The recently enacted “One Big Beautiful Bill” introduces significant, comprehensive changes to the U.S. tax code scheduled to take effect in 2026.
While Treasury Secretary Scott Bessent declared, “The passage of the [OB3-Act] has set the stage for the coming Golden Age as we prepare to celebrate the 250th year of our great nation,” this remains to be seen. What is certain is that these substantial updates will impact taxpayers across all income levels.
With these changes quickly going into effect, it is important to thoroughly understand their potential impact on your financial goals and situation. Proper awareness and strategic financial planning will be essential to navigate the implications and capitalize on the benefits of these tax reforms (and avoid unwanted tax season surprises).
One Big Beautiful Bill Act Summary
The OB3-Act is an ambitious legislative package championed by President Trump, aiming to revitalize economic growth through extensive tax cuts, simplify tax filing processes, and provide considerable financial relief to individuals and corporations.
To balance these tax reductions, the legislation introduces significant spending cuts to critical public programs like Medicaid and SNAP. The bill represents a substantial shift in U.S. fiscal policy, with widespread implications for millions of Americans.
At Hall Accounting, we believe a solid tax strategy begins with understanding the variables of each individual’s unique situation. We’ve outlined how this bill is likely to affect you depending on your tax bracket and assets.
How Will the OB3-Act Affect Middle- to Upper-Income Households?
Permanent Extension of the 2017 Tax Cuts
The OB3-Act permanently secures the tax cuts introduced by the 2017 Tax Cuts and Jobs Act (TCJA), previously set to expire in 2025. These cuts include reduced tax brackets and lower individual tax rates, offering long-term clarity and stability for financial and investment planning.
This permanence is particularly beneficial to taxpayers with significant taxable incomes, capital gains, or extensive investment portfolios. If you fall into this category, here are several changes to account for going into 2026.
Increased Standard Deduction
Under the OB3-Act, the standard deduction significantly increases, providing notable benefits to many taxpayers. Specifically, single filers can expect deductions of around $15,750, heads of households approximately $23,625, and married couples filing jointly around $31,500.
These figures will adjust annually for inflation, simplifying the filing process and enabling higher savings. Additionally, taxpayers aged 65 or older will enjoy an extra deduction of $6,000 until 2028, though this additional benefit phases out for higher-income earners.
Higher SALT Deduction Cap
The act notably raises the State and Local Tax (SALT) deduction cap from $10,000 to $40,000 between 2025 and 2029. This substantial increase primarily benefits higher-income earners residing in states with high property and income taxes, such as California, New York, and New Jersey. Beginning in 2030, the SALT deduction cap will revert to $10,000, with a gradual phase-out starting at incomes above $500,000.
Expanded Child Tax Credit
The Child Tax Credit is also expanded under the OB3-Act, increasing from $2,000 to $2,200 per child, with annual inflation adjustments. However, new eligibility criteria impose stricter requirements, such as valid Social Security Numbers, and introduce phased reductions for high-income taxpayers.
Key takeaway: Middle- and upper-income households gain significantly under the OB3-Act under these changes. However, the greatest proportion of tax savings benefits the wealthiest taxpayers, especially those in high-tax regions.
How Will the OB3‑Act Affect Small Business Owners?
Permanent Extension of the Qualified Business Income (QBI) Deduction
The OB3‑Act locks in the 20 percent QBI deduction for pass‑through entities—S‑corps, partnerships, and sole proprietorships—beyond its original sunset in 2025. While the basic structure remains intact, a tighter wage‑and‑property limitation now begins phasing in at $500,000 of taxable income (down from $640,000).
This means high‑earning firms may see part of the deduction restricted. Owners should model their projected 2026 income early to decide whether entity restructuring or salary adjustments could preserve the full benefit.
Enhanced Expense Write‑Offs and Depreciation Rules
To spur capital investment, Section 179 expensing caps jump from $1 million to $2.5 million, with the phase‑out threshold rising proportionally. In parallel, 100 percent bonus depreciation—scheduled to wind down—gets a fresh extension through 2029.
Pairing these provisions allows businesses to deduct large equipment purchases or technology upgrades immediately, improving cash flow. However, the immediate write‑off may depress taxable income enough to reduce the QBI benefit; coordinating the two is essential.
Key Takeaway: Small businesses stand to save big—from a locked‑in 20 % QBI deduction and higher expensing limits—but those wins come with tighter income caps.
What Does the OB3-Act Mean for Working-Class Families?
New Deductions for Overtime Pay and Tips
The OB3-Act introduces targeted deductions designed specifically for hourly and tipped employees, allowing these workers to retain more of their hard-earned income. Employees must maintain accurate documentation, clearly reporting overtime hours, tips, and total earnings to qualify for these deductions.
Potential Indirect Impacts on Social Services
Despite these targeted deductions, working-class families may experience indirect financial burdens due to extensive cuts to essential social services such as Medicaid and SNAP.
For instance, a family might benefit modestly from tax savings but simultaneously face increased out-of-pocket healthcare expenses or reduced access to food assistance, significantly offsetting any positive impacts from the tax changes.
Key takeaway: Working-class families could see modest direct tax relief but must prepare for changes stemming from decreased availability and funding of vital public services.
Who Wins and Loses from OB3-Act?
The snapshot below shows how the OB3‑Act’s tax cuts and program trims are distributed—spotlighting who stands to gain, who could lose ground, and where the gray areas lie. Scan the grid, find your lane, and keep these dynamics in mind as you shape your 2026 strategy.
Group | Gains | Potential Losses |
High-income earners | Lower tax rates, SALT increase | None (most benefit overall) |
Working-class employees | Overtime/tip deductions | Reduced access to Medicaid/SNAP |
Seniors | Higher standard deduction | Phase-out of extras after 2028 |
Small business owners | Tax cut permanence | Fewer public programs for workforces |
States with high taxes | Higher SALT cap (short-term) | Cap returns in 2030 |
What You Can Do Now
Specific information on how to document and submit filings for these changes is still forthcoming. However, there are steps you and your tax advisor can take now to prepare or make adjustments to your tax strategy.
Review and adjust withholdings: Especially for those expecting higher deductions or new benefits.
Revisit investment strategies: For those affected by capital gains changes or SALT cap shifts.
Track all qualifying expenses: Especially tips, overtime, or dependent-related deductions.
Evaluate reliance on public assistance: For those impacted by SNAP/Medicaid cuts.
Big Changes Ahead. We’ll Help You Prepare.
Concerned about how the OB3-Act will impact your taxes or finances? Be proactive— schedule a consultation with Hall Accounting Company today. Our tax professionals are ready to guide you through new regulations and requirements to help you strategize effectively. Developing a personalized financial strategy now can ensure your financial stability and preparedness for these significant tax code changes in 2026.
Frequently Asked Questions about the OB3-Act
When do the OB3-Act tax changes go into effect?
The OB3-Act tax changes begin in 2026.Who benefits most from the One Big Beautiful Bill Act?
Primary beneficiaries include high-income earners, small business owners, senior citizens, and middle-income employees, especially those receiving significant tip income or overtime pay.How does the OB3-Act impact Medicaid and SNAP benefits?
Significant cuts exceeding $1.2 trillion are imposed on Medicaid and SNAP, accompanied by stricter eligibility rules, work requirements, and additional fees.What should taxpayers do to prepare for the 2026 changes?
Taxpayers should proactively consult with a CPA to plan strategically and minimize financial impacts.