OBBBA Tax Changes for Parents Starting in 2026
Initially, under the 2017 Tax Cuts and Jobs Act (TCJA), 2025 was set to be the final year for the higher standard deduction and expanded child tax credits. Now, under the 2025 One Big Beautiful Bill Act (OBBBA), 2025 is just the beginning. The OBBBA made many key components of the TCJA, including the standard deduction and tax credit provisions, permanent when adjusted for inflation.
These changes serve a twofold purpose. They help blunt “bracket creep” (higher taxes due to inflation pushes) and give direct relief to parents and guardians.
Usually, laws like the TCJA and OBBBA give and take away. They often offset deductions and exemptions in some areas with increases and new taxes in others. The Phoenix Tax Consultants team is keenly aware of both the positive and negative developments in ever-changing tax laws. Our tax planning expertise helps families and businesses keep more of the money they earn, which is the ultimate goal of any tax return.
Increased Standard Deduction Under the OBBBA 2026
Most households claim the standard deduction every tax season. This flat dollar amount is the same for everyone, depending on filing status, as follows:
- Single or Married Filing Separately: These filers are entitled to a $16,100 standard deduction. Legal status determines filing status. Emotionally or physically separated married couples remain married couples.
- Head of Household: Usually, an HH is an unmarried (divorced, never married, or widowed/widower) adult who cares for at least one legal dependent, usually a minor child. Adults, especially college students, may be dependents in certain situations. Usually, the dependent child must have lived with the HH filer for at least 6 months during the preceding calendar year.
- Married Filing Jointly: Most personal tax returns are MFJ tax returns. The marriage rate hit a 50-year low in 2021 but has increased significantly since then, and MFS tax rates are typically the highest in the tax code. The MFJ standard deduction is $32,200 per year.
How Permanent Tax Credits Benefit Parents
These relatively modest increases over the 2025 amounts (e.g., $15,750 for singles and $31,500 for married filing jointly) significantly reduce taxable income, since the standard deduction is an above-the-line deduction.
These increases are big news because more than 90 percent of filers claim standard deductions. Most people do not have enough itemized expenses, such as SALT (state and local taxes), charitable gifts, or mortgage interest, to exceed the standard deduction, especially at the new higher levels.
Nevertheless, the Phoenix Tax Consultant team always carefully evaluates tax profiles to find the most significant deductions.
Child Tax Credit (CTC) in 2026
The Child Tax Credit is closely related to the standard deduction. Many of the aforementioned dependent rules also apply to CTC deductions. The CTC reduces the tax owed for filers with qualifying children under age 17. Under current 2026 provisions:
- Maximum credit per qualifying child: $2,200, and
- Refundable portion: up to $1,700.
A refundable portion of the CTC is the part that families can receive even if their overall tax liability is zero, thanks to the standard deduction and other deductions. The refundable component remains capped at $1,700, meaning lower-income families still benefit even if they owe little or no federal tax.
The OBBBA keeps the higher credit amounts and phase-out thresholds (income levels at which the credit gradually phases out) through calendar year 2026. These thresholds help more middle-income families qualify for larger credits.
For more ways to reduce your tax liability in 2026 and beyond, contact us online or call 610-933-3507.