What CPAs Need to Know About the One Big Beautiful Bill Act (OBBBA) in 2026

The 2025 tax season will feature some of the most extensive changes to the tax code that CPAs have had to contend with in recent memory, thanks to the One Big Beautiful Bill Act (OBBBA). The bill makes permanent many of the provisions of the 2017 Tax Cuts and Jobs Act (TCJA), while adding new permanent and temporary provisions. While the beauty of the bill may be debatable, one thing is certain: it is BIG, clocking in at around 1,000 pages. 

That said, it is not possible to cover every change to the tax code in a single blog post. This article will review the top-level changes and outline what CPAs need to be aware of when filing for their clients in 2026.  

An overview of the changes 

OBBBA updates tax laws in three general areas: individual taxes, corporate taxes, and estate/gift taxes. Additionally, new provisions will take effect in 2026, including expanded rules for 529 college savings plans and so-called “Trump” savings accounts for minors. Many changes from the TCJA have become “permanent”, at least until changed by subsequent legislation. The bill also introduced some temporary provisions that sunset in 2028, including a bonus deduction for senior citizens and an increased deduction limit for state and local taxes (SALT). 

Please note that the list below provides an overview only and is not intended to replace professional tax advice. CPAs should read OBBBA as much as possible to familiarize themselves with the exact language of the new laws. 

Also read: Is Your Firm Ready? Machine Learning for Accounting is Here to Stay 

Personal Income Taxes and Deductions 

• Permanent Lower Tax Brackets: The tax brackets, which were changed under the TCJA, will remain at 10%, 12%, 22%, 24%, 32%, 35%, and 37% permanently.
• Increased Standard Deduction: For 2025, the standard deduction will increase to $15,750 for single filers and $31,500 for married couples filing jointly. This deduction will be indexed for inflation annually moving forward. 
• Bonus Deduction for Older Adults: An additional $6,000 deduction is available for taxpayers aged 65 and older. MAGI and income thresholds apply.  
• Raised SALT Deduction Limit: New cap: $40,000 for married couples filing jointly/ $20,000 for married couples filing separately. MAGI and income thresholds apply. 
• Increased Child Tax Credit: Rises to $2,200 per qualifying child (indexed for inflation). 
• AMT Adjustments: The exemption has been increased to $88,100 (individuals)/ $137,300 (married couples). 
• Mortgage Interest Deduction Limitation: Limited to $750,000 for new borrowing; no deductions for home equity loan interest. 
• Automobile Loan Interest Deduction: Up to $10,000 interest deduction for eligible car loans. Qualified vehicles must be new and assembled in the U.S. after Dec. 31, 2024. This provision expires in 2029.  
  
  

Corporate Income Tax and Deductions

• Corporate Income Tax Rates: The top federal corporate income tax rate is now permanently reduced from 35% to 21%. S Corporations' top tax rate set at 29%.  
• Qualified Business Income (QBI) Deduction: Permanent 20% deduction for pass-through entities (e.g., S corporations, partnerships) on QBI under certain income thresholds. 
• Bonus Depreciation Allowance: 100% bonus depreciation for qualified property acquired and placed in service after January 19, 2025. 
• Research Incentives: Allows immediate expensing of certain domestic research and development expenditures for 2025. 
• Qualified Small Business Stock (QSBS) Tax-Free Exclusions: Now offers a 50% exclusion for stock held at least 3 years, 75% for 4 years, and 100% for 5 years. The maximum capital gain exclusion has increased from $10 million to $15 million per issuer, the aggregate gross asset test for QSBS eligibility has been raised from $50 million to $75 million, and the exclusion amounts are now indexed for inflation. 
  
  

Gifts and Estate Tax

•  Above-the-line Charitable Deductions (Effective 2026): $1,000 deduction for single filers; $2,000 for married couples (available regardless of itemization). 
• Higher Lifetime Gift and Estate Tax Exemptions: Exemptions set at $13.99 million for individuals and $27.98 million for married couples through 2025. In 2026, exemptions will increase permanently to $15 million per person ($30 million for couples) and will be indexed for inflation. 
• Cost Basis Step-Up of Inherited Assets: Step-up in basis at death for capital gains retained, allowing heirs to use fair market value on the decedent’s date of death. 
• Private School Scholarship Donation Tax Credit: New tax credit for gifts up to $1,700 per person ($3,400 for couples) to organizations providing K-12 private school vouchers, fully reimbursed by federal tax credit. 
  
  

New provisions in 2026 

• 529 Plan Enhancements: The federal withdrawal limit has increased to $20,000 per year (up from $10,000). Expanded qualified expenses can now be used for K-12, including books, materials, testing fees, tutoring, online education, and specific therapies. Tax-free withdrawals for recognized postsecondary credential programs (trade schools, certifications, etc.). 
• “Trump Account” for Minors: For U.S. citizen or resident children under 18, parents can open accounts. Contributions of up to $5,000/year (after-tax) from parents and $2,500/year (tax-free) from employers are permitted. Distributions allowed only after age 18; tax-deferred growth. A one-time $1,000 government contribution will be made to this account for babies born between 2025 and 2028. 

Also read: The Evolving Role of Risk Management in Accounting 

Communicating these changes to clients 

With the substantial amount of changes to the tax code this year comes a much higher risk of claims. To stay ahead of increased liability, CPAs should take the extra step to communicate the upcoming changes to clients.

Engagement letters are a key tool of communication that clearly lay out what is and is not covered in your service for new clients. Updated engagement letters for returning clients can be an efficient way to highlight changes prompted by OBBBA. At the very least, sending emails to clients that clearly communicate these changes can reduce the risk of claims and create a digital paper trail in the event of a client claim.

Professional liability protects your firm against tax claims

Despite the best intentions, the sheer size of OBBBA dramatically increases the chance of accounting errors, oversights, and client claims.    

If you have any questions or need assistance with securing Professional Liability Insurance for your accounting firm, do not hesitate to reach out. Protexure Accountants is here to help you find competitive rates and personalized service tailored specifically for small CPA firms navigating the challenges of the 2025 tax season.