2026 New Tax Law Calculator (OBBBA)

How 2026 New Tax Law Calculator (OBBBA) Works

See how the One Big Beautiful Bill affects your 2026 taxes. Compare old vs new rates, tips, overtime, and senior deductions. and. Enter your values into the form above and the calculator processes them instantly in your browser — no data is sent to any server.

What Changed in the 2026 Tax Law (OBBBA)

The One Big Beautiful Bill Act (OBBBA), signed into law in 2026, is the most significant federal tax reform since the Tax Cuts and Jobs Act of 2017. The bill introduces several new deductions and credits aimed at working Americans, seniors, and families with children. Key changes include higher standard deductions, a new exemption for tip income, a deduction for overtime pay, an additional deduction for seniors aged 65 and older, and an increase in the child tax credit from $2,000 to $2,200 per qualifying child. The SALT deduction cap was also raised from $10,000 to $40,000, providing relief to taxpayers in high-tax states. These provisions are designed to lower the effective tax rate for most middle-income and working-class households.

No Tax on Tips — Who Qualifies and How Much You Save

One of the headline provisions of the OBBBA is the elimination of federal income tax on tip income for qualifying tipped workers. If you earn tips as part of your regular compensation — such as restaurant servers, bartenders, hotel staff, hairdressers, and delivery drivers — your tip income (up to $25,000 per year) is now excluded from federal taxable income. This means a server earning $35,000 in wages plus $20,000 in tips would only pay federal income tax on the $35,000 base wage portion. For workers in the service industry, this can result in savings of $2,000 to $5,000 or more per year depending on their tax bracket. Social Security and Medicare taxes still apply to tip income.

Overtime Pay Deduction Explained ($12,500 Maximum)

The OBBBA introduces a new above-the-line deduction for overtime pay, allowing workers to deduct up to $12,500 of overtime income from their federal taxable income. This provision applies to hourly workers who earn time-and-a-half or double-time for hours worked beyond 40 per week. If you earned $15,000 in overtime last year, $12,500 of that would be excluded from your taxable income, potentially saving you $1,500 to $3,000 depending on your marginal tax rate. This deduction is available regardless of whether you itemize or take the standard deduction.

New Senior Tax Deduction for Ages 65+

Taxpayers aged 65 and older receive an additional $4,000 deduction under the OBBBA. This stacks on top of the standard deduction and any existing additional standard deduction for seniors. The senior deduction phases out for single filers with adjusted gross income above $75,000 and married couples filing jointly above $150,000. For seniors living primarily on Social Security and modest retirement income, this provision can reduce their federal tax bill to near zero. Combined with the existing senior standard deduction bonus, a single filer aged 65+ could receive over $20,000 in total standard deductions for 2026.

Child Tax Credit Increase to $2,200

The OBBBA increases the child tax credit from $2,000 to $2,200 per qualifying child under age 17. The refundable portion also increases, meaning families who owe little or no federal income tax can still receive a portion of the credit as a refund. For a family with three children, this adds up to $6,600 in credits — a $600 increase over the previous $6,000 total. Income phase-out thresholds remain at $200,000 for single filers and $400,000 for married couples filing jointly. The credit continues to reduce your tax liability dollar for dollar, making it one of the most impactful provisions for families.