The One, Big, Beautiful Bill Act - A Recap For Military Families (2026 update)
On the 4th of July, President Trump signed into law, the One, Big, Beautiful, Bill Act (OBBBA). Regardless of where you stand politically, this bill is going to have some effects on your taxes, some of them this year! You can read the entire bill here, but I've taken the liberty of drawing out a few sections I felt were most applicable to military families. Here we go!
Extension of the Current Tax Rates & Brackets
The Tax Cuts and Jobs Act (TCJA) of 2017 decreased most tax rates and brackets. That decrease was meant to expire at the end of 2025, which most financial planners were planning for (worst case). The current rates are now “permanent” (until 2029) individual tax rates of 10%, 12%, 22%, 24%, 32%, 35%, and 37%. This is excellent news!
Extension and Additional Enhancement of Current Standard Deductions
The TCJA almost doubled the standard deduction for single, head of household, and married filers. The result was that many people received a significant tax deduction without having to itemize. In fact, most people could not itemize enough to meet the standard deduction. This provision was meant to expire in 2025, but is now permanently extended and adjusted for inflation.
An added provision for tax years 2025-2028 allows a deduction of $31,500 for joint filers, $23,625 for head of household, and $15,750 for all other filers, inflation-adjusted thereafter.
Extension of the Child Tax Credit
The child tax credit, set to revert back to $1,000 per child at the end of 2025, is now not only permanent, but for tax years 2025-2028, increased to a maximum of $2,200 per child. There is still an income threshold of $200,000 for single filers and $400,000 for married filers.
Increase to the Dependent Care FSA
For tax years beyond Dec 31, 2025, the Dependent Care FSA contribution limits are increased to $7,500 for single and married filers.
State and Local Taxes (SALT) Cap
For those who itemize their taxes, the TCJA capped the maximum amount of state and local tax deductions at $10,000. For some who live in highly taxed states and/or local municipalities, this hurts their ability to itemize some or all of their tax deductions. The OBBB increases the SALT cap to $40,000 for those earning less than $500,000 annually. The SALT cap of $40,000 will sunset in 2029 and return to $10,000 in 2030.
Limitation on Home Mortgage Interest
This provision makes permanent that you can only itemize interest on the first $750,000 of your home mortgage, which is the current limit today.
Permanent Elimination of Qualified Moving Expenses - Except for Active Duty!
That's right! If you are an active member of the Armed Services, you can still take above-the-line deductions for qualified, unreimbursed moving expenses. Check out my post for a few more details about what you can claim and how you can claim them.
ABLE Account Improvements
There are several improvement provisions for those with ABLE accounts.
Previous year contribution limits remain the same.
Designated beneficiary qualified contributions are eligible for the Saver's Credit.
Tax-free rollovers from a Section 529 to an ABLE account.
No Tax on Car Loan Interest
This is a tricky one, but here's the interpretation. This is an above the line deduction of up to $10,000 per year for loan interest that meets the following standards:
Was manufactured for use on public roads, streets, or highways
Has at least two wheels
Is a car, minivan, van, SUV, truck, or motorcycle
Final assembly done in the US
This does not include all-terrain vehicles and recreational vehicles. The tax deduction is only good for tax years 2025-2028 and there are income phase-outs.
Repeal of Clean Energy Credits (Already enacted)
There is a substantial repeal of clean energy credits as it relates to your home or car. (Please don't go buy home improvements or cars just to get the credits while you can.) I mention this in case you were already thinking about these types of purchases. 2025 may be the year to do it if you want the credits.
Charitable Deductions
If you give to charity, but don't itemize, you can still claim above-the-line charitable deductions of $1,000 for single filers and $2,000 for married filers.
There is also a new adjustment for itemized charitable giving, which adds a 0.5% floor. This means that if you have an adjusted gross income of $100,000, you can itemize charitable giving that exceeds the first $500.
529 Account Enhancements
Beginning in 2026, beneficiaries will be able to use their 529 accounts for quite a few more qualified educational expenses. In fact primary, secondary, and homeschool expenses are specifically named, including:
Online educational materials
Tutoring or educational classes outside of the home
Testing fees
Educational therapies for students with disabilities
Also, 529s can be used for “qualified postsecondary credentialing expenses” in connection with “recognized postsecondary credential programs” and “credentials”. Think occupational certificates, licenses, apprenticeships, etc.
Money Accounts for Growth and Advancement, a.k.a. Trump Accounts
Trump accounts are tax advantaged IRAs geared for minors. They have their own annual contribution limits, can only be invested inexpensive, passive, index funds, and cannot be distributed (easily) before the minor turns 18. There are 5 types of contributions:
The $1,000 seed deposit (if the child qualifies)
“General” contributions funded by certain government entities or nonprofits (less common for most families, but think the Dell’s)
Employer contributions (high school job)
Rollovers from one Trump account trustee to another (rare for most families)
Regular contributions from parents/family
Under IRS Notice 2025-68, there is also a $1,000 “pilot program” deposit that applies only if the child meets several requirements.
The easiest filter to understand is the birth-year window:
✅ The child must be born after December 31, 2024, and before January 1, 2029 (so, generally kids born in 2025–2028).
Other key requirements include:
The child must be a U.S. citizen
The child must have an SSN issued before the election
The election must be made through Form 4547 or the tool at trumpaccounts.gov
Once the Trump account exits the “growth period,” which is defined as ending Dec 31st, the year the year prior to the child turning 18, the Trump account will revert to a regular tradioinal IRA with all associated rules and contribution limits.
Summary
There is a lot more to the OBBBA and even more questions around implementation of the OBBBA. 2025 will be an exciting time to see how this all plays out through the IRS, but stay tuned for more updates and how they might affect you.
Sources:
https://www.kiplinger.com/taxes/gop-proposes-maga-savings-accounts
https://taxfoundation.org/research/all/federal/big-beautiful-bill-senate-gop-tax-plan/
Disclaimer: This article is provided for educational, general information, and illustration purposes only. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, investment advisory services, or does it provide tax advice. I encourage you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Read the full disclosure.