One Big Beautiful Bill: Your top questions answered

The passing of the One Big Beautiful Bill brought sweeping changes to the tax code and beyond. It permanently extended certain Tax Cuts and Jobs Act (TCJA) provisions that were set to expire, including a higher cap on the state and local tax (SALT) deduction, and introduced changes to taxes on tips and overtime pay for certain workers. The bill also made significant changes to energy credits, Medicaid, the debt ceiling, and student loans.

As you follow the news about the One Big Beautiful Bill, you might be wondering about the key tax provisions that have passed and what provisions kick in for tax year 2026 (the taxes you file in 2027).

Intuit TurboTax shares some of the top questions we’re getting, along with the answers.

Key takeaways

Starting July 1, 2026, federal student loan rules change too: Two new repayment plans replace the previous ones for new borrowers, and strict new limits cap borrowing.
On April 13, 2026, the IRS released final guidance on the “no tax on tips” provision of the bill. It adds the phase-out threshold for married couples, the list of qualifying occupations, and qualifying tip criteria.
Some of the new tax laws under the One Big, Beautiful Bill first kicked in for tax year 2025 (i.e., the taxes filed in 2026), and some will debut for tax year 2026. A few uncommon provisions are retroactive to tax year 2024.

What key provisions passed under the One Big Beautiful Bill?

Here are some key provisions of the One Big Beautiful Bill for tax year 2026.

A new charitable contribution deduction and increased Child and Dependent Care Credit take effect in tax year 2026.
New deductions on tips and overtime apply to eligible workers.
The SALT cap increases to $40,000 for homeowners (rising to $40,400 in 2026)
Expanded family and senior benefits include a larger child tax credit and an enhanced deduction for seniors.
A permanent 20% qualified business income deduction applies to self-employed workers.
New federal student loan repayment options are available to graduates.

When do the new tax laws go into effect?

The majority of the tax provisions went into effect in tax year 2025, while some are changes for tax year 2026 (the taxes you will file in 2027). A few uncommon provisions are retroactive to tax year 2024.

What passed from the Tax Cuts and Jobs Act (TCJA) and what does that mean for taxes?

The One Big Beautiful Bill permanently extends certain tax provisions from the 2017 Tax Cuts and Jobs Act, including:

Lower individual tax rates (10%, 12%, 22%, 24%, 32%, 35%, 37%)
The nearly doubled standard deduction
The expanded Child Tax Credit
The elimination of personal and dependent exemptions
Unreimbursed employee expense deductions (except for teachers)

If you don’t qualify for new tax benefits, your taxes will likely look similar to last year’s, but if you are eligible for any of the new tax provisions this year, you may be able to claim larger deductions and credits.

What are the new tax laws or changes that kick in for tax year 2026?

Bigger credit for child and dependent care

Starting with tax year 2026, the Child and Dependent Care Credit is getting a boost. You’ll be able to claim up to 50% of your eligible child care expenses, up from 35% before.

Here’s what that means in dollars: For one kid, the credit goes up to $1,500 (that’s 50% of $3,000), and for two or more kids it climbs to $3,000 (50% of $6,000). Previously, the max was $1,050 (35% of $3,000) for one child and $2,100 (35% of $6,000) for two or more kids.

What counts as eligible care?

Daycare, summer day camp, before- and after-school care, and even sports camps — basically, the child care that lets you work or look for work — counts. The Child and Dependent Care Credit also applies to disabled kids of any age and other disabled dependents.

Charitable giving deduction even if you don’t itemize

If you claim the standard deduction, starting in 2026, you can still deduct cash donations to charity — up to $1,000 if you’re single or $2,000 if you’re married and filing jointly.

In the past, you could only write off charitable gifts if you itemized deductions (for things like home mortgage interest). Now, if you stick with the standard deduction, your cash donations to IRS-recognized 501(c)(3) organizations can still earn you a tax break.

Higher SALT deduction cap, 2026-2029

In tax year 2025, the cap increased from $10,000 to $40,000. For tax year 2026, the cap increases to $40,400, where it will stay through 2029. The deduction begins to phase out when income is more than $500,000 ($250,000 for married couples filing separately).

This change may benefit filers in states with high state and property taxes, allowing them to deduct more of their related expenses. Some individuals who don’t own homes, but pay significant state income taxes may also see a benefit from this increased allowance.

