Miscellaneous items in ‘OBBBA’ tax law

A new law that forms part of the tax and spending bill enacted earlier this year introduces numerous changes to the U.S. tax code. Here’s a breakdown of some key contributions:

• Estate Tax Exemption: Scheduled to come down to $7,000 per person in 2026, the new law permanently raises the lifetime estate and gift tax exemption to $15 million per individual and $30 million for married couples starting in 2025, indexed for inflation.

• Charitable Deductions: Introduces an above-the-line deduction for non-itemizers, with limits of $1,000 for individuals and $2,000 for married couples, starting in tax year 2026. Makes permanent the 60 percent of AGI contribution limitation for cash gifts to qualified charities.

• Dependent Care Assistance: Increases the annual contribution limits for employer-provided assistance to $7,500, up from the current $5,000.

• Changes to Itemized Deductions: In 2026, taxpayers are permanently unable to claim miscellaneous itemized deductions.

Only deductions for educators will be expanded and allowed.

• Mortgage Insurance Premiums: These premiums are now includable in deductible mortgage interest. Homeowners who owe more than 80 percent in their home’s value are usually in this category.

• Casualty Losses Expanded: Starting in 2026, certain state-declared disasters will be allowed; previously only federal- declared disasters were allowed.

• Qualified Business Income (QBI): This benefit for business owners to deduct 20 percent of QBI has been made permanent.

These items will help many taxpayers to lower their tax burdens.

Barry Lisak is an IRS enrolled agent specializing in personal and small business taxes for 30 years. Any questions can be directed to him at 516-829-7283, or mrbarrytax@aol.com.