paid on qualifying new personal-use vehicles
- Vehicle must be assembled in the U.S.
- Excludes campers and motor homes
- Income limits apply:
- $200,000 for joint filers
- $100,000 for single filers
These deductions may allow more taxpayers to benefit even without itemizing.
Other Notable Deduction Changes
Mortgage Interest Deduction
The limit on mortgage interest for loans up to $750,000 is now permanent.
SALT Deduction Cap
- Increases to $40,000 through 2029
- Phases out by 30% of the excess of modified AGI over $500,000
- Cannot reduce the deduction below $10,000
Miscellaneous Itemized Deductions
These remain permanently suspended, continuing the limitations on unreimbursed employee expenses and similar deductions.
Big Changes Coming in 2026
Starting with the 2026 tax year:
- Higher-income taxpayers will face limits on itemized deductions, reducing the deductible amount for every dollar claimed.
- Charitable contribution rules for non-itemizers change, allowing certain deductions within new thresholds.
- Combined with the higher standard deduction, these shifts may change how taxpayers approach giving, timing expenses, and planning overall tax strategy.
What You Should Be Doing Now
- Reassess your giving strategy—particularly if you make large, charitable contributions.
- Analyze whether itemizing is still worthwhile, or if the standard deduction provides more benefit.
- Consider the timing of deductible expenses, especially those that could be accelerated into 2025.
- For business owners and high-net-worth clients—evaluate how these limits may affect compensation, investments, retirement planning, and entity structure.
Why These Changes Matter Across Sectors
Individuals
Your deduction mix and timing may shift significantly—planning in advance helps maximize available tax benefits.
For-Profit Businesses
Compensation strategies, equipment investments, retirement contributions, and charitable giving decisions may be affected.
Nonprofits & Schools
Understanding how donor deduction rules change helps inform fundraising strategies and year-end communication.
A new era of deduction rules is ahead, and thoughtful planning now can help you benefit later. If you’d like support reviewing your strategy, our team is here to help you move forward with clarity and confidence.