A year ago, the One Big Beautiful Bill Act reshaped the tax planning landscape for families and businesses alike. If you haven’t revisited your plan since the initial rollout, here are some key tax law changes to review.
529 Plans: Qualified Expenses Are Now Expanded
If your 529 plan strategy hasn’t changed since last year, it’s worth a second look. The annual tax-free K-12 withdrawal limit doubled to $20,000 per student in 2026, and the list of qualifying expenses now stretches well beyond tuition. Qualifying expenses now include tutoring, test fees, and certain online coursework in addition to other expenses not listed here. Families whose 529 plan beneficiaries aren’t participating in a traditional four-year path can still benefit from tax-free withdrawals. Qualified expenses include trade schools and credentialing programs. Withdrawals not utilized for qualified expenses are not eligible for tax-free treatment.
Cash Donations: Limitations and Opportunities May Require More Strategic Donating
Charitable deduction rules tightened for itemizers this year. Contributions are now subject to a floor of 0.5% of adjusted gross income, and top-bracket taxpayers face an additional cap on itemized deductions. However, there’s a new upside for those taking the standard deduction. Non-itemizers can deduct up to $1,000 in cash donations if filing single ($2,000 if filing jointly). Prior to OBBBA, non-itemizers didn’t receive a tax benefit from their cash donations.
The practical takeaway is that donors who give the same amount every year may see tax advantages by changing the timing of their donations or by utilizing a donor-advised fund to separate the deduction timing from the distribution timing. Our team is available to help our clients determine if they’re structuring their donations in the most tax advantageous manner.
Capital Gains: The 180-Day Clock Still Runs
Large capital gains commonly result from a sale of a business, real estate, or securities, and Qualified Opportunity Fund investments remain one of the few tools that can defer the tax liability now and eliminate tax on investment appreciation later. The catch is unchanged: the reinvestment window is 180 days. This is an area of taxation that requires advanced tax planning. If you’re considering an asset sale, it’s best to communicate this with your advisor in the early stages to learn about tax savings opportunities that you may benefit from.
For Business Owners: Four Deadlines Worth Knowing
Employer Credit for Paid Family and Medical Leave is now a permanent tax credit. What used to be a temporary tax credit incentive is now a standing part of the tax code. If your written employee leave policy and payroll coding haven’t been reviewed since the credit was made permanent, then you may benefit from a review of your policy and payroll before year-end to determine if this is a business credit that you can take advantage of.
Clean energy projects on the clock. Wind and solar projects needed to break ground before July 4, 2026, or need to be fully operational by the end of 2027 to be eligible for certain clean energy tax credits. If you feel you may have a project that qualifies for clean energy credits, it’s worth a discussion now to determine if other eligibility requirements are met and how these changes may impact your credit calculation. It’s important to note that there are new foreign-sourcing restrictions impacting projects starting after 2025 and that geothermal and storage projects are relatively unimpacted by the OBBBA.
Manufacturers receive depreciation benefits related to Qualified Production Property. Businesses constructing or expanding production, manufacturing, or refining facilities can now fully expense qualifying real property through 100% bonus depreciation. A mid-sized manufacturer putting up a new production line addition may now be eligible to utilize bonus depreciation to deduct a substantial amount of the construction costs in the first year it’s in-service rather than depreciating the facility over several decades. This may assist the business with cash flow needs that are commonly felt during an expansion or update of facilities. This tax benefit is not permanent. There are restrictions based on when construction begins, when the project is placed in-service, and who the original user is. Property must be placed in-service before 2031 making this an important discussion to have now with your advisor to allow for ample time planning to avoid missing strict eligibility deadlines.
Increased Section 179 limits. For 2026, businesses can expense up to $2.56 million in qualifying 179 purchases which commonly applies to equipment purchase. The $2.56M limit begins to phase-out when current year asset additions reach $4.09 million. Paired with 100% bonus depreciation, this is still one of the most reliable ways to offset taxable income on planned capital spending. If you have significant asset additions that may limit your use of Section 179, planning related to timing of asset purchases can save you tax dollars in both the current and future.
Where This Leaves You
Waiting until year-end to consider these provisions may lead to missed tax savings opportunities. It’s beneficial to understand the tax rules surrounding these key areas of the tax code prior to starting a project, and your advisors at LattaHarris are here to help you navigate the tax code to unlock your time and money.