Buckle up, taxpayers: the sweeping One Big Beautiful Bill (OBBB) that cleared Congress in July rewrites the playbook for 2025‑2028 returns, offering perks well beyond the headline “no‑tax on tips” provision.
Who stands to gain, and when should you act? Below is a concise guide to the biggest changes—charitable write‑offs, vehicle interest deductions, and larger family credits—that could shrink your future tax bill.
For millions who have relied on the standard deduction since 2017, OBBB finally restores strategic wiggle room. Seniors score a separate $6,000 bonus deduction, but younger filers also see new opportunities—if they plan ahead.
Standard deduction filers regain above‑the‑line write‑off for charitable donations in 2026
Beginning with the 2026 tax year, cash gifts up to $1,000 per person ($2,000 per couple) become deductible even if you do not itemize. During the pandemic, a similar break was temporary; OBBB makes it permanent. Therefore, year‑end donation timing will once again matter.
| Key charitable change | Old rule | OBBB rule |
|---|---|---|
| Deduction available to standard‑deduction filers | Only in 2020‑21, up to $300/$600 | Yes, every year from 2026 |
| Maximum cash gift deductible | $300 single / $600 joint | $1,000 single / $2,000 joint |
Think your gifts are too small to bother recording? Think again—lowering adjusted gross income (AGI) can unlock other credits down the line.
Auto loan interest on new U.S. vehicles becomes deductible but rules are strict
From 2025 through 2028, up to $10,000 in interest on a new, U.S.‑assembled personal vehicle can be written off—even for non‑itemizers. However, income caps apply and leased cars do not qualify.
Checklist before you sign that contract:
- Confirm the vehicle’s final assembly point is in the United States.
- Verify your AGI stays under forthcoming IRS thresholds.
- Keep lender statements that separate principal from interest.
Do you plan to buy a car next year? If so, modeling the tax savings could tip the buy‑versus‑lease decision in favor of ownership.
Expanded family credits and higher flexible spending limits demand early income planning strategies
Families will notice two big wins: the Child and Dependent Care Credit (CDCC) now reimburses 50 % of up to $3,000 in expenses for one child, $6,000 for two or more, and the lower 20 % credit doesn’t phase in until household income hits $206,000 (married) or $103,000 (single). Additionally, annual dependent‑care FSA contributions jump to $7,500.
Consequently, bumping 401(k) or IRA contributions to nudge AGI beneath the new phaseout bands could amplify both credits. Wondering how much room you have? A mid‑year paycheck checkup is a smart first step.
OBBB packs fresh incentives for giving, driving, and caregiving, but most breaks arrive in 2025 or 2026. Start tracking deductible expenses now, revisit paycheck withholdings, and talk with a trusted tax pro before the next filing season opens. Acting