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The One Big Beautiful Bill Act (OBBBA) is a massive rewrite of the federal tax code. The legislation offers several new credits and deductions that could potentially lower your tax bill in the year ahead. However, it also includes some traps that could limit or even eliminate the tax savings you enjoy.
Many of these changes are coming in 2026, so you still have time to prepare and adjust your spending plans to avoid these pitfalls. Here are the top three traps you should keep an eye on.
Perhaps the most noteworthy new deduction unveiled in the OBBBA was the additional seniors deduction (1). Individual taxpayers over the age of 65 can claim up to $6,000 in extra deductions on Social Security, while a married couple filing jointly can claim up to $12,000 together under this new rule.
However, the deduction is available only through 2028, which means if you’re over the age of 65 but delaying Social Security benefits until age 70, you could be leaving money on the table.
There are also income thresholds to consider. The deductions are phased out for annual incomes over $75,000 for singles (or $150,000 for married seniors filing jointly), and are fully phased out at $175,000 or $250,000, respectively.
If you plan to realize certain capital gains or have been deploying a Roth conversion strategy, these could put you over the income thresholds and reduce your deductions by thousands of dollars. You can avoid this trap by lowering and spreading out tax gain harvesting and Roth conversions over multiple years.
If this sounds confusing, you might benefit from hiring an expert to help navigate the best option for your circumstance. A financial advisor can help you map out a strategy that maximizes your potential deductions.
If you’re not sure where to begin, Advisor.com can help you find SEC/FINRA-registered advisors near you for free.
Since financial advice isn’t one-size-fits-all, Advisor.com matches you with vetted advisors based on your specific needs. Just answer a few basic questions, and Advisor.com’s AI-powered matching tool will match you with the best fit.
The OBBBA’s changes to the State and Local Tax (SALT) deduction present both opportunities and challenges, especially for people living in states or cities with higher local taxes (2).
Since 2025, the cap for deducting these taxes has been raised from $10,000 to $40,000. The caps are expected to be raised 1% every year through 2029, before reverting back to $10,000 in 2030.
The primary beneficiaries of this change are families that earn six-figures or more and live in high-tax states like New York, California, New Jersey and Connecticut, according to the Bipartisan Policy Center (3).
However, the deduction is phased out for incomes above $500,000. That means realizing a big investment gain, selling rental property or receiving a big bonus from your employer could push you over the income threshold. Missing out on this limited-time deduction could be an expensive mistake.
Even if you don’t qualify for the SALT deduction, commercial real estate investments offer other tax-planning tools.
For instance, owners of income-producing properties may deduct up to 20% of their qualified rental income under the Qualified Business Income (QBI) deduction. Plus, investors can also use Section 1031 exchanges to defer capital gains taxes by reinvesting proceeds from a sale into another like-kind commercial property.
That said, buying and managing commercial properties yourself can feel overwhelming, but First National Realty Partners (FNRP) can help accredited investors tap into this market.
And thanks to their triple net lease structure, tenants are responsible for paying property taxes, insurance and maintenance, plus base rent — meaning you can invest in these properties without worrying about tenant costs cutting into potential returns.
FNRP pays out any positive net cash flows as quarterly distributions, providing truly passive income since you forgo typical landlord headaches. Since inception in 2015, they’ve paid $140 million in total distributions.
If you itemize your deductions, the OBBBA has introduced a new floor for deductions related to charitable contributions (4). Starting January 1, 2026, only donations exceeding 0.5% of your adjusted gross income can be deducted from your taxes.
For instance, if you earn $150,000, you can claim a deduction for charity only in excess of $750. The higher your gross income, the higher your charitable floor.
An experienced tax advisor — like those you can find on Advisor.com — can help you calculate how much of your charitable giving is deductible, ensuring you’re maximizing the tax benefit.
If you make frequent donations, neglecting this new floor could be an expensive error.
The OBBBA is so wide-ranging that there could be just as many pitfalls as benefits for some taxpayers. With many months to go before the next tax season, this could be the right time to start planning and adjusting your spending and income plans accordingly.
