Trump Tax Plan 2026: What It Means for Taxpayers

The Trump tax plan of 2026 is the set of permanent and temporary tax changes created by the One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025. It locks in the 2017 tax brackets for good, raises the standard deduction, and adds new breaks for tips, overtime, car loan interest, and seniors. Most provisions took effect in 2025 or 2026, and several phase out by 2028 or 2029.

This guide breaks down exactly what changed, who qualifies for the new deductions, and what to check on your return before you file. Building year-round tax planning strategies around these changes, rather than scrambling each April, makes the biggest difference in what you actually keep.

What Is the Trump Tax Plan for 2026?

The Trump 2026 tax plan refers to the OBBBA provisions that take full effect starting with the 2026 tax year, filed in early 2027. The law’s biggest job was preventing a tax cliff: without it, the 2017 tax cuts would have expired at the end of 2025, and the top rate would have jumped from 37% back to 39.6%. Federal tax brackets, the standard deduction, and dozens of smaller provisions were all on the same expiration clock.

Instead, the OBBBA made those lower rates permanent and added several new, temporary breaks layered on top. Some of these new pieces, like the deductions for tips and overtime, only run through 2028 unless Congress extends them. Others, like the permanent QBI deduction for small business owners, are built to last.

Quick Summary of the Biggest 2026 Tax Changes

The fastest way to see what changed is to compare the old rules against the new ones side by side. The tax plan 2026 touches brackets, deductions, credits, and business write-offs all at once, so a single comparison table covers more ground than separate explanations.

The table below compares the main provisions before OBBBA (under the expiring 2017 rules) against what applies now, and who each change affects most.

The 7 Tax Changes of Trump Tax Plan in 2026

Seven changes carry the most weight for ordinary taxpayers filing under the Trump tax plan 2026, spanning individual rates, family credits, and business deductions. Each one works differently, and several only apply if you meet specific income or occupation rules.

Individual income tax rates

The seven brackets, 10%, 12%, 22%, 24%, 32%, 35%, and 37%, are now permanent under OBBBA, with the 10% and 12% brackets getting an extra inflation boost in 2026. For 2026, the 37% top rate applies above $640,600 for single filers and $768,700 for married couples filing jointly, per IRS Revenue Procedure 2025-32.

Standard deduction changes

The 2026 standard deduction is $16,100 for single filers, $32,200 for married filing jointly, and $24,150 for heads of household. This is roughly double what the pre-2018 standard deduction would have been, and it remains permanent rather than reverting after 2025.

Child Tax Credit

The Child Tax Credit rose to $2,200 per qualifying child starting in 2025, up from the prior $2,000, and the amount is now indexed to inflation beginning in 2026. The credit phases out at $200,000 MAGI for single filers and $400,000 for joint filers, unchanged from prior law.

SALT Deduction Revisions

The state and local tax (SALT) deduction cap rose from $10,000 to $40,000 in 2025 and $40,400 in 2026, with 1% annual increases through 2029 before reverting to $10,000 in 2030. The cap phases down for taxpayers above roughly $500,000 in MAGI, dropping toward the old $10,000 limit at higher incomes.

Tax Treatment Of Tips And Overtime

Workers in tipped occupations can deduct up to $25,000 in qualified tips, and overtime workers can deduct up to $12,500 single ($25,000 joint) in qualified overtime pay, both through 2028. Both deductions phase out above $150,000 MAGI single or $300,000 joint, and apply whether you itemize or take the standard deduction.

Business deductions

The Qualified Business Income (QBI) deduction is now permanent at 20% for pass-through business owners, and 100% bonus depreciation is permanently restored for qualifying equipment and property. Section 179 expensing also rose to $2.56 million for 2026, letting small businesses write off even more equipment purchases immediately.

