Beginning in 2026, residents of the United States will be affected significantly by the country’s tax code, healthcare system, and government benefits.
That’s because, on Thursday, certain provisions of President Donald Trump’s signature tax and spending package are scheduled to take effect.
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Known as the One Big Beautiful Bill Act (OBBBA), the package was signed into law in July, amid bipartisan pushback.
Fiscal conservatives feared it would increase the nation’s deficit, while left-leaning critics feared that millions of Americans would be without food or health insurance as a result of the changes.
Notably, the OBBBA did not grant any extensions to the COVID-era healthcare subsidies, which are scheduled to expire on Thursday.
Democrats have warned that, without those subsidies, health insurance premiums purchased under the Affordable Care Act (ACA) are set to skyrocket.
What and how will these changes affect Americans going forward in 2026? We break down the new year’s resolutions.
What is the One Big Beautiful Bill Act?
Before Trump ran for re-election in January 2025, he had suggested drafting a comprehensive bill that would cover all of his platform’s components.
He wrote on January 5 that “Members of Congress are getting to work on one powerful Bill that will bring our Country back and make it greater than ever before.”
That idea became the foundation for the OBBBA, which Trump signed into law on July 4, the Independence Day holiday.
It contains dozens of provisions, ranging from Trump’s 2017 tax cuts to policies that encourage fossil fuel production.
What changes are coming to the price of healthcare?
The Affordable Care Act’s marketplace, an online exchange that assists consumers and small businesses in connecting insurance plans, is expected to increase in prices for US citizens.
Under then-President Joe Biden, the ACA healthcare subsidies that were put in place as part of the 2021 American Rescue Plan Act were not extended by the One Big Beautiful Bill Act. Those subsidies expire on December 31.
The National Economic Council’s former deputy director, Daniel Hornung, said, “The healthcare issue is a big one because people typically have their health insurance premium taken out of their account on the first, second, or third of the month.”
In response, “we’re likely to see people’s health insurance premiums double in the coming days.”
Why hasn’t Congress extended the healthcare subsidies?
The decision to extend the ACA subsidies has caused a jiggle in Congress.
Before Congress extended the healthcare subsidies, Democrats resisted passing budget legislation in September. But Republican leaders said they would only vote on the subsidies after the budget legislation was signed.
The longest government shutdown in US history was 43 days due to this impasse.
A few Democrats joined their political party members to defeat the budget legislation, with the agreement that the subsidies would be extended in December.
But rival proposals from Democrats and Republicans to address the subsidies both failed earlier this month.
On January 1st, the expiration will go into effect, but Congress won’t go back to work until January 5.
How many people will be affected by the expiration of the subsidies?
Approximately 2.2 million Americans are projected to lose healthcare coverage because of the increased cost, according to analysis from the Congressional Budget Office.
Former Biden administration official Hornung claimed that many more people are susceptible to higher healthcare costs.
“We’re talking about about 20 million or so Americans who are either on the state exchanges or the national exchanges, so that’s a significant issue,” Hornung said.
What new work requirements does the federal food assistance program have?
There are new work requirements under the One Big Beautiful Bill Act that help low-income households pay for groceries under the Supplemental Nutrition Assistance Program (SNAP) benefits.
Able-bodied adults between the ages of 18 and 64 must now work or participate in school or a training programme for at least 80 hours per month to remain eligible.
Beginning January 1, the policy applies to both new and renewal applicants.
Implementation dates for current SNAP recipients vary by state. Some states have already notified existing beneficiaries of the pending changes, while others will begin enforcement later. For instance, the new regulations are not anticipated to go into effect until March 2026 in New York.
The new regulations may put additional pressure on service-industry workers, many of whom have irregular schedules that prevent them from putting in 80 hours a month, according to Al Jazeera’s report.
How will inheritances be affected?
An expanded estate tax exemption is one of the changes. Individuals who inherit an estate less than $15 million are exempt from the federal estate tax under the new policy. For couples, that threshold is $30m.
Prior to the 2017 law, the maximum amount for untaxed estate heirs was $ 5.5 million ($7.2 million in 2025, inflation-adjusted) for individuals and $ 11 million ($14 million for couples).
Critics claim that significant generational wealth transfers are tax-free because of the higher thresholds. As a result of the new provision, fewer than 1 percent of taxpayers ever face the estate tax.
What changes will there be regarding deductions going forward?
The 2017 Tax Cuts and Jobs Act, which was passed during Trump’s first term, will become permanent on January 1. Many of these provisions benefit higher-income households.
Some businesses are able to deduct 20% of their qualifying income from federal taxes under one of the new 2017 provisions.
Additionally, the SALT deduction cap has been changed.
Typically, the federal government allows taxpayers to pay less in federal taxes if they can show they are paying a certain amount in income, sales and property taxes on the state and local levels.
However, there is a cap on how much of that reduction is. The SALT deduction cap increased from $10, 000 to $40, 000 after the One Big Beautiful Bill Act was passed.
That cap will increase by 1 percent to $40, 400 for the 2026 tax year, with additional 1 percent increases through 2029.
Residents in high-taxing states like New York and California, according to opponents, will disproportionately benefit from those cap increases.
The OBBBA will increase the taxpayers’ standard deductions for 2026.
The standard deduction will increase by $350 for single filers, $700 for joint filers, and $525 for heads of households over the 2025 rates.
In comparison to last year, the deduction will increase modestly by $50 for those over 65.
Are there any benefits for childcare?
Trump made reducing childcare costs a key campaign objective during his re-election bid for the year 2024.
Trump stated to the Economic Club of New York in 2024, “Childcare is childcare.” “It’s something you have to have in this country. You must possess it.
The child tax credit is anticipated to slightly increase as a result of the One Big Beautiful Bill Act.
In 2026, parents can receive tax credits for up to 50 percent of their eligible childcare expenses.
However, one child’s qualifying expenses are set at $3, 000 and two or more at $6, 000. This is an increase from the current maximum of $2,200 per child for 2025.
What about Trump’s campaign promise, ‘ No tax on tips or overtime’?
There are already provisions in the tax code, including the repeal of both overtime and no federal income taxes, both of which are retroactive for income earned after January 1, 2025.
Taxes paid on eligible 2025 income will not be refunded on annual tax returns earned after 2026 and beyond.
Workers can deduct up to $25, 000 in cash tips, including those paid via credit and debit transactions.
Some tipped workers may benefit, but many on the lower income scale, especially those who work in the food service, will not benefit significantly.
The sector’s roughly two-thirds of its employees don’t make enough money per year to meet the $1,750 threshold for filing federal income taxes in 2026. The new law would ultimately not benefit them.
Workers are able to deduct up to $12,500 in overtime income from the company’s no-tax-on-overtime policy, though.
According to Saru Jayaraman, the founder of One Fair Wage, a nonprofit advocacy organization, “policies like “no tax on tips” or “no tax on overtime” do not address the main issue that millions of workers across the nation face, which is that wages are simply too low to begin with.
“A policy that keeps base wages low and unstable while offering tax relief many workers will never see does not solve the affordability crisis”.
If Congress doesn’t extend these tax exemptions, they will end in 2028, Trump’s final year in office, and they are not permanent.
Source: Aljazeera
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