OBBBA Tax Changes for 2026: Deductions, Refunds, and Key Dates

Several major individual deductions took effect for tax year 2025, including deductions for qualifying seniors, qualified tips, qualified overtime compensation, and qualifying car loan interest.

Eligible taxpayers generally use Schedule 1-A to claim these deductions.

Because these provisions apply to the 2025 tax year, a taxpayer's 2026 filing-season result may differ from what was anticipated during 2025. A deduction that was not fully reflected in withholding, for example, can reduce the final amount of federal income tax due.

Eligibility still depends on the requirements for the particular deduction. The legislation does not give every taxpayer the same benefit.

For tax years 2025 through 2028, a qualifying individual who is age 65 or older by the end of the tax year can claim an additional deduction of up to $6,000.

If both spouses qualify on a joint return, the combined amount can reach $12,000.

The deduction begins to phase out when modified adjusted gross income exceeds:

$75,000 for an individual filer;

$150,000 for married taxpayers filing jointly.

Eligible seniors can claim the deduction whether they itemize or use the standard deduction.

Married taxpayers generally must file jointly to claim it, and each person claiming the deduction must have a valid Social Security number.

This deduction is separate from the existing additional standard deduction available to qualifying older taxpayers.

The senior deduction reduces taxable income. Its effect on the taxpayer's actual tax bill depends on the applicable tax rate and any income phaseout.

Several new deductions apply retroactively to the beginning of tax year 2025.

If a taxpayer qualifies for one of those deductions but 2025 withholding did not account for the resulting reduction in taxable income, the final return may show a larger overpayment.

The result depends on factors such as:

Taxable income;

Withholding;

Estimated payments;

Filing status;

Credits;

Deduction eligibility;

Applicable phaseouts.

A taxpayer can qualify for a new OBBBA deduction without necessarily receiving a larger refund. For example, lower liability may instead reduce a balance due.

OBBBA permanently restored 100% bonus depreciation for qualifying property acquired and placed in service after January 19, 2025.

Both acquisition and placed-in-service timing can matter when determining whether property qualifies.

Domestic research and experimental expenses now require a different statutory analysis from foreign research costs.

IRC §174A generally permits current deductions for qualifying domestic research and experimental costs in tax years beginning after December 31, 2024.

Foreign research costs remain subject to §174's capitalization and 15-year amortization rules.

Businesses should therefore avoid treating all research expenditures as subject to the same post-OBBBA rule.

Section 163(j) also changed. The adjusted-taxable-income calculation again incorporates depreciation, amortization, and depletion add-backs for tax years beginning after 2024.

For tax years beginning after December 31, 2025, specified controlled foreign corporation income inclusions are excluded from a U.S. .hareholder's adjusted taxable income calculation.

Businesses with significant capital purchases, research expenditures, or financing costs may need a broader business tax analysis of how these provisions interact.