One Big Beautiful Bill Act Summary: What High-Income Households Need to Know

Updated 3/12/26

The One Big Beautiful Bill Act (OBBBA) has made sweeping changes to tax legislation for 2025 and beyond. Many of these changes are slated to bring positive impacts to high-income households, but wading through the extensive changes can be time-consuming. 

What do you need to know to leverage changes in your financial planning?

Here’s what you need to know about the OBBBA, the changes likely to impact your financial future, and how you can make it work for your gain.

Tax Brackets and Standard Deduction

The Tax Cuts and Jobs Act (TCJA) created a seven-bracket structure for individual tax returns, but it was set to end in 2025. TCJA rates were lower than those that high-income earners would have seen had the policy been permitted to sunset at the end of the year. 

Instead, the One Big Beautiful Bill Act made the tax brackets permanent as well as the increased standard deduction.

What benefits can you anticipate under the OBBBA in relation to your end-of-year taxes?

Those in the top bracket (which for 2026 begins at $640,600 for single filers and $768,700 for married couples filing jointly) would have seen their tax rates increased to 39.6 percent if the policy had been permitted to sunset. Instead, the OBBBA caps it at 37 percent, providing substantial savings!

Not to mention, the standard deduction is almost double what it would have been without the TCJA. For single filers, the new permanent standardized deduction for 2026 has adjusted to $15,750. Couples filing jointly can expect a deduction of $31,500. Both will continue to be indexed for inflation in the coming years.

State and Local Taxes (SALT)

State and local tax deductions are also a consideration with the One Big Beautiful Bill Act. Under this provision, the cap increased from $10,000 to $40,000 through 2029, with phases for inflation. In 2030, filers can expect SALT to revert to $10,000.

The phase-out begins at a modified adjusted gross income (MAGI) of $500,000 for single filers with an upper cap of $600,000.

Deductible Interest

In addition to the rate cuts of the TCJA extension, individuals can now deduct the interest for the most common types of loans. Notably, this applies to auto loan interest and mortgage interest.

When it comes to an auto loan, there is an allowable deduction of up to $10,000 per year in interest. This deduction will apply to vehicles assembled in the United States and phases out at $100,000 for single filers and $200,000 for married couples filing jointly. This deduction is set to last through 2028 and can be claimed whether you itemize your deductions or not. 

Mortgage interest has long been a tax-deductible expense for those who itemize their returns. In that vein, there has been a limit on deductible interest that has made its way into permanent tax policy. The debt limit for new mortgages is $750,000 on your primary residence for single filers and married couples filing jointly.

In addition to deducting traditional mortgage interest, private mortgage insurance is also treated as part of your mortgage interest. PMI generally applies to homeowners who have put down less than 20 percent of the purchase price of their home.

Enhanced Child Credit & Dependent Care

Many people look forward to a credit simply for having minor children in their care. In summary, the OBBBA has increased the child tax credit to $2,200 per child. This credit will be indexed for inflation every year.

Additionally, if you utilize a Dependent Care Assistance Program (FSA) through your employer to pay for childcare, 2026 brings a major increase. The maximum annual exclusion limit has been raised to $7,500 (up from the historical $5,000 limit).

529 Plan Enhancements for K-12 (New for 2026)

If you’re funding private education for your children, 2026 brings a massive benefit. Starting this year, the annual distribution limit from 529 Plans for K-12 K-12 tuition and expenses has doubled from $10,000 to $20,000 per year.

Furthermore, the definition of qualifying K-12 expenses has been expanded to include tutoring, standardized test fees, and educational therapies.

New "Trump Accounts" for Children (Launching July 2026)

Starting in July 2026, a brand-new tax-deferred savings vehicle for children will become available. Parents and authorized individuals can contribute up to $5,000 per year (after-tax) to an eligible child's account, and those investments will grow tax-deferred.

Employers are also permitted to make tax-favored contributions up to $2,500 per year toward an employee's dependent's account.

Lifetime Gift and Estate Tax Exception

Some people might have been eager to utilize their full estate and gift tax exemption, knowing that there was set to be a decrease in the coming year. As with the expansion of the tax brackets, the OBBBA made the exemption for larger lifetime gift and estate tax exemptions a permanent part of tax law.

In 2026, the exemption officially increased to $15 million for individuals. Couples can give double this amount, capping it at $30 million. This exemption will continue to increase annually with adjustments for inflation.

Sunset of Residential Clean Energy Credits (Effective 2026)

While the OBBBA extended many tax cuts, it also accelerated the sunset of several popular energy credits.

If you were planning to install solar panels or make energy-efficient home improvements this year, be aware that the 30% Residential Clean Energy Credit and the Energy Efficient Home Improvement Credit officially expired on December 31, 2025. They are no longer available for projects completed in 2026 or beyond.

Alternative Minimum Tax

While many of the policies of the One Big Beautiful Bill Act will benefit high-income earners, the Alternative Minimum Tax is one of the few places where high-income households are negatively affected.

Starting in 2026, new thresholds will expand the number of taxpayers subject to AMT.

What can you expect from AMT under the new legislation?

The OBBBA lowered the exemption phase-out to $500,000 for single filers and $1 million for those married filing jointly. These figures are lower than the rates that applied pre-OBBBA, alongside increased exemption phase-out rates (which jumped from 25 to 50 percent for 2026). This means that more people are likely to owe alternative minimum tax moving forward.

Charitable Giving Changes

One of the areas that permits tax filers in high-income brackets to minimize their taxable income while making a difference is charitable contributions. Under the OBBBA, there is a new floor that requires filers to contribute more than 0.5 percent of their AGI to deduct their contributions. Only deductions above this floor are deductible.

That being said, there are also caps on what you can give and deduct. If you fall into tax bracket seven, your deductions are capped at 35 percent of your income.

Another consideration is the permanent extension of larger deductible donations. You can now give up to 60 percent AGI in cash donations to public charities (50 percent for non-cash gifts).

Turn the 2026 Tax Changes Into Your Financial Advantage

Reading about the One Big Beautiful Bill Act is one thing. Applying it to optimize your portfolio is another.

The fine print of this legislation holds incredible opportunities for high-income earners — but only if you have a proactive strategy in place to seize them! At Consilio Wealth Advisors, we don't just react to tax changes; we anticipate them. We provide specialized, fiduciary wealth management specifically designed to help tech professionals with complex compensation structures keep more of what they earn.

Don't leave your wealth to chance. Contact us today to schedule your strategic consultation, and let's build a customized plan to optimize and future-proof your porfolio!

Disclosures

The information provided in this article is for educational and informational purposes only and does not constitute investment advice and should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status, or investment horizon. You should consult your attorney or tax advisor.

The views expressed in this commentary are subject to change based on market and other conditions. These documents may contain certain statements that may be deemed forward‐looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.

Consilio Wealth Advisors, LLC ("CWA") is a registered investment advisor. Advisory services are only offered to clients or prospective clients where CWA and its representatives are properly licensed or exempt from licensure.