The One Big Beautiful Bill Act (OBBBA) introduces significant changes to federal income tax rules. Some have already taken effect, but many provisions that could affect your individual tax liability don’t kick in until 2026. Read on for a sneak peek into some of these provisions so you can begin to formulate your tax strategies. Some forthcoming changes may also impact tax planning for 2025.

Why It Matters

Many of these changes will alter the balance between income, deductions and credits and in ways that affect high-income taxpayers most. Decisions about charitable giving, state tax payments, education savings, and even whether to itemize could look very different in 2026 than they do today. Because some strategies must be implemented in 2025 to secure the most favorable tax outcomes, understanding these provisions now allows you to make proactive moves before the window closes.

Key Changes for 2026

Under the OBBBA, beginning in 2026:

• Charitable contribution deductions will be subject to a floor of 0.5% of your adjusted gross income (AGI).
• Nonitemizers can claim a deduction for charitable cash contributions, up to $1,000 for single filers and $2,000 for married couples filing jointly.
• For taxpayers in the highest marginal tax bracket (37%), the benefit of itemized deductions (except the qualified business income deduction for owners of pass-through businesses) will be capped at 35 cents per dollar, versus 37 cents per dollar in 2025.
• The personal casualty deduction is limited to losses resulting from federally declared disasters and certain state-declared disasters.
• Only 90% of gambling losses are deductible. (Gambling losses still can’t exceed winnings.)
• Certain mortgage insurance premiums may be eligible for the mortgage interest deduction, subject to income-based limitations.
• The annual limit on tax-free withdrawals from Section 529 plans for qualified education expenses doubles to $20,000.
• ABLE accounts are available to individuals who are blind or disabled by a condition that began before age 46 (up from age 26).
• Trump accounts, similar to individual retirement accounts, are available for children under age 18, allowing after-tax contributions from individuals, family, friends and employers of up to $5,000 total per year until the account holder reaches age 18.
• The income thresholds for the alternative minimum tax (AMT) exemption phaseout return to their 2018 levels ($1 million for joint returns and $500,000 for other taxpayers, adjusted annually for inflation going forward), and the phaseout reduction rate doubles, so the exemption will phase out twice as quickly. Specifically, the exemption is reduced by $0.50 for each $1.00 by which your AMT income exceeds the applicable threshold.

The onset of these changes calls for a re-evaluation of your tax plans.

Strategic Decisions for 2025 and Beyond

The OBBBA has triggered significant tax planning shifts for many taxpayers. Together with some of the changes that have already taken effect, the 2026 provisions may prompt the following questions:

Should you claim the standard deduction or itemize deductions? 

In 2026, the standard deduction will increase to:

• $16,100 for single filers,
• $24,150 for heads of households, and
• $32,200 for joint filers. 

Taxpayers who are age 65 or older or blind can claim an existing additional standard deduction. For 2025 through 2028, though, the OBBBA also creates a temporary deduction of up to $6,000 for taxpayers age 65 or older ($12,000 for joint filers). This “senior” deduction is above-the-line, so it may be available, subject to income-based limitations, regardless of whether you claim the standard deduction or itemize deductions.

For some taxpayers, the standard deduction might equal or surpass their itemized deductions. But if you pay significant state and local taxes (SALT), it’s likely that the temporarily expanded SALT deduction (up to $40,400 for 2026) could alone exceed the standard deduction. 

If you opt to itemize, the cap on deductions for those in the 37% tax bracket may incentivize accelerating itemized deductions into 2025 — especially for charitable contribution deductions. The new 0.5% floor on charitable contribution deductions kicks in next year. So the 2025 tax year is generally your last opportunity to deduct the full amount of your donations if you itemize, regardless of your income level. For higher earners, accelerating charitable deductions into 2025 makes even more sense due to the combined effect of the charitable deduction floor and the itemized deductions limit. 

For example, in 2025, a $100,000 contribution by an individual with an AGI of $1 million would receive a tax benefit of $37,000 ($100,000 × 37%). Making the same donation in 2026 would provide a tax benefit of only $33,250 [($100,000 - ($1 million × 0.5%)) × 35%].

How will the 2026 tax law changes affect your AMT liability? 

The answer depends on various factors, including your decision to claim the standard deduction or itemize for 2026. AMT taxable income is calculated differently from regular taxable income for federal income tax purposes. AMT taxable income includes certain income that generally isn’t included in the latter and excludes some deductions. 

In particular, the AMT system disallows the standard deduction and certain itemized deductions. On the one hand, the limit on itemized deductions could reduce the odds of being subject to the AMT in 2026 because a smaller amount of those deductions would be added back when calculating AMT income. On the other hand, large SALT deductions under the temporarily higher cap could increase your AMT exposure next year. But remember, the SALT cap phases out as income increases.