Major tax legislation rarely affects just accountants. It affects payroll teams, HR leaders, business owners, and employees alike. The One Big Beautiful Bill Act (OBBBA) introduces structural tax changes beginning in 2025 and 2026, and several provisions require operational adjustments long before they take effect.
For employers, this is not just a tax planning issue. It is a payroll configuration issue, a withholding issue, and in some cases a workforce communication issue.
Below is a structured breakdown of what is changing, what remains uncertain, and what your business should prepare for now.
Beginning December 24, 2025, the United States Postal Service will no longer treat standard postmarks as valid proof of mailing for time-sensitive tax documents unless the envelope is hand-stamped.
This matters for employers who file paper returns or correspondence, including:
If your business relies on an April 15th postmark to demonstrate timely filing, you will need to obtain a hand-stamped postmark during postal business hours.
Most federal payroll and information returns can be filed electronically through IRS-approved e-file systems. Employers that rely on electronic filing are not affected by the postmark change.
Operational recommendation: move toward electronic filing wherever possible to reduce procedural risk. If your team is still filing certain forms manually, this is the year to reassess.
Several individual income tax provisions become permanent or are modified starting in 2026.
The 37 percent top individual federal income tax rate is permanently extended.
For updated federal tax bracket information, reference the IRS tax tables published annually at irs.gov.
Beginning in 2026:
This change affects paycheck withholding accuracy and employee net pay projections.
If you are managing payroll internally, ensure your system reflects updated standard deduction tables once IRS withholding tables are revised.
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Two new deductions directly affect wage earners.
Taxpayers may deduct up to $25,000 of qualifying tip income. Tip income is not exempt from tax, but a deduction is available within defined limits and subject to income phaseouts.
For employers in hospitality, healthcare support roles, and service industries, tip tracking accuracy becomes even more important.
If your organization employs tipped workers, review reporting systems and Form W-2 accuracy procedures.
You can review IRS guidance on tip reporting.
Read more about tip income deduction on our blog here.
Overtime pay is deductible up to the following limits and is subject to income phaseouts.
This creates additional payroll complexity. Employers must ensure overtime is clearly categorized and reported accurately.
You can review IRS guidance on overtime compensation tax deduction. Read more about the overtime income deduction on our blog here.
Beginning in 2026, charitable deductions for itemizers are limited to the amount exceeding 0.5 percent of adjusted gross income.
Key points:
For businesses that promote charitable giving programs, communicate these changes to employees so expectations align with new rules.
Effective January 1, 2026:
This has implications for closely held businesses, succession planning, and equity transfers.
If you operate a family-owned organization or plan an ownership transition, coordinate with estate counsel early.
For shares issued after July 4, 2025:
If your business anticipates raising capital or issuing stock, consult with tax counsel to understand how these changes could impact new equity rounds.
The One Big Beautiful Bill Act significantly narrows or phases out several federal clean energy incentives that businesses have relied on for capital planning and infrastructure upgrades. If your organization is considering renewable energy investments or facility improvements, timing matters more than ever.
Under the new rules:
For official program guidance, reference the U.S. Department of Energy at energy.gov and IRS clean energy credit pages.
The Act maintains through 2032 the zero-emission nuclear power production credit for electricity generated at qualifying nuclear facilities placed in service before early August 2022.
Energy producers operating eligible facilities should confirm ongoing qualification requirements under IRS guidance.
The clean production fuel credit, which applies to certain transportation fuels including sustainable aviation fuel, remains available through 2029. However, eligibility rules have tightened, including stricter sourcing and supply chain requirements.
Given the complexity of fuel sourcing standards and lifecycle emissions calculations, affected businesses should monitor regulations closely.
The Act terminates the deduction for energy-efficient commercial building improvements for construction that begins after June 30, 2026.
This deduction historically allowed building owners to deduct qualifying upgrades, such as:
Organizations planning facility renovations or new construction should review project timelines carefully if they intend to rely on this deduction.
The legislation introduces new limitations affecting clean energy projects involving certain foreign entities, foreign-influenced entities, or projects receiving material assistance from prohibited foreign sources. The Treasury Department is required to issue additional guidance by December 31, 2026 to clarify how these restrictions apply.
The state and local tax deduction cap increases:
Phaseout begins at:
Unless extended, the cap reverts to $10,000 after 2029.
Excelforce provides integrated solutions that connect:
The One Big Beautiful Bill Act creates both certainty and complexity. Some provisions are permanent. Others include sunset dates and phased eligibility rules.
This overview highlights selected provisions of the One Big Beautiful Bill Act but does not include every amendment, extension, or technical clarification contained in the legislation. Certain provisions of the Tax Cuts and Jobs Act of 2017 were not extended, and additional Treasury regulations and IRS guidance are expected. Future legislative action could also modify provisions currently described as permanent.
Individuals and businesses should consult a qualified tax professional to evaluate how these changes apply to their specific circumstances and to ensure planning strategies remain aligned with current law.
Payroll accuracy, reporting clarity, and proactive planning will determine whether these changes are disruptive or manageable.
©2026 - Content on this blog is intended to provide helpful, general information. Because laws and regulations evolve, please consult an HR professional or legal expert for guidance specific to your situation.