The “One Big Beautiful Bill Act” (the OBBBA), signed into law in July 2025, created sweeping tax changes for individuals and small business owners. It permanently extends a number of tax law provisions, modifies others and creates several new tax-saving credits, deductions and other opportunities. These changes will affect many taxpayers as they file their annual income returns, which are due by April 15, 2026.
This series of articles spotlights key tax issues and changes made to tax law in 2025 that will affect the 2026 income tax filing season and the years to come, as a result of the OBBBA. Additional articles will be added as the full effects of the law on taxpayers and tax professionals are explored.
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The Tax Cuts and Jobs Act (TCJA)—the massive tax law enacted during the president’s first term—included several fundamental changes in the tax treatment of individuals. Generally, the changes were made in conjunction with other basic provisions for individuals. This included the tax rates and brackets used by individuals, the standard deduction claimed in lieu of itemizing deductions, and the suspension of personal exemptions.
1. Individual tax rates: The TCJA replaced the previous tax rate structure with seven brackets of 10%, 12%, 22%, 24%, 32%, 35%, and 37%. It also adjusted the bracket income ranges in a manner that favored upper-income taxpayers. These changes were effective for the tax years spanning 2018 through 2025.
Absent any subsequent legislation, the tax rates were scheduled to return to pre-TCJA levels, with a top tax rate of 39.6% instead of the current top 37% rate. But the OBBBA preserves the current rates going forward on a permanent basis.
Along with the extensions, the OBBBA makes some other technical tweaks that may benefit some individuals in the lower tax backets. All brackets will continue to be adjusted annually for inflation. Bottom line: Clients may save more on taxes in upcoming years.
2. Standard deduction: The TCJA turned things upside down by substantially increasing the standard deduction while reducing or eliminating tax breaks for certain itemized deductions. As a result, millions of taxpayers who traditionally itemized deductions have switched to the standard deduction.
Notably, under the TCJA, the standard deduction was effectively doubled to $12,000 for single filers and $24,000 for joint filers for 2018 through 2025, with inflation indexing. For example, the standard deduction for 2025 was indexed to $15,000 for single filers and $30,000 for joint filers.
Not only does the OBBBA preserve the higher amounts for the standard deduction, it bumps up to the figures for 2025 to $15,750 for single filers and $31,500 for joint filers. The new law also authorizes a new temporary deduction of $6,000 for senior citizens for 2025 through 2028. We will have more on this new deduction later in the series. Note that this new deduction for seniors is in addition to the existing extra $2,000 standard deduction that currently is provided for seniors age 65 and over or blind.
3. Personal exemptions: Personal exemptions have been part of personal tax returns for decades. Generally, you could claim one exemption for yourself, one for your spouse (if filing jointly), and one for every dependent you support during the tax year, subject to several requirements.
The exemption amount, which was indexed annually, was $4,050 in 2017. But personal exemptions were suspended by the TCJA from 2018 through 2025. They were scheduled to be revived in 2026.
Now the OBBBA eliminates personal exemptions—permanently. However, the rules applying to dependents may still come into play for various other tax purposes.
In summary: These three extensions in the OBBBA don’t require any action by clients. But they should account for the changes when tax planning for the end of the year and beyond. Help your clients coordinate strategies to maximize their tax benefits.
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