The One, Big, Beautiful Bill Act (OBBBA) brings sweeping tax changes that could put more money back in your pocket—or create new obligations you haven't planned for. From enhanced adoption credits to brand-new savings accounts, these updates affect everything from your daily childcare decisions to how you send money to relatives abroad.
Understanding these changes now gives you a significant advantage. You can adjust your financial strategy, maximize new benefits, and avoid costly surprises when tax season rolls around. Let's break down the seven most important changes that could impact your family's bottom line.
Adoptive families have reason to celebrate. The adoption tax credit remains at $17,280 for 2025, but there's a game-changing update: up to $5,000 of this credit is now refundable.
This shift matters because the previous version was entirely nonrefundable. If your tax liability was lower than the credit amount, you simply lost the benefit. Now, eligible families can receive up to $5,000 as a direct refund, even if they owe no federal income tax.
The income limits stay the same—the credit phases out starting at $259,190 in modified adjusted gross income (MAGI) and disappears completely at $299,190. The refundable portion adjusts for inflation but can't be carried forward to future years, so timing becomes crucial for maximizing this benefit.
The Child Tax Credit increases to $2,200 per qualifying child under 17, up from the previous $2,000. The refundable portion rises to $1,700 for 2025, with inflation adjustments beginning in 2026.
Here's the catch: starting in 2025, you must provide Social Security numbers for both the child and the taxpayer claiming the credit. For married couples filing jointly, at least one spouse needs a Social Security number on the return. No exceptions—no Social Security number means no credit.
The income phaseout thresholds remain at $200,000 for single filers and $400,000 for married couples filing jointly. These thresholds won't adjust for inflation, which means more families may gradually lose eligibility over time.
Starting in 2026, families can open Trump Accounts for children under 18 with Social Security numbers. These accounts accept up to $5,000 annually until the child turns 18, with contribution limits adjusting for inflation after 2027.
Children born between January 1, 2025, and December 31, 2028, with at least one U.S. citizen parent may qualify for an initial $1,000 government deposit. Contributions aren't tax-deductible, but earnings grow tax-deferred.
The accounts must invest in exchange-traded funds or mutual funds tracking qualified indexes. Employers can contribute to these accounts for employees' dependents. Withdrawals generally aren't allowed until age 18, making these accounts strictly long-term savings vehicles.
Child and Dependent Care Credit Expansion
Beginning in 2026, the child and dependent care credit undergoes significant improvements. The calculation method changes, and income limits increase, allowing more parents to qualify or receive larger benefits. This credit helps offset childcare costs when parents work or job hunt.
529 Plan Flexibility Increases
Starting in 2026, 529 education savings plans become more versatile. You can withdraw up to $20,000 tax-free for K-12 tuition at public, private, or religious schools. The plans also cover additional qualified expenses like books, online education materials, and tutoring services.
New Tax on International Money Transfers
A lesser-known provision introduces a 1% excise tax on certain money transfers to foreign countries, effective 2026. This applies to cash transfers through remittance providers, but excludes transfers through banks or credit/debit card transactions. The transfer provider collects and remits this tax quarterly.
These changes create both opportunities and obligations. The enhanced adoption credit and increased Child Tax Credit provide immediate benefits for qualifying families. Trump Accounts offer new long-term savings options, while 529 plan expansions make education savings more flexible.
However, new requirements like Social Security number reporting for tax credits and potential taxes on international transfers require careful attention. The sooner you understand how these changes affect your specific situation, the better you can position your family financially.
Review your current tax strategy against these new provisions. Consider whether Trump Accounts make sense for your children's futures, and evaluate if the enhanced childcare credit changes your work decisions. Most importantly, ensure you have all required documentation for existing credits.
These legislative changes represent significant shifts in family tax policy. Professional guidance helps you navigate the complexities and maximize the benefits while staying compliant with new requirements.