What's Changing for 2026 Taxes Under OBBB
The One Big Beautiful Bill continues to evolve. While 2025 brought the biggest changes, several key updates and reporting requirements are set to take effect in 2026. Here’s what you need to know to stay ahead.
Core 2026 Tax Changes
The following adjustments are confirmed for the 2026 tax year, which you will file in 2027. These changes focus on refining the OBBB framework and improving IRS reporting.
🎯 Key Theme for 2026
The 2026 updates are less about new deductions and more about data collection and clarification. The IRS is implementing these changes to better track the usage of OBBB benefits and reduce reporting burdens in other areas.
1. New W-2 Reporting Requirements
To streamline the tracking of the new OBBB deductions, two new codes will become mandatory for Box 12 on Form W-2:
- Code TT: Employers must report all overtime premium pay here. This amount should match what you claim for the Overtime Deduction.
- Code UU: Employers must report all declared tip income here. This amount corresponds to your Tips Deduction claim.
Why this matters
This change makes it easier for you and the IRS to verify deduction amounts, reducing errors and potential audits. It also standardizes reporting across all payroll software.
2. Updated Schedule 1-A Form
The Schedule 1-A, introduced in 2025 for OBBB deductions, will see minor revisions for 2026. The new version will include specific lines to cross-reference the new W-2 Box 12 codes (TT and UU), making the form more intuitive.
Practical Impact
This is a quality-of-life improvement. Filing will be slightly faster as you'll simply carry over the values from your W-2 to the new, clearly marked lines on Schedule 1-A.
3. New 1099-K Threshold: $2,000
After years of debate, the 1099-K reporting threshold for third-party payment networks (like Venmo, PayPal, Cash App) is officially rising from $600 to $2,000 for the 2026 tax year.
Who this helps
This change significantly reduces the paperwork burden for casual online sellers, people selling personal used goods, and micro-gig workers who will no longer receive a 1099-K for small transaction volumes.
4. 'Trump Account' Reporting Requirements
As 'Trump Accounts' (tax-free accounts for domestic investments) enter their second year, new reporting rules will take effect. For 2026, financial institutions must report the year-end Fair Market Value (FMV) of all Trump Accounts to both the account holder and the IRS on the new Form 1099-TA.
No Action Needed By You
This is purely an informational reporting requirement. You do not need to take any action, but you will receive a Form 1099-TA showing your account's value, similar to a 1099-INT or 1099-DIV.
5. Inflation Adjustments for High Earners
The income phase-out thresholds for OBBB deductions (like Overtime, Tips, and SALT) will be adjusted for inflation for the first time in 2026. While the exact numbers will be released by the IRS in late 2025, they are expected to rise by 2-3%.
Impact
This is good news for high-income earners near the current thresholds (e.g., $150k for single filers). A small salary increase in 2026 may not push you past the new, higher phase-out limit, allowing you to continue claiming the full deductions.
Timeline: When Each Change Takes Effect
- January 1, 2026:The new rules officially become active. All transactions, paychecks, and reporting periods from this day forward fall under the 2026 guidelines.
- Throughout 2026:Employers and payment processors update their systems to comply with the new W-2 and 1099-K requirements.
- January 2027:You will receive your W-2s and 1099s reflecting these new reporting rules for the first time.
- April 15, 2027:Tax filing deadline for the 2026 tax year, where you will use the updated Schedule 1-A and incorporate all these changes.
Frequently Asked Questions for 2026
What are the new W-2 reporting requirements for 2026?
For tax year 2026, the IRS has introduced two new codes for Box 12 on Form W-2: Code TT to report overtime premium pay eligible for the OBBB deduction, and Code UU to report tip income eligible for the OBBB deduction. This helps the IRS track these new deductions.
What is the new 1099-K reporting threshold for 2026?
The reporting threshold for Form 1099-K, used by third-party settlement organizations like PayPal and Venmo, increases to $2,000 for 2026 transactions, up from the $600 level in previous years. This reduces the reporting burden for casual sellers and gig workers.
What are the 'Trump Account' reporting requirements?
Starting in 2026, financial institutions will be required to report the total value of assets held in designated 'Trump Accounts' to the IRS. This is an information reporting requirement to track the growth of these tax-advantaged accounts, similar to IRA reporting.
When do the 2026 tax changes take effect?
These changes apply to the tax year beginning January 1, 2026. You will see them reflected on the tax return you file in early 2027.
Prepare for Your 2026 Filing
While these changes are a year away, understanding them now can help you plan. Use our tools to see how OBBB impacts you today, and be ready for the smooth implementation of these updates in 2026.