Estate and wealth transfer rules

The federal estate and gift tax exemption rose permanently to $15 million per person for 2026, adjusted for inflation going forward, instead of reverting to roughly half that amount. This means far fewer estates owe federal taxes on transfers at death than would have under the pre-OBBBA schedule, though state-level estate rules still vary and choosing the right filing status for a surviving spouse can affect the math in the year of death.

2026 Tax Brackets and Standard Deduction Changes

The 2026 tax brackets keep the same seven rates as 2025, with income thresholds adjusted upward for inflation by about 2.7%. Federal tax brackets determine your marginal rate, meaning only the income inside each bracket gets taxed at that bracket’s rate, not your entire income.

The table below shows where each 2026 bracket starts for single filers and married couples filing jointly.

The above table makes clear that federal income tax brackets stack, so moving into a higher bracket only raises the rate on income above that threshold, not your whole paycheck. Choosing the right filing status also shifts where these brackets fall, since married filing jointly roughly doubles each threshold compared to single filers. 

New and Enhanced Deductions for Workers

Two brand-new deductions target hourly and tipped workers specifically, and both are temporary, running only through the 2028 tax year unless Congress extends them. These deductions reduce taxable income directly, regardless of whether you itemize, and tracking them carefully is one of the simplest ways to maximize your tax refund this filing season. 

No Tax on Tips: Who May Benefit?

Workers in occupations that customarily and regularly receive tips, like servers, bartenders, and salon workers, can deduct up to $25,000 in qualified cash tips from their federal taxable income. The deduction phases out for single filers above $150,000 MAGI and joint filers above $300,000 MAGI, reduced by $100 for every $1,000 over the threshold. Tips from specified service trades like law, accounting, or financial services don’t qualify, and mandatory service charges aren’t considered qualified tips either.

No Tax on Overtime: What Counts?

Only the overtime premium, the extra half of time-and-a-half pay required under the Fair Labor Standards Act, counts toward this deduction, not your entire overtime paycheck. 

Single filers can deduct up to $12,500 and joint filers up to $25,000, with the same $150,000/$300,000 MAGI phaseout that applies to the tips deduction. Both deductions apply to federal income tax only; Social Security, Medicare, and state taxes still apply to tips and overtime as usual.

What Seniors Should Know About the 2026 Tax Plan

Taxpayers 65 and older get a brand-new $6,000 deduction per person ($12,000 for couples where both spouses qualify) on top of the regular standard deduction and the existing additional senior deduction. This new OBBBA senior deduction phases out at 6% of MAGI above $75,000 single or $150,000 joint, disappearing entirely around $175,000 single or $250,000 joint. It runs through the 2028 tax year and requires a valid Social Security number on the return.

Stacked together, a single senior with a modest income can shelter roughly $24,150 of income through the standard deduction, age-based add-on, and new senior deduction combined. This doesn’t directly exempt Social Security benefits from tax, since Social Security taxability still follows its own separate combined-income formula, but it does lower overall taxable income for many retirees.

How the 2026 Tax Plan May Affect Families

Families benefit most from the higher Child Tax Credit, the larger standard deduction, and the expanded employer-provided childcare credit for working parents under the Trump 2026 tax plan. The Child Tax Credit’s jump to $2,200 per child, now adjusted for inflation each year, puts more money back in the hands of parents compared to the $2,000 credit under prior law.

Starting in 2026, the OBBBA also raises the maximum employer-provided childcare tax credit from $150,000 to $500,000 ($600,000 for eligible small businesses), encouraging more employers to offer on-site or subsidized childcare. A new federal scholarship tax credit program for contributions to scholarship-granting organizations also rolled out in many states in 2026, giving families more education funding options.

What Business Owners Should Watch in 2026

Business owners face the most consequential permanent changes in the entire bill, particularly around depreciation, the QBI deduction, and business tax preparation for R&D costs. These provisions reward capital investment and reduce the tax burden on pass-through entities specifically.

