The Omnibus Budget and Benefits Bill of America (OBBBA) introduces several important tax law changes beginning in 2026 that may impact your financial plan. Whether you're focused on retirement, charitable giving, family planning, or education savings, now is the time to prepare.

This checklist highlights important tax planning issues to review with your financial advisor before these changes take effect.

Tax Planning Issues

☑ Are you or your spouse age 65 or older?

If so, consider how the new senior deduction ($6,000 per eligible person) could enhance other tax strategies such as Roth conversions or capital gain harvesting. Be mindful that eligibility begins to phase out at $75,000 of Modified Adjusted Gross Income (MAGI) for single filers and $150,000 for married couples filing jointly (MFJ).

☑ Are you charitably inclined and taking the standard deduction?

Starting in 2026, non-itemizers may deduct up to $1,000 ($2,000 MFJ) in charitable contributions. This can complement your giving strategy—but note that you can't take this deduction if you itemize.

☑ Do you live in or plan to move to a high-tax state?

The expanded $40,000 SALT cap deduction (state and local taxes) may make certain strategies, such as Roth conversions or capital gain harvesting, more attractive. Phaseouts begin at $500,000 MAGI (single and MFJ).

☑ Do you earn income from tips or overtime pay?

A new deduction may apply for income from tips and/or overtime, subject to documentation by your employer. The deduction phases out starting at $150,000 MAGI (single) and $300,000 MAGI (MFJ).

☑ Are you planning to purchase a home with less than 20% down?

Beginning in 2026, PMI (private mortgage insurance) becomes deductible again, up to certain income limits ($100,000 MAGI single and MFJ).

☑ Are you planning to buy a vehicle soon?

Interest on new U.S.-assembled vehicles may be deductible—up to $10,000. However, eligibility phases out at $100,000 MAGI (single) and $200,000 MAGI (MFJ). Note: electric vehicle tax credits will no longer apply to vehicles acquired after September 30, 2025.

☑ Do you purchase health insurance through the Marketplace?

Watch for the Premium Tax Credit "cliff" returning in 2026. Households exceeding 400% of the federal poverty line may lose access to premium credits. Careful income management may help maintain eligibility.

☑ Do you have Incentive Stock Options (ISOs)?

The coming changes to the Alternative Minimum Tax (AMT) could affect when you exercise ISOs. Consider accelerating exercises before 2026 if current AMT thresholds are more favorable.

☑ Are you in the 37% tax bracket and itemize deductions?

Beginning in 2026, the effective tax benefit for itemized deductions drops from 37% to 35%. Consider accelerating deductible expenses before the change.

☑ Do you expect larger deductions or credits next year?

If so, adjust your withholding or estimated payments to manage cash flow and prevent surprises at tax time.

Child Planning Issues

☑ Do you claim children as dependents?

The Child Tax Credit increases to $2,200 (inflation-adjusted) per child, with a $1,700 refundable portion starting in 2026.

☑ Do you pay for daycare or nanny expenses?

You may contribute up to $7,500 to a Dependent Care FSA, or claim an expanded Child and Dependent Care Credit of 20–50% of eligible expenses.

☑ Will you give birth to a child in 2025 or later?

You may be eligible for a $1,000 government credit when you open a Trump Account before the child turns 18.

☑ Are you planning to adopt a child soon?

The adoption tax credit increases to $17,280 (with $5,000 refundable). Consider strategies to ensure your taxable income allows you to claim the full benefit.

Education Planning Issues

☑ Do you have children or grandchildren in grades K–12?

Starting in 2026, you may withdraw up to $20,000 per year, per child from a 529 plan, tax-free, for K–12 educational expenses.

☑ Are you or your child planning to attend college?

The OBBBA restricts federal borrowing and repayment options for some borrowers beginning in 2026. Increasing your college savings (e.g., via 529 plans) may reduce reliance on high-interest private loans.

☑ Are you pursuing professional or specialized education?

529 plans will now allow tax-free withdrawals for a wider range of career training and certifications, making them more flexible for adults returning to school.

Miscellaneous Planning Issues

☑ Do you need to review your estate plan?

With the estate and gift tax exemption being made permanent in 2026, your estate plan may need adjustments to optimize gifting and legacy strategies.

☑ Are you planning major business purchases?

Depending on timing, you may still qualify for 100% bonus depreciation instead of standard MACRS depreciation—an opportunity to maximize deductions for 2025.

 

Takeaway

The upcoming OBBBA changes present both opportunities and challenges for taxpayers. A proactive approach—coordinating with your tax professional and financial advisor—can help you take advantage of deductions, avoid phaseouts, and plan effectively for 2026 and beyond.

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Disclosure: 

This article is based on current tax laws and rules as of 2025, which are subject to change. While every effort has been made to ensure the accuracy of information, neither Index Fund Advisors, Inc. nor its representatives take responsibility for errors or omissions.

This is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, product, service, or considered to be personalized tax advice.  This material is provided for informational purposes only. IFA Taxes is a division of Index Fund Advisors, Inc., which provides tax-related guidance as part of its investment advisory services. Clients, prospective clients, and readers of this article should consult with their tax advisor before making any tax-related decisions. Tax laws are subject to change, and the information presented herein reflects our understanding as of the date of publication. Future legislative or regulatory developments may affect the accuracy or applicability of the information provided.   Investors are encouraged to consult with a qualified advisor to assess personal financial goals and risk capacity. Additional information is available by reviewing IFA's ADV Brochure at https://www.adviserinfo.sec.gov/ or visiting www.ifa.com.