The ONE BIG BEAUTIFUL BILL Act: A Tax Preparer’s Perspective

As a tax preparer who’s worked with clients across income levels and filing situations, I’ve seen firsthand how complicated our tax system can be — not just for individuals and families, but also for small businesses trying to stay compliant year-round.

On our nation’s birthday, President Trump signed the One Big Beautiful Bill Act (OBBBA) into law, “permanently” extending key provisions from the 2017 Tax Cuts and Jobs Act and introducing new tax provisions.  The name is certainly unique and one that will be talked about in this industry for decades to come.   And while the jury is still out on whether this act will simplify the average taxpayer’s compliance or further complicate it, the OBBBA certainly represents a significant shift in the individual tax landscape, with provisions that affect nearly every taxpayer level, including low-income households, seniors, high-income earners and self-employed individuals.

 The Good:

1. Many provisions originally due to sunset in 2025 will remain, including: lower individual income tax rates, doubled standard deductions, QBI and more.  We can finally more accurately prepare tax projections!
2. New provisions include deductions for qualified overtime and income from tips, expanded child tax credit and a deduction for seniors to essentially provide tax relief specifically on Social Security Income.  Some seniors will even have the option to reduce withholding or estimated tax payments, benefiting from more immediate savings.
3. Enhancement of the child and dependent care tax credit includes an increased annual contribution limit for employer-provided dependent care assistance programs to $7,500 effective January 1, 2026, up from the current $5,000.
4. Temporary relief on the SALT (State and Local Tax) Cap limitations, increasing the allowable deduction to $40,000 (subject to income phase-outs).
5. Charitable Deductions for non-itemizers are back for the 2026 tax year, allowing up to $1,000 for single filers and $2,000 joint as an above-the -line deduction on returns.
6. Trump Accounts, a new class of long-term savings vehicles, have been established to “promote financial education and asset accumulation for individuals under age 18”.
7. Expansion of qualified expenses eligible for 529 distributions for K-12 education.
8. Increased the estate and gift tax exemption to $15 million per taxpayer!

The Concerns:

1. Tax Season is guaranteed to be delayed in 2026.  The IRS still struggles with backlogs from years past and is experiencing a rapid decrease in labor due to early-retirement incentives.  Implementation of the OBBBA across their systems will be challenging and time-consuming.  Consequently, e-filing will likely not be opened until well into February, meaning those early-bird filers seeking their refunds will have to wait.

2. Sunsetting of individual green energy tax credits, including clean vehicle credits on 9/30/25 and residential energy credits at the end of the year.   There will certainly be a flood of consumers over the next few months seeking to take advantage of residential energy credits, in particular.  For example, if taxpayers are considering installing qualified solar panels and want to benefit from a 30% federal tax credit, the full installation must be completed and paid for by December 31, 2025.

3. The burden of keeping GOOD records and receipts for deductions are back for many who have claimed the much more simplified standard deduction in recent years.  The SALT Cap increase will push more taxpayers back to filing Schedule A which means taxpayers should keep up with personal property tax payments and charitable contributions.  From this tax preparer’s perspective, this can increase time in the collection of tax documents and tax return preparation, ultimately slowing the process down and increasing fees.

The One Big Beautiful Bill Act means it will be a busy late summer and fall for tax preparers who want to plan accordingly for changes that will affect their clients.  I will be reviewing each of my clients’ tax situations individually to identify how the OBBBA provisions will not only affect their 2025 and 2026 tax liabilities, but what if any tax strategies can be implemented to maximize tax savings.