January 1, 2026 wasn’t just a symbolic fresh start this year; it was a real line in the sand for a long list of tax provisions tied to the major OBBBA changes. Some benefits begin on January 1st, while others are officially in their final year. A few quietly become permanent.
If you like clarity before making financial moves (and who doesn’t), this is one of those moments where knowing the date matters just as much as knowing the rule.
Here are Some January 1st Tax Changes that You Should Know
A Bigger Charitable Deduction, Even If You Don’t Itemize
Starting January 1, 2026, non-itemizers get a meaningful boost when it comes to charitable giving. Single filers can deduct up to $1,000, and joint filers up to $2,000, even if they take the standard deduction.
What makes this especially notable is that this deduction is not subject to the new 0.5% of AGI floor that applies to other charitable deductions. In plain English: smaller, consistent gifts finally get recognized again in the tax code, without requiring itemization or complex strategies.
For many households that give regularly but don’t itemize, this restores a tax benefit that had effectively disappeared in recent years.
The New 0.5% of AGI Floor: What It Really Means
At the same time, January 1, 2026 introduces a 0.5% AGI floor for charitable deductions. This means that only the portion of charitable contributions above 0.5% of your adjusted gross income is deductible.
This change doesn’t eliminate charitable deductions, but it does change the math.
For example:
- Smaller or sporadic gifts may no longer generate deductions for itemizers.
- Larger, more intentional giving strategies become more important.
- Timing and aggregation of donations start to matter more than ever.
High-Income Taxpayers: A Lower Benefit from Itemized Deductions
If you’re in the 37% tax bracket, January 1, 2026 brings another subtle but important shift. Itemized deductions, including charitable contributions, will now be limited by 2/37, effectively capping the tax benefit at 35% instead of 37%. The deduction still exists. The incentive is just slightly reduced.
The Estate Planning Backdrop: A Bigger Exemption
Overlaying all of this is a much larger federal estate tax exemption, also effective January 1, 2026:
- $15 million per individual
- $30 million per couple
- Indexed for inflation
For families whose estates fall below these thresholds, charitable giving becomes less about estate tax avoidance and more about values, legacy, and income-tax efficiency. For larger estates, charitable strategies may still play a role, but often in more targeted, intentional ways.
Business Owners: QBI Rules Add Another Layer
January 1, 2026 also makes the 20% Qualified Business Income (QBI) deduction permanent, with a new minimum deduction of $400 for those with at least $1,000 in QBI from an active business.
However, the deduction begins to phase out if taxable income exceeds $75,000 (single) or $150,000 (joint). For owners of specified service trades or businesses (SSTBs), the deduction can phase out entirely to $0. For non-SSTB owners, it may be limited to the 10% W-2 wages and depreciable property (WDP) limit. The deduction is fully phased out at $272,300 (single) and $544,600 (joint).
More Changes (and Dates)
Energy Efficient Home Improvement Credits (Ending in 2025)
Homeowners can claim up to $1,200 for qualifying energy-efficient upgrades like windows, doors, insulation, HVAC systems, and home energy audits, but 2025 is the final year to use this credit.
Residential Clean Energy Credits (Ending in 2025)
Taxpayers can deduct up to 30% of the cost of installing solar panels, geothermal heat pumps, wind systems, or fuel cells, with 2025 marking the last year this credit is available.
Enhanced Additional Senior Deduction (2025–2028)
Taxpayers age 65 and older qualify for an additional $6,000 deduction per filer ($12,000 for married couples), though the benefit phases out as income rises.
Car Loan Interest Deduction (2025–2028)
Interest paid on loans for U.S.-assembled vehicles can be deducted up to $10,000, subject to income limits and phase-outs.
Trump Accounts for Children (Effective 2025)
For children born between 2025 and 2028, the government provides a $1,000 contribution at birth, with additional annual contributions allowed up to $5,000 (including employer contributions). Accounts can be opened starting July 4, 2026, and funds become accessible at age 18 under IRA-style rules.
Enhanced SALT Deduction (2025–2029)
The SALT deduction cap increases to $40,000, with a 1% annual increase before reverting to $10,000 in 2030; high-income taxpayers may see partial or full phaseouts.
Child Tax Credit Increase (Permanent)
The Child Tax Credit increases to $2,200 per child, indexed for inflation, while the refundable portion remains capped at $1,700 and continues to rise with inflation over time.
529 Plan Expansions (Permanent)
529 plans now cover a wider range of K–12 expenses and allow funds to be used for postsecondary credentialing, including certifications, licensing exams, and continuing education.
Why These Changes Deserve a Planning Conversation
What makes these changes tricky isn’t complexity, it’s timing. Many of these provisions interact with income levels, phaseouts, and multi-year planning decisions. Acting too late can mean missing deductions entirely. Acting too early without context can create unintended trade-offs.
In other words, January 1, 2026 was no longer just the start of a new year – it was the start (or end) of real tax opportunities.
If reviewing this list made you think, “I should probably double-check how these fit into my bigger picture,” that’s exactly the point. These rules don’t exist in isolation – and they’re most powerful when coordinated intentionally.
That’s where we can help. If you’re looking for a financial advisor in the Pensacola, FL or Birmingham, AL areas, Approach Retirement Advisors is here to assist you in implementing these changes to help ensure your money is working harder for you.
CLICK HERE to make an appointment with Phil Walker in Navarre and Pensacola.
CLICK HERE to make an appointment with Eric McClain in Birmingham.