New limits on how gambling losses offset winnings

Gambling losses that offset winnings will be limited to 90% instead of 100%. That means you’ll now owe tax on 10% of your winnings even if your losses matched or exceeded them.

Before tax year 2026, if you were able to claim itemized deductions, you could offset 100% of your gambling losses against your gains, up to the amount you won.

Education-related changes

Bigger deductions for teachers: In tax year 2026, teachers can deduct up to $350 for school supplies purchased for their classrooms under the Teachers Educator Deduction (up from $300 in tax year 2025). If you’re married to another educator, you can each claim the deduction, for a total deduction of $700.

The deduction now covers coaches and sports-related equipment. And, if you itemize, you can deduct your unreimbursed education expenses that exceed the $350 cap. Educators remain the only profession that gets this particular deduction.

Education credits: You’ll be required to have a Social Security number to claim education credits like the American Opportunity Tax Credit and the Lifetime Learning Credit.

Student loans: If a student loan is discharged (canceled or forgiven) because of death or disability, that forgiven amount won’t count as taxable income, and a valid Social Security number (SSN) is required.

Employee student loans: The law that allowed employers to help pay employee student loans was made permanent.

New kids’ savings accounts, plus a bonus for babies born 2025-2028

The One Big Beautiful Bill created a new tax-deferred savings account for kids.

Parents, guardians, and other authorized individuals can put in up to $5,000 a year for a child under 18 who has a valid SSN. And employers can chip in up to $2,500. There’s also a pilot program, which adds a one-time contribution of $1,000 for children born between Jan. 1, 2025, and Dec. 31, 2028, who are U.S. citizens and have a valid SSN.

Bigger qualified business income deduction

The Qualified Business Income (QBI) deduction lets self-employed people and small-business owners write off part of their business profit. Starting for tax year 2026, there’s a new guaranteed minimum deduction of $400 for anyone with at least $1,000 in business income.

Premium tax credit changes

Starting in 2026, there may be some situations where people will be required to pay back any excess advanced premium tax credit. Also, individuals enrolling in Marketplace insurance during a special enrollment period due to changes in household income won’t be eligible for that coverage.

What are other provisions of the One Big Beautiful Bill?

Tax breaks for workers: Tips and overtime

In previous years, cash and non-cash tips were considered income subject to federal taxes, Social Security, and Medicare taxes, and were required to be reported to your employer if they exceeded $20 a month.

The new provision creates a temporary deduction to federal income tax for qualified tips up to $25,000 for tax years 2025 through 2028. This deduction is available regardless of whether you itemize your deductions.

Note that this deduction only applies to federal income tax. Tips remain subject to Social Security, Medicare, and potentially state income taxes without change. Also, if you are a worker who earns below the standard deduction ($15,750 for individual filers, $31,500 for joint filers in 2025 or $16,100 for single and $32,200 for joint filers in 2026), you may not benefit from this deduction since you probably won’t owe federal income taxes to begin with.

If you earn tips as a waitress, stylist, or in another qualifying occupation, you may be eligible to claim this deduction. For individual filers, the tax benefit begins to phase out for income above $150,000. Married couples filing jointly have a higher phase-out threshold of $300,000.

For example, if you are an individual filer and earned $5,000 in tips and are in the 12% tax bracket, your tax savings would be $600 ($5,000 x 12%).

It’s essential to understand that these deductions don’t directly reduce your taxes dollar-for-dollar, and your actual tax savings will depend on your tax rate.

Qualifying occupations

In April 2026, the IRS released the final regulations that include the formal list of 70 occupations that receive qualified tips, across eight categories:

Beverage and food service
Entertainment and events
Hospitality and guest services
Home services
Personal services
Personal appearance and wellness
Recreation and instruction
Transportation and delivery

What counts as a qualifying tip

A qualifying tip must be cash or cash-equivalent, voluntary, and received directly from customers or through tip pools. Automatic service charges do not qualify. Additionally, managers and supervisors who pool tips with employees cannot deduct those pooled amounts.

The new tax law for no tax on overtime

The new provision for overtime introduces a deduction for qualified overtime premium up to $12,500 for individual filers and $25,000 for a joint return for tax years 2025 through 2028 and phases out for income above $150,000 for individual filers and $300,00 for joint filers.

Certain workers, such as police officers, firefighters, nurses, and retail workers, may benefit from this deduction. However, while this deduction can lower your taxable income, it is not a dollar-for-dollar reduction of your taxes, and the actual tax savings will depend on your tax rate.

