2026 New Tax Law Calculator (OBBBA)
See how the One Big Beautiful Bill Act changes your 2026 federal taxes. Enter your income details to compare your 2025 tax bill against the new 2026 provisions — including no tax on tips, overtime deduction, senior deduction, and increased child tax credit.
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.
Frequently Asked Questions
What is the One Big Beautiful Bill Act?
The One Big Beautiful Bill Act (OBBBA) is federal tax legislation signed in 2026 that introduces several new deductions and credits. It raises the standard deduction, eliminates federal income tax on tip income (up to $25,000), allows overtime pay deductions (up to $12,500), adds a $4,000 senior deduction for ages 65+, increases the child tax credit to $2,200, and raises the SALT cap to $40,000.
How much will I save under the new 2026 tax law?
Savings depend on your income, filing status, and which provisions apply to you. A single filer earning $60,000 with no special provisions might save $50-100 from the higher standard deduction alone. A tipped worker earning $20,000 in tips could save $2,000-4,000. A senior with $50,000 income could save nearly $500 from the senior deduction. Use the calculator above for your specific estimate.
Who qualifies for the no-tax-on-tips provision?
Workers who receive tips as part of their regular compensation qualify. This includes restaurant servers, bartenders, hotel staff, hairdressers, barbers, delivery drivers, valets, and similar tipped occupations. The exemption applies to up to $25,000 in tip income per year. Social Security and Medicare taxes still apply.
What is the overtime pay deduction limit?
The OBBBA allows workers to deduct up to $12,500 of overtime pay from their federal taxable income. Overtime is defined as hours worked beyond the standard 40-hour workweek at time-and-a-half or higher rates. This is an above-the-line deduction, available whether you take the standard deduction or itemize.
Do seniors get an extra tax deduction in 2026?
Yes. Taxpayers aged 65 and older receive an additional $4,000 deduction under the OBBBA. This phases out at $75,000 AGI for single filers and $150,000 for married filing jointly. The phase-out rate is 10% of income above the threshold. This is in addition to the existing higher standard deduction for seniors.
Did the SALT deduction cap change?
Yes. The State and Local Tax (SALT) deduction cap increased from $10,000 to $40,000 under the OBBBA. This benefits taxpayers in high-tax states like New York, California, New Jersey, and Connecticut who itemize their deductions. The higher cap allows more state and local taxes to be deducted from federal taxable income.