What Families Need to Know About the New OBBBA

The recently enacted One, Big, Beautiful Bill Act (OBBBA) implements a range of tax modifications intended to offer financial relief for families. Although numerous provisions are advantageous, the legislation also introduces new regulations and considerations for planning. Below is an overview of the principal changes that may impact you.

Enhanced Adoption Credit

Families who adopt are now eligible for a revised tax credit.

Current Benefit: For 2025, the adoption credit is valued at up to $17,280 per eligible child. The credit begins to phase out at a modified adjusted gross income (MAGI) of $259,190 and is unavailable for those with incomes at or above $299,190.

What’s New: Beginning in 2025, the credit becomes partially refundable. Up to $5,000 can be refunded even if no federal income tax is owed. Previously, the credit was entirely nonrefundable. This refundable portion will be adjusted for inflation but cannot be carried forward to subsequent years.

This change allows eligible adoptive families to claim a portion of the credit as a refund, subject to established limits.

Changes to the Child Tax Credit (CTC)

The CTC will have a permanent increase and additional requirements.

Credit Amount: Starting in 2025, the credit increases from $2,000 to $2,200 per qualifying child under age 17, with annual inflation adjustments beginning in 2026.

Refundable Portion: The refundable amount is set at $1,700 for 2025 and will be indexed for inflation in subsequent years.

Phaseout Thresholds: The MAGI limits are $200,000 for individuals and $400,000 for joint filers. These thresholds are now permanent and will not be adjusted for inflation.

Requirement Update: Beginning in 2025, valid Social Security numbers must be provided for both the child and the taxpayer claiming the credit. For joint filers, at least one spouse must have an SSN.

Introduction of Trump Accounts

A new savings vehicle, Trump Accounts, will be introduced in 2026.

Eligibility: These accounts may be established for individuals under the age of 18 who possess a Social Security number.

Contribution Limits: Families are permitted to contribute up to $5,000 annually (with indexing for inflation commencing in 2027) until the beneficiary reaches age 18.

Government Seed Funding: Children born between 2025 and 2028 may be eligible for a $1,000 government-funded deposit at birth.

Account Features: While contributions are not tax-deductible, account earnings accumulate on a tax-deferred basis. Investments are limited to designated index-based funds. In addition, employers can contribute on behalf of employees’ dependents. Withdrawals are generally restricted until the beneficiary attains the age of 18.

Additional Family-Related Changes

Child and Dependent Care Credit: In 2026, new methods and higher income limits will broaden access and benefits for working parents.

529 Plan: Starting in 2026, families can withdraw up to $20,000 from a 529 Plan for K–12 tuition and other qualified expenses, such as books and tutoring.

Tax on International Transfers: A 1% excise tax applies to remittances sent abroad via providers from 2026; bank, debit, and credit card transfers are exempt.

Planning Ahead

The OBBBA introduces potential tax savings as well as additional compliance requirements. Early planning can help families understand and adjust to these changes before tax season.

Next, consider reviewing how these updates may impact your family’s financial and tax approach.