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Beyond Tips and Overtime: The Other New OBBBA Deductions for 2026 (Jul 2026)
OBBBA created a senior bonus deduction, a car-loan interest deduction, a bigger employer child care credit, and Trump Accounts. Here are the exact figures and phaseouts REG and TCP candidates should know. Updated August 2026 with proposed regulations on the Trump Account employer limit.
Published July 15, 20267 min readVerified as of August 17, 2026
Four More Deductions to Know
The no-tax-on-tips and no-tax-on-overtime deductions got the headlines, but OBBBA created several other individual and business breaks that are just as testable. The two new individual deductions, for seniors and for car-loan interest, are claimed on the same new Schedule 1-A as tips and overtime, and like those two they are available whether or not you itemize but do not reduce adjusted gross income. On the business side, OBBBA sharply increased the employer-provided child care credit. It also created Trump Accounts and raised the child tax credit.
The Senior Bonus Deduction
Taxpayers age 65 and older get an additional $6,000 deduction for tax years 2025 through 2028, or $12,000 for a married couple where both spouses are 65 or older. This stacks on top of the existing extra standard deduction for seniors rather than replacing it. The deduction begins to phase out at $75,000 of modified adjusted gross income for single filers and $150,000 for joint filers, at a rate of 6 percent of the excess. A valid Social Security number is required, and the deduction is available to both itemizers and non-itemizers.
Car Loan Interest Deduction
For loans originated in 2025 through 2028, taxpayers can deduct up to $10,000 per year of interest on a loan used to buy a personal-use vehicle. The vehicle must be new, meaning original use begins with the taxpayer, and it must have undergone final assembly in the United States, which the buyer verifies through the vehicle information label or VIN. The vehicle must have a gross weight rating under 14,000 pounds, and the VIN goes on the return. The deduction phases out starting at $100,000 of modified adjusted gross income for single filers and $200,000 for joint filers. Used vehicles do not qualify.
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Employer-Provided Child Care Credit (Section 45F)
OBBBA made the employer-provided child care credit much larger, effective for amounts paid or incurred after December 31, 2025. The credit rate rose from 25 percent to 40 percent of qualified child care expenses, and to 50 percent for eligible small businesses. The maximum annual credit rose from $150,000 to $500,000, and to $600,000 for eligible small businesses, indexed for inflation. An eligible small business is defined using the Section 448(c) gross-receipts test, which for 2026 is $32 million or less of average annual gross receipts. Unlike the senior and car-loan deductions, this is a 2026-forward provision, not a 2025 one.
Trump Accounts and the Child Tax Credit
OBBBA created Trump Accounts, tax-advantaged savings accounts for children. Children born from January 1, 2025 through December 31, 2028 are eligible for a one-time $1,000 government seed contribution under a pilot program. Families can contribute up to $5,000 per year, with employer contributions capped at $2,500 within that limit, and no contributions can be made before July 4, 2026. Separately, OBBBA made the higher child tax credit permanent. Analyses of the law, including from the Bipartisan Policy Center, put the credit at $2,200 per child for 2025, indexed for inflation thereafter, with the refundable portion at $1,700 and a Social Security number now required for both the child and the claiming taxpayer.
Update (August 2026): Proposed Regs Clarify the $2,500 Trump Account Limit
Treasury and the IRS issued proposed regulations under REG-101355-26 in August 2026 that answer the question practitioners kept asking about employer contributions to Trump Accounts. The $2,500 annual limit applies per employee, not on a dependent-by-dependent basis, so an employee with three eligible children still has a single $2,500 ceiling rather than $7,500. The proposed rules also narrow who can receive tax-favored employer contributions to common-law employees, which leaves out partners, sole proprietors, 2 percent S corporation shareholders, and directors serving only as directors. On the government side, the proposed regulations describe the $1,000 federal contribution under Section 6434 as available for eligible children born after December 31, 2024 and before January 1, 2029. Comments are due 45 days after publication in the Federal Register, and a public hearing is scheduled for October 15, 2026, so these rules are proposed rather than final.
Exam Relevance
These provisions land on REG and TCP, and the phaseout thresholds are exactly the kind of detail examiners like to test. The senior deduction and the car-loan deduction share a mechanical quirk worth remembering: they lower taxable income but not AGI, so they do not help with AGI-tied items like credit phaseouts. For the tips and overtime rules, see our no tax on tips and overtime guide, and for the full OBBBA picture see our OBBBA overview.
Sources
- 1.IRS — One Big Beautiful Bill Act: Tax Deductions for Working Americans and Seniors(accessed Jul 15, 2026)
- 2.IRS — Employer-Provided Child Care Credit: Tax Year 2026 and Later(accessed Jul 15, 2026)
- 3.IRS — Treasury, IRS Issue Guidance on Trump Accounts Established Under the Working Families Tax Cuts(accessed Jul 15, 2026)
- 4.Bipartisan Policy Center — How the OBBB Changes to the Child Tax Credit Will Impact Families(accessed Jul 15, 2026)
- 5.Journal of Accountancy — Trump Account Prop. Regs. Clarify $2,500 Limit for Workers (REG-101355-26, Aug 11, 2026)(accessed Aug 17, 2026)
Brennan Kolar
Founder, Atlas CPA Index
Brennan Kolar is the founder of Atlas CPA Index, an independent CPA review comparison platform covering all 55 U.S. jurisdictions. With over 10 years of experience with CPA review, he built Atlas to help candidates find the right review course based on how they actually learn, not which provider has the biggest ad budget.
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