Tax insight

OBBBA in 2026: Key impacts and planning considerations for individuals

Insight
5 minute read
February 11, 2026

What happened?

Federal tax changes relating to the One Big Beautiful Act (the Act) introduce significant provisions that could materially impact high-income taxpayers, creating both new risks and planning opportunities for the years ahead.

Beginning in 2026, the Act limits the overall tax benefit of itemized deductions for individuals, estates, and trusts in the highest tax bracket, effectively limiting the value of those deductions. It also introduces a new rule requiring charitable contributions to exceed 0.5% of adjusted gross income (AGI) before becoming deductible, which may reduce the tax benefit of charitable giving for itemizing taxpayers. This is often referred to as the charitable contribution ‘floor.’ In addition, there is a temporary increase in the cap on state and local tax (SALT) deductions from $10,000 to $40,000, subject to a phase-out.

Why is it important?

These provisions can meaningfully change after-tax outcomes for taxpayers who itemize, particularly those in higher brackets, because deductions may deliver less tax value than in prior years. The charitable contribution floor also may affect charitable giving strategies and the timing or use of carryforwards.

Actions to consider

Taxpayers should utilize multi-year projections to understand how the new limitations on itemized deductions, the charitable contribution floor, and the scheduled SALT changes could affect their specific tax profile and planning decisions, including the timing of deductions and contributions. Taxpayers with pass-through interests or founder equity also may want to revisit planning assumptions in light of updates affecting Section 199A, the excess business loss limitation, and expanded qualified small business stock (QSBS) opportunities for certain post–July 4, 2025 issuances.