Tax Changes Loom Large For US Economy In 2026

• Economists view Trump’s “One Big Beautiful Bill” tax package as a major driver of U.S. economic activity in 2026, with benefits flowing to both households and businesses through larger refunds, higher take-home pay and stronger investment incentives.
• The bill makes permanent the lower individual and corporate tax rates from the 2017 Tax Cuts and Jobs Act, extends the larger standard deduction, expands the alternative minimum tax exemption, and raises the estate tax exemption from $14 million to $15 million.
• Individuals receive temporary breaks including: tax exemptions on up to $25,000 in tipped income and up to $12,500 in overtime pay (phasing out above $150,000 income), a new deduction of up to $6,000 for seniors, expanded State and Local Tax (SALT) deductions to $40,000, and a tax break on up to $10,000 in auto-loan interest for U.S.-assembled vehicles, all generally through 2029.
• For businesses, the bill makes permanent lower corporate tax rates and restores full expensing for qualifying equipment, allowing companies to immediately deduct capital purchases instead of depreciating them over time.
• U.S.-based research and development spending becomes fully deductible, with small businesses allowed to retroactively expense R&D costs back to 2022, a provision many independent experts see as especially supportive of growth.
• Additional business incentives include loosening limits on interest deductibility (returning to an EBITDA-based cap including amortization) and expanding the 20% deduction for pass-through businesses such as restaurants, law firms, medical practices, hedge funds, and private-equity firms, though analysts remain divided on its growth effects.

(Source: Reuters)