Tax planning for 2026

The OBBA took effect beginning in the  2025 tax year. Many taxpayers  overlooked some of the newer tax credits and deduction, and   not know where to find them on their return.The  OBBA introduced new limitations on itemized deductions for higher-income taxpayers. It is important to begin planning now for the 2026 tax year so you can take advantage of these tax credits, while avoiding the limitations

Some of the most accessible OBBA-related tax benefits include the American-assembled vehicle deduction, the additional charitable contribution deduction, the “no tax on tips and overtime” provisions, the Trump/Dell accounts, and the senior tax credit.

Taxpayers increasing their earning power should  should also be aware that the OBBA introduced phaseouts and limitations for higher earners. Under the new rules, certain itemized deductions may be reduced or capped based on income levels.

The OBBA introduced an additional line item in the 1040 called the 1-A. The deductions for the American Assembled car, No tax on tips/overtime, and additional deductions will be located in this line item. To locate 1-A on the face of the 1040 go to page 2 and locate line 13b.  Line 1-A also has its own worksheet. I have attached a link to the IRS website for the 1040, and the 1-A additional information. https://www.irs.gov/pub/irs-pdf/f1040.pdf https://www.irs.gov/pub/irs-pdf/f1040s1a.pdf .

The American-assembled vehicle deduction allows taxpayers to deduct vehicle interest payments if the vehicle’s final assembly occurred in the United States. This includes vehicles produced by foreign manufacturers such as Toyota and Honda because some of their vehicles are assembled domestically. However, certain domestic vehicles, including some Ford F-150 models assembled in Mexico, do not qualify. Before purchasing a vehicle, taxpayers should verify the final assembly location using the VIN number. A VIN lookup service such as VIN Checkup(VIN Checkup) can help confirm eligibility.

Taxpayers with children should be aware of  the Trump accounts and the proposed Dell accounts. The Trumps accounts will allow children born between January 1, 2025, and December 31, 2028,  receive a $1,000 government contribution that can will be a

ccessible when the child reaches age 18. Taxpayers need to file  IRS form 4547 qualify

There have also been discussions regarding Dell accounts, which would provide $250 seed contribution for children under age 10 born before 2025. However, these accounts have not been finalized, and reports regarding their implementation are uncertain.

Taxpayers who claim the standard deduction can  qualify for an additional charitable contribution deduction. This deduction applies only to cash donations and is limited to $1,000 for single filers and $2,000 for married couples filing jointly.  There is no income phase out.

The OBBA also introduced new limitations on itemized deductions for higher-income taxpayers. For taxpayers earning more than $626,250 (single filers) or $751,600 (married filing jointly), itemized deductions may effectively be capped at 35%. As income increases further, deductions may be reduced until reaching a minimum floor of $10,000.

Taxpayers should begin now planning  minimize their tax liability by taking advantage of the OBBA tax benefits. While High earners should be start planning now to avoid the phase outs.