The tax changes affecting small business owners that matter most in 2026 include:

• 100% bonus depreciation, now permanent, for qualifying equipment and property placed in service after January 19, 2025
• A permanent 20% QBI deduction, with a wider phase-in range ($75,000 to $150,000 above the threshold) that lets more business owners claim the full deduction
• Section 179 expensing raised to $2.56 million, with a $4.09 million phaseout threshold for 2026
• Full, immediate expensing of domestic research and development costs, reversing the five-year amortization rule from 2022
• A new car loan interest deduction of up to $10,000 per year for new, U.S.-assembled personal-use vehicles

Owners who structure as pass-through entities should also watch how these tax changes affecting small business owners interact with their personal return, since the QBI deduction flows through to Form 1040 rather than the business return itself.

Tax Planning Moves to Consider Before Filing

A handful of proactive moves can meaningfully change what you owe under the new rules, and most need to happen before December 31, not at filing time. Effective tax planning under OBBBA means checking these items now rather than waiting for your tax software to catch everything automatically.

• Check your federal tax refund status regularly during filing season using the IRS Where’s My Refund tool, especially with new Schedule 1-A deductions in play this year
• Track your tips and overtime pay throughout the year, since the deduction depends on accurate reporting on your W-2 or 1099
• Confirm your MAGI against the $150,000/$300,000 and $75,000/$150,000 phaseout thresholds before assuming you’ll get the full deduction
• If you itemize and you’re in the 37% bracket, remember the new 35-cent cap on the tax benefit per dollar of itemized deductions
• Business owners should time equipment purchases to take full advantage of permanent 100% bonus depreciation
• If you’re carrying old IRS balances, paying off IRS tax debt before these new deductions phase in keeps more of the savings working for you instead of going toward interest and penalties
• Anyone behind on returns should prioritize filing past-due tax returns first, since several OBBBA deductions can only be claimed on a properly filed return for the relevant year

Investors weighing ways to reduce capital gains tax should note that capital gains tax brackets stayed at 0%, 15%, and 20% under this law, and that claiming capital losses on your tax return still offsets gains the same way it did before OBBBA.

How Hopkins CPA Firm Can Help You Plan Around 2026 Tax Changes

The OBBBA rewrote dozens of provisions at once, and figuring out which ones actually apply to your specific income, occupation, and filing status takes more than reading a summary article. Hopkins CPA Firm brings 150+ years of combined team experience, including former IRS agents and revenue officers who track these changes as they roll out through actual IRS guidance.

We help individuals and business owners translate the new rules into an actual number on their return:

• Calculating your exact tips, overtime, and senior deduction amounts against the correct phaseout thresholds
• Reviewing whether the new SALT cap or itemized deduction limits change your filing strategy
• Modeling 100% bonus depreciation and Section 179 elections for business equipment purchases
• Confirming your QBI deduction calculation under the wider 2026 phase-in ranges
• Checking your withholding now so a deduction you’re counting on doesn’t turn into a surprise balance due
• Building year-round tax planning strategies so next year’s filing isn’t a scramble, and helping you maximize your tax refund by catching every OBBBA deduction you actually qualify for

We have resolved over 10,000 IRS cases and saved clients an average of more than $50,000 each, and that same depth of experience applies directly to making sense of the Trump tax plan of 2026 for your situation. Book a consultation before you file.

Secure Bigger Tax Savings With Hopkins CPA Firm 

The Trump tax plan of 2026 locks in lower individual rates permanently while adding temporary breaks for tips, overtime, and seniors that expire after 2028. Business owners gain permanent access to the 20% QBI deduction and 100% bonus depreciation, while families see a larger, inflation-indexed Child Tax Credit and a higher SALT cap through 2029. 

Hopkins CPA Firm helps you turn complex tax law into practical tax savings. With former IRS professionals, over 150 years of combined experience, more than 10,000 resolved IRS cases, and average client savings exceeding $50,000, we deliver tax solutions you can trust. Contact us today and let us help you keep more of what you earn while planning confidently for the years ahead.

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