OBBBA federal tax package: major filing-season changes and looming expirations
Key Questions
What are Trump Accounts in the OBBBA?
Trump Accounts provide a $1,000 seed for babies as part of the OBBBA federal tax package. They aim to support future savings but may have eligibility catches.
What senior tax benefits are in the OBBBA?
Seniors can claim up to $6,000 or $12,000 deductions via new Schedule 1A, with phase-outs and Social Security traps to avoid. Stacking deductions could reach $46,700 off tax bills.
What is the tips and overtime tax break?
The OBBBA proposes up to $25,000 exemption on tips and overtime, though Wisconsin Governor Evers vetoed similar state bills. It boosts refunds for service workers.
How does OBBBA affect car purchase deductions?
A $10,000 deduction is available for car purchases with VIN verification under the OBBBA. This incentivizes certain vehicle buys during filing season.
What adoption and CTC changes boost refunds?
Adoption credits increase to $17,000 plus CTC boosts to $6,700, leading to larger refunds for thousands of new parents. Changes apply to 2026 filings.
What IRS cuts are part of OBBBA?
The package includes $1.4 billion in IRS funding cuts, potentially impacting services. States like MN, SC, NC have mixed responses.
What RMD warnings apply to seniors?
Seniors face Required Minimum Distribution (RMD) changes that could tax Social Security lump sums; act before deadlines to avoid penalties. New rules phase in for 2026.
How can older Americans get free filing help?
Free filing assistance is available for seniors navigating OBBBA changes like tax breaks. Programs target those affected by new deductions and SS rules.
Trump Accounts ($1k baby seed); seniors $6k/$12k Schedule 1A (30M eligible, AARP promo, phase-outs/SS traps); tips/OT $25k (WI veto); car $10k VIN; Adoption $17k +CTC $6.7k boosting refunds; corporate cuts; $1.4B IRS cuts; states MN/SC/NC split; RMD warnings.