The Tax Code Shake‑Up: How New Rules Are Reshaping Financial Planning at Every Stage of Life

January 12, 2026

At First National Bank and Trust Company, we remain committed to providing clarity and confidence during times of change. Our “Preparing for 2026 & Beyond: Tax Code Updates” series was created to help you understand key tax law updates from trusted experts—and to show how these changes can provide meaningful planning opportunities for your future, not just shifts in policy.

Part Five — “The Tax Code Shake‑Up: Reshaping Planning for Every Stage of Life”

In our final installment, we close out the series by highlighting several sweeping changes included in the One Big Beautiful Bill Act (OBBBA) that affect taxpayers across all life stages. These updates—from permanent tax brackets to expanded deductions and credits—can influence financial decisions for nearly everyone. Understanding these revisions now can help you have more productive conversations at your next tax planning session or financial review.

The tax adjustments enacted on July 4th represent far more than minor numerical changes. They effectively rewrite significant portions of the tax code and introduce permanent rules that will shape how Americans spend, save, invest, and plan for many years to come.

Permanent Adjustments to Tax Brackets

As discussed in earlier sections of this series, the simplified seven‑bracket system has now been made permanent. The federal tax brackets will remain at:

10%, 12%, 22%, 24%, 32%, 35%, and 37%.

This shift is expected to offer meaningful advantages to a wide range of taxpayers. Estimates show that nearly 62% of filers will see a tax reduction, with after‑tax income increasing by an average of 2.9%. For many households, the extra income may help support increased retirement contributions or savings toward future education costs.

Standard Deductions & Child Tax Credits

Previous increases created by the Tax Cuts and Jobs Act (TCJA)—including a higher standard deduction and a larger Child Tax Credit—are now permanent through the OBBBA. The legislation also expands these amounts further and ensures they continue adjusting for inflation.

For 2025, the updated Standard Deduction amounts are:

A New Qualified Deduction: Car Loan Interest (2025–2028)

In addition to the previously discussed deductions introduced in earlier parts of this series—such as the senior bonus deduction and the charitable contribution deduction—OBBBA introduces a temporary, yet valuable deduction for car loan interest.

Here’s what taxpayers should know:

• The vehicle must be brand‑new,
• purchased for personal use, and
• assembled in the United States.
• Dealerships can confirm assembly location by using the VIN.

If all requirements are met, taxpayers may deduct up to $10,000 of interest on the purchase, provided their MAGI is $100,000 or less (or $200,000 or less for married couples filing jointly).

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