OBBBA Tax Changes for the CFP Exam: 2026 Quick Reference

The One Big Beautiful Bill Act was signed July 4, 2025. It made most of the individual provisions in the 2017 Tax Cuts and Jobs Act permanent (they were scheduled to sunset at the end of 2025) and added several new ones. The CFP exam tests 2026 law, so every dollar threshold you compute uses the OBBBA-era number, not the pre-OBBBA one.

The CFP Board put out a briefing of roughly forty pages on OBBBA, but what's testable is much smaller than that. Five items show up disproportionately in CFP question banks: the $40,000 SALT cap, the new senior deduction, the child tax credit bump to $2,200, the permanent $15 million estate exemption and the new 0.5% AGI floor on cash charitable contributions. Below are all twelve changes that matter, in the order they touch a 1040, followed by the estate-side items.

The twelve changes that matter

1. SALT cap raised to $40,000, with a phase-down

State and local taxes (income or sales, plus property) are deductible up to $40,000 per return, $20,000 MFS. Above $500,000 MAGI the cap drops by 30 cents per dollar of additional MAGI, down to a $10,000 floor (reached at $600,000 MAGI). The phase-down is gradual, so questions with high-income filers usually expect you to run the arithmetic instead of defaulting to $40,000.

For example, an MFJ filer with $560,000 MAGI has an effective cap of $40,000 minus $18,000 = $22,000. By $600,000 MAGI the cap has fully phased down to the $10,000 floor.

Here's a fuller one. The Aldermans file MFJ in 2026 with AGI of $650,000, state income tax of $30,000 and property tax of $18,000. They want to know whether to bunch property taxes into one year.

1. Base SALT cap = $40,000.
2. Phase-down. MAGI excess = $650,000 minus $500,000 = $150,000. Cap reduction = $150,000 times 30 cents = $45,000.
3. The $45,000 reduction exceeds the $30,000 gap between the $40,000 cap and the $10,000 floor, so the cap bottoms out. Effective SALT cap = $10,000. Any MAGI at or above $600,000 lands here.
4. Total SALT incurred = $30,000 plus $18,000 = $48,000. They can deduct $10,000, and the excess $38,000 produces no federal tax benefit.
5. Bunching. If they paid double property tax in 2026 ($36,000) and nothing in 2027, their 2026 SALT would still cap at $10,000. Bunching doesn't help once they're already past the cap. The planning move is to lower MAGI below $600,000 in 2026 if possible, which lifts the effective cap off the floor.

2. Standard deduction permanent at TCJA-doubled levels

Without OBBBA, these would have dropped to roughly half on January 1, 2026.

3. New senior deduction (age 65+)

OBBBA added a new senior deduction. It doesn't replace the age-65 additional standard deduction, which continues unchanged, so a client who's 65 or older now has two separate breaks.

The age-65 additional standard deduction is $2,000 for single or HoH filers and $1,600 per spouse 65+ for MFJ ($3,200 if both qualify). It's indexed annually, it's part of the standard deduction, and it has no income phase-out.

The new OBBBA senior deduction is $6,000 per individual age 65+ ($12,000 MFJ if both qualify), claimed on Schedule 1-A for tax years 2025 through 2028. It stacks on top of the standard or itemized deduction and phases out at 6% of MAGI above $75,000 single / $150,000 MFJ, reaching zero at $175,000 / $250,000.

For example, an MFJ couple, both age 67, with MAGI of $120,000 takes a 2026 standard deduction of $32,200 + $3,200 = $35,400, plus a separate $12,000 senior deduction on Schedule 1-A (fully available because their MAGI is below the $150,000 phase-out threshold).

Exam items like to mix the two up. The age-65 addition is part of the standard deduction. The new senior deduction is a separate Schedule 1-A item that applies whether the client itemizes or not.

4. Child tax credit raised to $2,200

The credit is per qualifying child under 17. The refundable portion is near $1,700. The phase-out is unchanged: a $50 reduction per $1,000 of MAGI above $200,000 single / $400,000 MFJ.

5. New tip income exclusion

Up to $25,000 of qualified tip income per worker is excluded from federal income tax. FICA still applies. It phases out above $150,000 single / $300,000 MFJ MAGI.

6. New overtime pay exclusion

Up to $12,500 single / $25,000 MFJ of the premium portion of overtime pay (the "half" in time-and-a-half) is excluded from federal income tax. FICA still applies, and the phase-out thresholds are the same as for tips.

Tips and overtime are both exclusions from gross income, not above-the-line deductions. They reduce AGI directly because the income never enters the return.

