One Big Beautiful Bill Act (OBBBA) 2026 Tax Changes – the Reese CPA Firm.

One Big Beautiful Bill Act (OBBBA): 2025–2026 Tax Law Changes Explained by Reese CPA Firm in Eden Prairie, MN

The One Big Beautiful Bill Act (OBBBA) introduces some of the most significant individual tax changes since the Tax Cuts and Jobs Act. It affects 2025 returns filed in 2026 and beyond, with new rules for the standard deduction, seniors, SALT, tips, overtime, charitable giving, and more.

Located in Eden Prairie, MN, in the Twin Cities metro area, Reese CPA Firm helps Minnesota individuals and business owners understand these new provisions and build practical tax-saving strategies around them.

Overview: What the One Big Beautiful Bill Act Does

OBBBA is designed to extend and enhance many TCJA-era tax benefits while adding new targeted deductions and a few revenue raisers.

In broad terms, it:

  • Keeps the seven-bracket rate structure and larger TCJA-style standard deduction going forward.
  • Adds temporary and permanent new deductions and credits that start in 2025 or 2026.
  • Changes the rules for SALT, tips, overtime, seniors’ deductions, charitable deductions for non-itemizers, foreign remittances, and certain credits.

For many taxpayers in Minnesota and the Twin Cities, 2025–2026 will bring larger deductions and potentially bigger refunds, but only if the new rules are understood and applied correctly.

Standard Deduction and Senior Deduction Under OBBBA

OBBBA preserves the expanded standard deduction created under the TCJA and further increases the amounts for 2025, with inflation adjustments in 2026 and later years.

In addition, OBBBA creates a special extra deduction for seniors:

  • For 2025 through 2028, individuals age 65 and older can claim an additional $6,000 deduction on top of their standard (or itemized) deduction.
  • A married couple where both spouses are 65+ can potentially claim $12,000 extra.
  • This extra senior deduction phases out as income rises.

Reese CPA Firm in Eden Prairie can help you model whether you’ll benefit more from itemizing under the new SALT and other rules or taking the enhanced standard deduction plus the senior add-on, especially if you live or work in the Twin Cities area.

SALT Deduction Cap Increased to $40,000

One of the headline changes in the One Big Beautiful Bill Act is the temporary increase in the State and Local Tax (SALT) deduction cap.

Key points:

  • The SALT cap increases from $10,000 to $40,000 per return starting in 2025, with annual inflation adjustments for 2026–2029.
  • The increased SALT cap phases out for higher-income households.
  • The higher cap is especially impactful for taxpayers in higher-tax states and metro areas like the Twin Cities, who itemize deductions.

For clients with significant Minnesota income tax, Hennepin County property tax, and local real estate tax, this is a major planning opportunity. Reese CPA Firm helps Eden Prairie and Twin Cities clients:

  • Decide whether and when to prepay property taxes or state estimates.
  • Coordinate SALT timing with other itemized deductions and the higher standard deduction.

“No Tax on Tips” and “No Tax on Overtime” – Up to New Limits

OBBBA includes popular provisions often summarized as “no tax on tips” and “no tax on overtime”, but the details matter:

  • Certain taxpayers may deduct up to a set amount of tip income and overtime pay from taxable income, subject to income limits.
  • These benefits are generally available to individuals below specific income thresholds and phase out as income rises.

For service-industry workers and hospitality employees across the Twin Cities, including those working in restaurants, hotels, and venues around Eden Prairie, Minneapolis, and St. Paul, these rules can result in substantial reductions in taxable income.

Reese CPA Firm can:

  • Analyze your W-2 and tip records to calculate the maximum allowed deduction.
  • Help Minnesota employers adjust withholding and communication so employees aren’t surprised at tax time.

Charitable Deduction for Non-Itemizers (Starting 2026)

Beginning with 2026, OBBBA introduces a charitable deduction for taxpayers who take the standard deduction:

  • Standard-deduction filers can deduct up to a capped amount of eligible cash charitable contributions without itemizing.
  • This deduction is in addition to the standard deduction.

For Minnesota taxpayers who routinely donate to local Twin Cities charities, churches, and nonprofits, this provides a way to see a direct tax benefit even if they don’t itemize.

Reese CPA Firm can help you:

  • Track and document eligible cash gifts.
  • Decide whether to bunch larger contributions in certain years to maximize both itemized and non-itemizer strategies.

Miscellaneous Itemized Deductions Permanently Eliminated

OBBBA permanently eliminates miscellaneous itemized deductions subject to the old 2% of AGI floor, which had already been suspended.

This means expenses like:

  • Unreimbursed employee business expenses
  • Certain legal fees (outside newer above-the-line provisions)
  • Investment advisory fees will not reappear as deductions, and taxpayers must instead focus on the new mix of standard deduction, SALT, charitable rules, and targeted above-the-line deductions.

Reese CPA Firm works with Twin Cities professionals and business owners to restructure expense arrangements (for example, through entities or accountable plans) to preserve tax efficiency.

Child Tax Credit, Dependent Care, and Premium Tax Credit Modifications

OBBBA adjusts several important credits beginning around 2025–2026, such as:

  • Child Tax Credit (CTC) increases and adjusted phase-out thresholds.
  • Revised Child and Dependent Care Credit percentages and income ranges.
  • Tighter rules for the Premium Tax Credit starting in 2026, impacting families on MNsure and other marketplace plans.

Families in Eden Prairie and across the Twin Cities juggling childcare, health insurance, and fluctuating income will see meaningful changes in their net after-tax position.

Reese CPA Firm can model:

  • How your credits change under OBBBA.
  • Strategies to keep income in optimal ranges for MN and federal credits.

1% Excise Tax on Certain Foreign Remittance Transfers

Beginning in 2026, OBBBA imposes a 1% excise tax on certain money transfers to foreign locations, mainly impacting remittance transactions sent through specific channels.

Residents in the Twin Cities who regularly send funds overseas may see higher transaction costs unless they adjust how and when they remit funds.

Reese CPA Firm can help determine whether your transfers are subject to the excise tax and how to track and document them for compliance.

How Reese CPA Firm in Eden Prairie Helps You Navigate OBBBA

The One Big Beautiful Bill Act creates real opportunities but also real complexity. The exact benefit depends on your filing status, income level, type of income, and where you live in Minnesota.

From our office in Eden Prairie, serving clients throughout the Twin Cities metro, Reese CPA Firm offers:

  • Personalized OBBBA impact reviews – Side-by-side comparisons of your 2024–2026 tax projections to show exactly how your situation changes.
  • Strategies for SALT, tips, overtime, and charitable giving – Tailored to Minnesota tax rules and local property tax realities.
  • Senior and retirement planning – Integrating the extra senior deduction, charitable rules, and retirement distribution strategies.
  • Business owner planning – Coordinating your personal return with S corp, partnership, or C corporation planning under the updated federal and Minnesota framework.
Schedule an OBBBA Tax Planning Consultation in Eden Prairie, MN

If you want to understand how the One Big Beautiful Bill Act affects your 2025 and 2026 taxes, now is the time to plan—not after the year ends.

Contact Reese CPA Firm in Eden Prairie, Minnesota today to:

  • Review your projected 2025–2026 tax liability under OBBBA
  • Optimize your deductions and credits under the new law
  • Build a proactive tax plan tailored to your situation in the Twin Cities area

With the right strategy, OBBBA can be more than just “another tax law”—it can be an opportunity to materially lower your tax bill over the next several years while staying fully compliant.

Schedule a meeting with me