For example, if you’re a nurse with $12,500 in qualified overtime and a 22% tax rate, then your tax savings would be $2,750 (22% of $12,500).

Benefits for seniors, parents, and caregivers

There’s an enhanced deduction for seniors up to $6,000 for individuals 65 and over for tax years 2025 through 2028. The deduction begins to phase out at income higher than $75,000 and $150,000 if you’re married filing jointly.

Increase to the child tax credit

Starting in tax year 2025, the Child Tax Credit permanently increased to $2,200 per child under 17, with annual adjustments for inflation every year. To claim this credit, a valid Social Security number is required for the children and the taxpayer claiming the Child Tax Credit (married filing joint returns only one spouse is required to have a valid Social Security number).

Elimination of personal and dependent exemptions

Personal and dependent exemptions are permanently eliminated. Although they were set to return in 2026 if the TCJA expired, the new bill makes the elimination permanent.

End to credit for energy-efficient improvements

Energy-efficient credits for home improvements under the Inflation Reduction Act ended for property placed in service after 2025. You can still claim these credits for improvements made in 2025 on your 2025 taxes (i.e., the ones you file in 2026), but tax year 2025 is the last year they’re available.

Food for thought

The One Big Beautiful Bill introduced new provisions, including temporary tax deductions tied to tips, overtime, and auto loan interest, but awareness and action are still catching up.

According to a Credit Karma survey conducted by the Harris Poll in September, about a quarter of employed Americans (24%) say they have adjusted their paycheck withholding in response to the new provisions, including 26% of employed Gen Z and 30% of employed millennials, and another 21% plan to. Some younger adults didn’t realize it was an option: 13% of employed Gen Z and 12% of employed millennials say they weren’t aware they could or should adjust their withholding.

Fall is a good time to visit your withholdings, especially if you’ve experienced life changes. If you didn’t withhold enough taxes, you still have time to make some end-of-year tax moves to lower your taxes.

FAQs

How do I get a deduction if I pay a car note?

A new temporary tax deduction allows you to deduct up to $10,000 in car loan interest per year for qualified auto loans. To qualify, the vehicle must be purchased new, for personal use, and assembled in the United States. This deduction phases out when income is above $100,000 and for married couples with incomes above $200,000.

I purchased an electric vehicle. Can I still get a credit?

The new bill eliminates the clean vehicle credit for electric vehicles purchased after Sept. 30, 2025. If you bought an electric vehicle before this date, you may be eligible for a clean vehicle credit up to $7,500 for a new EV or $4,000 for a used EV.

I work from home. Can I claim unreimbursed employee expenses again?

The TCJA temporarily eliminated miscellaneous itemized deductions, including unreimbursed employee expenses, from 2018 to 2025, and this elimination is now permanent. However, if you’re self-employed, you can still deduct expenses related to your home office.

Teachers and coaches are also an exception under the new tax law. If you’re a teacher or school coach, you can also deduct your supplies purchased for your class as an unreimbursed employee expense, in addition to the Teachers Educator Deduction.

I’m self-employed. What are the new tax benefits I can claim?

If you’re self-employed or a business owner who has a partnership or S-corp, you may be eligible for two significant tax deductions.

First, the 20% Qualified Business Income Deduction allows you to deduct up to 20% of your qualified business income. The new tax bill permanently extends this 20% deduction and increases the phase-in ranges to $75,000 and $150,000 for those married filing jointly.

Second, if you purchased equipment for your business, the new tax law also permanently allows you to write off 100% of your expenses for purchases of qualifying business equipment placed into service after Jan. 19, 2025.

What’s changing with federal student loans?

Starting July 1, 2026, federal student loan rules changed for undergrad and grad borrowers. Two things to know:

You now have to pick a repayment plan. For any new loans taken moving forward, you cannot choose any of the older plans. Instead, you must pick between the two new options: Repayment Assistance Plan (RAP) and the Tiered Standard Plan, which adjust depending on your income and balance. Skip the choice, and you’re defaulted into one automatically.
Grad borrowing is now capped. Grad students can no longer borrow up to their full cost of attendance — it’s now $20,500 per year, with up to $50,000 per year for professional students enrolled in certain defined programs.
All borrowers are subject to a lifetime loan limit of $257,500. This cap includes any federal student loan ever taken, excluding Parent PLUS loans. The limit applies even if some of the loans were paid off or canceled.

This story was produced by Intuit TurboTax and reviewed and distributed by Stacker.