OBBBA Tax Planning in 2025 & 2026: Smart Moves for Families

If you are wondering, “Is this new One Big Beautiful Bill Act going to help me or surprise me?” you are not alone.

The One Big Beautiful Bill Act (OBBBA) includes a number of changes that can either quietly cost you money or create meaningful planning opportunities, depending on how proactive you are.

To help make sense of it, we have created a detailed checklist you will find at the end of this blog and as an attached PDF resource. We will use that same checklist in one-on-one meetings to walk through how OBBBA tax planning in 2025 and 2026 may apply to your specific situation.

Big Picture: What the OBBBA Changes Mean for Everyday Taxpayers

At a high level, OBBBA does three important things that matter to many families:

• It extends and adjusts the current tax rate structure instead of allowing prior rules to expire, which gives us a little more predictability when planning around tax brackets and retirement withdrawals.
• It adds targeted tax breaks for certain groups, including seniors, workers who earn overtime or tips, and people purchasing certain new vehicles.
• It reshapes several deductions and credits, including charitable giving, the SALT cap, adoption credits, premium tax credits, and more, which makes tax timing and income management even more important.

Our attached OBBBA checklist breaks these changes into practical categories such as tax planning, child planning, education, and miscellaneous or estate issues. It then walks through simple Yes/No questions so we can quickly identify which opportunities may apply to you.

Key New Deductions and Credits to Know About

Here are some of the changes we expect many families to want to review closely.

Extra Deduction for Seniors

If you or your spouse is age 65 or older, OBBBA creates a new senior deduction of $6,000 per eligible person on top of other deductions for tax years beginning in 2025.

From a planning standpoint:

• This can make Roth conversions, capital gain harvesting, and strategic IRA withdrawals more attractive in certain income ranges.
• It may also allow us to recognize more income each year without pushing you into an uncomfortable tax bracket.
• The additional deduction begins to phase out once taxable income reaches $150,000 per year.

Our checklist specifically asks whether you or your spouse is age 65 or older so we can factor that into your retirement income plan.

Below-the-Line Charitable Deduction Starting in 2026

Beginning in 2026, OBBBA introduces a new charitable deduction for taxpayers who do not itemize, up to $1,000 for single filers and $2,000 for married couples filing jointly. At the same time, it adds a 0.5% AGI floor for itemized charitable deductions, which may be more relevant for higher-income donors.

That creates a few planning opportunities:

• If you are charitably inclined and usually take the standard deduction, you may now receive a tax benefit for gifts that previously did not provide one.
• If you are a higher-income donor, it may make sense to accelerate larger gifts into 2025 or consider using a donor-advised fund before the new floor and caps fully take effect.

SALT Cap and High-Tax Situations

OBBBA significantly raises the state and local tax deduction cap to $40,000 starting in 2025, with modest annual increases through 2029 before reverting back to $10,000 in 2030. The benefit begins to phase out once MAGI exceeds $500,000.

This may matter more than many people realize if:

• You pay substantial property taxes
• You own or are considering purchasing a second home
• You live in or may move to a higher-tax state
• You are considering a large Roth conversion or realizing significant capital gains in 2025 or 2026

Our checklist helps identify whether your income is near those phaseout thresholds and whether this expanded deduction may create a planning opportunity.

New Deductions for Tips, Overtime, and Car Loan Interest

If you or your spouse earns a meaningful portion of income from tips or overtime, or if you plan to finance a qualifying new vehicle assembled in the U.S., OBBBA adds several new planning levers:

• A deduction for qualified overtime pay, subject to MAGI phaseouts
• A deduction for certain tip income, also phased out at higher income levels
• A car loan interest deduction of up to $10,000 per year on qualifying new vehicles purchased between 2025 and 2028, phased out above $100,000 of MAGI for single filers and $200,000 for married couples filing jointly

Our checklist helps us evaluate:

• Whether tips and overtime are being accurately reflected on pay stubs and W-2s
• Whether your income falls into the range where these deductions actually produce a benefit
• Whether it makes sense to time a vehicle purchase during the 2025 to 2028 window and how much debt versus cash to use

Planning for Families and Kids Under OBBBA

Families may also benefit from several child-related and education-related changes under the law.