7. Non-itemizer charitable deduction restored

Filers who take the standard deduction can deduct cash gifts to qualified public charities up to $1,000 single / $2,000 MFJ. The deduction is claimed alongside the standard deduction, so it reduces taxable income, not AGI. This replaces the expired CARES Act caps of $300 / $600. It isn't available for gifts to donor-advised funds.

8. New 0.5% AGI floor on itemized cash charitable gifts

Cash gifts below 0.5% of AGI no longer produce an itemized deduction. Above the floor, the deduction is the gift minus the floor. A $400,000 AGI filer who donates $5,000 cash deducts $5,000 minus $2,000 = $3,000. The same filer donating $1,500 cash deducts zero, since that's below the $2,000 floor.

Back to the Aldermans, with AGI of $650,000 and $4,000 of cash charitable contributions. The 0.5% floor is $3,250, so the deductible portion is $4,000 minus $3,250 = $750. At a 32% marginal rate, that saves $750 times 32% = $240 in federal tax, well short of the $1,280 of tax savings a filer without the floor would have computed.

9. New 35% cap on the itemized charitable benefit

For filers in the 37% bracket, the itemized charitable deduction is worth at most 35 cents on the dollar. A $10,000 cash gift saves $3,500 of tax in the top bracket, not $3,700.

10. AMT phase-out reset to flat thresholds

The 2026 AMT exemption is $90,100 single / $140,200 MFJ. The phase-out begins at $500,000 single / $1,000,000 MFJ, and these thresholds are flat, not indexed.

11. Estate, gift and GST exemption permanent at $15,000,000

The exemption is per person and indexed for inflation going forward. The TCJA sunset to approximately $7,000,000 on January 1, 2026 is gone, and the rate above the exemption is unchanged at 40%.

A bypass trust still has value with the exemption permanent, because it shifts post-death appreciation outside the survivor's estate. The DSUE under portability doesn't index between the first and second death.

12. Section 199A QBI deduction permanent at 20%

The 20% deduction on qualified business income from pass-through entities is now permanent. Phase-in limits for specified service trades or businesses (SSTBs) still apply, with 2026 income thresholds indexed for inflation.

What OBBBA didn't change

Questions often plant a wrong choice that assumes a change that didn't happen, so it helps to know what stayed put:

• NIIT is still 3.8% on the lesser of net investment income or MAGI above $200,000 single / $250,000 MFJ, and the thresholds still aren't indexed.
• Capital gains brackets (0/15/20%) and their breakpoints are structurally unchanged.
• The estate tax rate above the exemption is still 40%.
• Kiddie tax: the first $1,400 is tax-free, the next $1,400 is taxed at the child's rate, and anything above $2,800 at the parents' marginal rate.
• The annual gift exclusion is still inflation-indexed: $19,000 for 2026.
• Roth IRA income phase-outs are still inflation-indexed.
• Roth conversion rules are unchanged, with no income limit on conversions.
• The Section 121 home-sale exclusion ($250,000 single / $500,000 MFJ) is unchanged.
• 1031 like-kind exchanges (real property only) are unchanged.
• Retirement plan contribution limits come from SECURE 2.0 and inflation indexing, not OBBBA.

How to study OBBBA for the CFP exam

OBBBA doesn't get its own exam section. It runs through Tax Planning and Estate Planning as the 2026 tax law, and it changes the answer to roughly twelve specific dollar-value questions. Memorizing those twelve numbers handles roughly 80% of OBBBA-flavored items, and practicing the SALT phase-down and the 0.5% charitable floor handles most of the rest. Here's how I'd spend the time:

1. Drill questions on the OBBBA dollar values until you can recite them without thinking.
2. Practice the SALT phase-down arithmetic. It's the most computation-heavy OBBBA item on the exam: the question gives you MAGI and you compute the effective cap.
3. Re-run the standard-vs-itemized decision for retired clients. The age-65 additional standard deduction changes the floor, and a client who used to itemize for medical may now take the standard deduction.
4. Practice the 0.5% charitable floor. The arithmetic is simple, but candidates compute the full gift and forget to subtract the floor.
5. Know what didn't change: NIIT, kiddie tax, 1031, Section 121 and Roth conversion rules. Wrong choices often assume one of these moved.

The remaining 20% is scenario questions where two or three OBBBA items interact, like a retired MFJ couple with $650,000 MAGI deciding between standard and itemized, or a high-net-worth couple deciding whether to keep a bypass trust now that the exemption is permanent. Those reward candidates who learned how the changes fit together, not just the twelve numbers on their own.

You can practice OBBBA-anchored CFP questions on FreeFellow free with an account, and you can try sample questions without signing up.