What the One Big Beautiful Bill Act means for the 2026 tax season How to prepare for OBBBA in the 2026 tax season

The One Big Beautiful Bill Act (OBBBA) is poised to complicate this upcoming tax season. It contains several modifications and consolidations of existing tax provisions, creates new reporting requirements, and alters certain eligibility thresholds. Needless to say, these sweeping changes have major implications for tax professionals and their clients in 2026. 

Here’s why a 10-15% increase in 1040 return complexity is projected for next year along with advice on how your firm can prepare for it. 

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What are the major tax changes under OBBBA?

Here are the components of OBBBA that most directly impact tax professionals and their clients.

Permanent extension of TCJA provisions

• Standard deduction: The increased standard deduction introduced by the Tax Cuts and Jobs Act (TCJA) is now permanent. 
• Lowered tax rates: Individual income tax rate reductions from the TCJA are now solidified. 

SALT cap adjustments

• Raised cap: The state and local tax (SALT) deduction cap increases from $10,000 to $40,000 starting in 2025. 
• Expiration: The cap will revert to $10,000 in 2030.  
• Annual growth: The cap will receive an annual 1% raise through 2029. 
• Phaseouts: Begins phasing out for individuals with modified adjusted gross income (MAGI) over $500,000. 

New individual tax breaks

• Tip income deduction: Up to $25,000 in tip income is now deductible. 
• Senior deduction: Individuals 65 and older can deduct an additional $6,000, subject to phase-out. 
• Overtime deduction: Individuals can deduct up to $12,500 ($25,000 for joint filers) of qualified overtime compensation, subject to phase-out. 
• Auto loan interest deduction: Taxpayers can deduct up to $10,000 annually in interest on new personal-use vehicle loans (2025–2028), subject to income-based phaseouts  

Compliance and complexity

As is evident in this summary, tax professionals will have their work cut out for them next year. Clients are likely to have several questions about new reporting requirements and may even miss details without professional guidance. For example, service and hospitality businesses will have to start tracking and reporting tips and overtime earnings. Such a change may require upgraded payroll systems and training for employees. 

Professionals will also have their own wrinkles to sort out, interpreting the nuances of this new legislation and trying to determine the tax implications. Ensuring that clients remain compliant and able to reap new benefits will require additional research, which of course requires time. 

Overall, these changes are expected to create an increase in the complexity of Form 1040 filings. The added burden stems from the need to report new types of income and apply updated eligibility criteria. As a result, tax preparation will demand more time, precision, and support from professionals and their software providers. 

How automation simplifies 1040 engagements

The forecasted surge in 1040 complexity will come as grim news to many tax pros. Busy season already pushes plenty of practices to the brink of exhaustion. For them, this could mean additional time and effort that well exceeds their capacity. That’s why implementing professional-grade automation for this upcoming busy season is more important than ever. 

Here’s a look at how our 1040 solutions streamline tax preparation so users have more bandwidth to navigate the unexpected: 

1040SCAN

What it does:  

Scans OCR data and exports it to your tax software, drastically reducing data entry requirements 

What sets it apart: 

• Recognizes 4–7x as many tax documents as alternative solutions  

• Auto-verifies OCR data on 65% of standard documents 

• Users reported a 39% reduction in preparation time in a 2021 study 

SPbinder

What it does: 

Organizes workpapers into a standardized index tree that follows the flow of the tax return 

What sets it apart: 

• Equips preparers with tick marks, annotations, notes, and hyper-linked cross-references that work on all supported file types    

• Reviewers can follow workpaper progress with change tracking and up to four sign-off levels  

• Users reported a 29% reduction in review time in a 2021 study 

SafeSend

What it does: 

Provides a secure platform for communication and collaboration during document gathering and tax return delivery  

What sets it apart: 

• Users can exchange e-signatures, custom questionnaires, tax documents, and invoices all in one place 
• Sends automatic reminders so staff don’t have to chase down clients for documents and payments

Smarter research for a more complicated landscape

Having the right solutions in place can significantly reduce time spent on 1040 tax prep, but what’s your firm’s plan for navigating OBBBA next tax season? With certain interpretations of the new legislation still up in the air, professionals need straightforward guidance they can trust. 

CoCounsel Tax uses next-level agentic AI to provide simple answers to complex tax questions. Compared to consumer-grade AI tools that use a mixture of reliable and unreliable sources across the web, CoCounsel Tax is trained on Checkpoint content verified by subject matter experts. The end result: Faster, more accurate research that helps tax professionals navigate this still-evolving compliance landscape with confidence. 

Why Q4 is the best time to prepare

It’s not too late to equip your firm for the OBBBA next tax season. Here’s why Q4 can be an effective window to implement new technology: 

Strategic timing advantages: Q4 provides the crucial “calm before the storm” — adequate time for thorough testing, staff training, and workflow integration before tax season pressure begins. 

Budget alignment: Tax practices traditionally plan their budgets for the upcoming year during Q4. Aligning your tech spend with annual budget cycles makes it easier to demonstrate ROI metrics and justify the expenditures.  

Stronger support: Q4 implementation gives firms a sufficient window to plan and troubleshoot while workloads are still relatively light. Vendors are also more likely to have adequate support availability compared to Q1. 

Navigating OBBBA next tax season

While the OBBBA brings unprecedented complexity to the 2026 tax season, firms equipped with professional-grade automation and AI-powered research tools will navigate these changes with confidence. The right technology investments today transform potential chaos into competitive advantage, ensuring your practice not only survives but thrives during this critical transition period. 

Check out our OBBBA resource hub for insights, FAQs and a full executive summary on the new legislation.