Enhanced Child Tax Benefits

If you claim children as dependents, OBBBA may provide additional planning opportunities:

• The Child Tax Credit increases to $2,200, with a refundable portion of $1,700
• A new $1,000 “Trump Account” credit is available for each child born in 2025 or later, but it must be claimed by opening an approved account before the child turns 18

From a planning perspective, we want to make sure:

• New parents understand the account must actually be opened since the credit is not automatic
• That strategy is coordinated with 529 plans, education savings, and long-term gifting goals

Childcare and Dependent Care Flexibility

If you pay for daycare, after-school programs, or in-home care, OBBBA expands the available planning tools:

• The Dependent Care FSA limit increases to $7,500 starting in 2026
• The Child and Dependent Care Credit is enhanced and may range from 20% to 50% of qualifying expenses, depending on income

We will want to compare:

• Whether the FSA, the tax credit, or a combination of both gives you the better result
• How this fits into your cash flow planning
• Whether your employer benefits elections need to be updated to capture the full advantage

Adoption and Education Planning

For families planning to adopt, OBBBA makes up to $5,000 of the $17,280 adoption tax credit refundable. That can be especially meaningful for families with lower current tax liability.

On the education side:

• Beginning in 2026, up to $20,000 per year per child can be used from a 529 plan for K-12 expenses
• 529 plans may also be used for a broader list of qualified education expenses, including trade schools, professional certificates, and continuing education programs

These changes give families more flexibility and may allow education planning to become more integrated with broader tax and cash flow planning.

Health Coverage, Premium Tax Credits, and the Return of the Cliff

OBBBA does not just change tax rules. It also affects health coverage decisions that flow through your tax return.

For households using Marketplace coverage, one major issue is the return of a steep Premium Tax Credit cliff around 400% of the Federal Poverty Level beginning in or after 2026.

In practical terms, that means:

• A relatively small increase in income from a Roth conversion, one-time bonus, or consulting income could cause you to lose the entire Premium Tax Credit
• That could create a very unpleasant surprise at tax time if income is not carefully managed

Our checklist flags this issue for anyone using Marketplace coverage and helps us evaluate MAGI-reduction strategies such as:

• Retirement plan contributions
• HSA or FSA contributions
• Tax-free or lower-tax income sources

In some years, good planning may mean intentionally keeping income below the cliff and shifting tax work to a different year when it will not jeopardize a health insurance subsidy.

Business Owners, ISOs, and Depreciation

If you own a business, receive incentive stock options, or plan to make large capital purchases, OBBBA may create additional planning opportunities.

For example:

• 100% bonus depreciation remains available on qualifying business assets, allowing certain purchases to be fully expensed instead of depreciated over time
• Changes to the Alternative Minimum Tax may affect how and when it makes sense to exercise incentive stock options

This is where coordination matters. We want to work alongside your CPA to evaluate:

• When to make large equipment purchases
• How to structure compensation
• Whether it makes sense to accelerate or delay certain tax decisions
• How ISO exercises fit into your broader retirement and tax planning strategy

Estate, Legacy, and Long-Term Planning

One issue that often catches high-net-worth families off guard is the assumption that estate tax rules will soon revert to lower exemption levels. OBBBA instead makes the higher estate and gift lifetime exemption permanent beginning in 2026, with the basic exclusion amount increasing to around $15 million and then indexing over time.

That gives us a good opportunity to revisit:

• Whether older estate planning documents and trust structures still make sense
• Whether annual exclusion gifting, 529 funding, or charitable planning should play a larger role in your legacy strategy
• How to align your estate plan with your values and long-term family goals

For many families, this is about more than tax efficiency. It is also about being intentional with generosity, family support, and the legacy you want your wealth to leave behind.

Bringing It All Together: Your OBBBA Checklist and Next Steps

OBBBA is a significant law with changes that affect everything from overtime pay and vehicle financing to adoption credits, Marketplace subsidies, and estate planning. No single article can cover every detail, which is exactly why we built and licensed the detailed “What Important Issues Should I Consider Regarding Changes Made by the OBBBA?” checklist attached to this blog.

Here is how we use it:

• Walk through each section, including tax planning, child planning, education, health coverage, business issues, and estate considerations
• Mark Yes or No on each question to quickly identify which provisions may apply
• Prioritize opportunities and risks based on your income, life stage, and goals
• Coordinate with your CPA so tax planning and tax filing are working together
• Update your financial plan and investment strategy to reflect the tax environment for 2025 and 2026 rather than relying on what worked under prior law

At Presidio Financial, we believe good planning helps remove financial stress and allows people to be more thoughtful, more generous, and more confident with their decisions. Our role is to help you stay disciplined, invest wisely, and make informed, evidence-based decisions about your money and your taxes.

If you are curious or concerned about how OBBBA tax planning in 2025 and 2026 may affect your situation, let’s talk. Bring your latest tax return, and we can use the OBBBA checklist below to begin building a tailored game plan.