What the One Big Beautiful Bill Act Really Changed for 2026
The One Big Beautiful Bill Act (OBBBA) is one of the most talked-about tax laws in years, and also one of the most misunderstood.
Between headlines claiming, “No tax on Social Security” and vague promises of “tax breaks for everyone,” misinformation has spread quickly. The reality is far more nuanced and important for taxpayers and tax professionals to understand for filing season.
This blog cuts through the noise and separates the OBBBA tax myths from reality, using the actual provisions that apply to 2025–2026 returns and beyond
Myth #1: “Social Security Is No Longer Taxable Under OBBBA”
Reality:
Social Security benefits are still taxable, and nothing in the OBBBA changes that.
What did change is the introduction of a temporary senior deduction, not a repeal of Social Security taxation. Most middle- and upper-income retirees will continue to pay tax on up to 85% of their Social Security benefits, just as they do today.
What Actually Changed
- A temporary $6,000 per person deduction for taxpayers age 65+
- Applies whether or not Social Security benefits are received
- Phases out beginning at:
- $75,000 MAGI (Single)
- $150,000 MAGI (Married Filing Jointly)
- Fully phased out at higher income levels
- Scheduled to sunset after 2028
Key takeaway:
OBBBA did not eliminate tax on Social Security. It added a limited, temporary deduction.
Myth #2: “OBBBA Is Just Another Tax Break for the Wealthy”
Reality:
OBBBA contains both benefits and limitations for higher-income taxpayers.
Yes, certain provisions favor business owners and investors, but others reduce deductions or impose new caps that disproportionately affect high earners.
Examples of New Limitations
- A new cap on the value of itemized deductions tied to the 37% tax bracket
- Phaseouts on the expanded SALT deduction
- Expanded AMT phaseout rates that eliminate exemptions faster for high-income filers
Key takeaway:
OBBBA is not a one-sided “tax cut for the rich.” It reshapes deductions and planning strategies across income levels.
Myth #3: “The SALT Deduction Is Permanently Fixed”
Reality:
The increased SALT cap is temporary and phased out for higher earners.
What the Law Actually Does
- Raises the SALT deduction cap to:
- $40,000 for most filers
- $20,000 for married filing separately
- Applies beginning in 2025
- Includes a phaseout starting at $500,000 MAGI
- Fully reverts back to $10,000 in 2030
Key takeaway:
This is a short-term planning opportunity, not a permanent fix.
Myth #4: “Everyone Gets the New Credits Automatically”
Reality:
OBBBA introduces stricter identification requirements that make it easier for the IRS to deny credits without a full audit.
New Compliance Rules
- Valid SSNs are required for:
- Child Tax Credit
- Education credits
- Tip and overtime deductions
- Missing or incorrect SSNs are treated as mathematical errors
- The IRS can disallow credits automatically
Key takeaway:
Eligibility now depends as much on documentation as income.
Myth #5: “OBBBA Only Affects Individual Taxpayers”
Reality:
Some of the biggest OBBBA changes apply to businesses.
Major Business Provisions Include
- Permanent 20% §199A QBI deduction
- 100% bonus depreciation reinstated
- Expanded Section 179 expensing
- Immediate expensing for domestic R&E costs
- Higher 1099 reporting thresholds
Key takeaway:
OBBBA significantly reshapes business tax planning, not just individual returns.
Why These Myths Matter Going Into the 2026 Tax Season
Misinformation leads to:
- Incorrect withholding
- Missed planning opportunities
- Disallowed credits
- Surprise tax bills
- Unnecessary IRS notices
Understanding what OBBBA actually does, and what it doesn’t do, is essential for both taxpayers and tax professionals preparing for 2026 and beyond.
Want a Deeper, Practical Breakdown of OBBBA?
This blog only scratches the surface.
Our OBBBA Tax Season Update – What You Need to Know course walks through:
- Key OBBBA provisions with real-world examples
- Planning strategies for individuals and businesses
- Compliance traps to avoid
- What tax professionals should be advising clients now, not after filing season starts
Click here to learn more and stay informed.
Sources
· Internal Revenue Service (IRS). One, Big, Beautiful Bill Act: Tax Deductions for Working Americans and Seniors.
Internal Revenue Service (IRS). One, Big, Beautiful Bill Act Provisions.
Internal Revenue Service (IRS). Treasury and IRS Provide Guidance for Individuals Who Received Tips or Overtime During Tax Year 2025.
· Tax Foundation. One Big Beautiful Bill: Pros and Cons.
Thomson Reuters. What the One Big Beautiful Bill Act Means for the 2026 Tax Season.
Investopedia. Here’s What’s in the One Big Beautiful Tax and Spending Bill.
