2026 EA Exam: How the OBBBA Changes Everything You Need to Study

The landscape of the Enrolled Agent (EA) exam has shifted dramatically. On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law as Public Law 119-21, ushering in the most sweeping changes to the U.S. tax code since the 2017 Tax Cuts and Jobs Act (TCJA). For candidates preparing for the Special Enrollment Examination (SEE) in 2026, this isn't just another minor update—it is a complete overhaul of the rules you must memorize to pass.

The OBBBA does three critical things: it makes the most popular provisions of the TCJA permanent, it introduces entirely new "above-the-line" deductions for individuals, and it aggressively phases out clean energy incentives. At Enrolled Angel, we have already updated our proprietary knowledge base and 3,000+ question bank to reflect these 2026 rules. If you are studying with outdated materials, you are learning laws that no longer exist.

Individual Tax Changes: The New Normal

The most immediate impact for Part 1 candidates is the permanence of the seven-bracket rate structure. Without the OBBBA, tax rates were scheduled to revert to higher pre-2018 levels in 2026. Instead, the 10%, 12%, 22%, 24%, 32%, 35%, and 37% brackets are here to stay.

2026 Tax Brackets and Rates

The Standard Deduction has also been permanently extended and adjusted for inflation. For 2026, the amounts are $16,100 for Single filers and $32,200 for Married Filing Jointly. Crucially, the Personal Exemption remains at $0 permanently. This is a major point of emphasis for the exam, as previous study guides often treated the $0 exemption as a temporary "suspension."

The "Big Four" New Deductions: A Detailed Look

The OBBBA introduces four temporary deductions (2025–2028) that are highly likely to appear on the 2026 EA exam. These are all "above-the-line" deductions, meaning they reduce Adjusted Gross Income (AGI) and are available even if the taxpayer does not itemize.

1. No Tax on Tips (Section 70201)

Taxpayers in service industries can deduct up to $25,000 of tip income. It is critical to understand that tips are still included in gross income but then deducted on the new Schedule 1-A. This is a deduction, not an exclusion.

Example: A server earns $30,000 in wages and $40,000 in tips. Their gross income is $70,000. They can take a $25,000 deduction for tips, reducing their AGI to $45,000 (assuming no other adjustments).

2. No Tax on Overtime (Section 70202)

Employees can deduct the overtime premium portion of their pay (the extra 0.5x in time-and-a-half). This is capped at $12,500 for Single filers and $25,000 for MFJ. To qualify, the pay must meet Fair Labor Standards Act (FLSA) requirements.

Example: A nurse earns $50 per hour and works 10 hours of overtime at $75 per hour. The "premium" is $25 per hour. For those 10 hours, the nurse can deduct $250 ($25 x 10).

3. Senior Bonus Deduction

Individuals aged 65 or older receive a flat $6,000 deduction ($12,000 if both spouses qualify). This stacks on top of the standard deduction and the existing additional standard deduction for age.

Example: A single 67-year-old taxpayer in 2026 would take the $16,100 standard deduction, the additional standard deduction for age (approx. $1,950), AND the new $6,000 Senior Bonus, for a total reduction of $24,050.

4. Auto Loan Interest Deduction

Interest on loans for new vehicles assembled in the U.S. is now deductible up to $10,000 per year. This is an above-the-line deduction. Note that lease payments do not qualify, and the vehicle must be for personal use.

New Above-the-Line Deductions (2026)

SALT Cap Relief and the Child Tax Credit

For years, the $10,000 cap on State and Local Tax (SALT) deductions was a major pain point for taxpayers in high-tax states. The OBBBA provides significant relief by raising the SALT cap to $40,000 for the years 2025 through 2029. However, this comes with a high-income phaseout: for every dollar of MAGI exceeding $500,000 ($250,000 for MFS), the cap is reduced by 20 cents, though it never falls below $10,000.

Example: If a married couple has a MAGI of $600,000, their SALT cap is reduced by $20,000 (20% of the $100,000 excess). Their effective SALT cap for 2026 would be $20,000 ($40,000 minus the $20,000 reduction).

The Child Tax Credit (CTC) has also been enhanced. The maximum credit is now $2,200 per child (up from $2,000) and is permanently indexed for inflation. The refundable portion (Additional Child Tax Credit) is now $1,700. This is a permanent change, preventing the credit from dropping back to $1,000 as originally scheduled.

Estate and Gift Tax: $15 Million Exemption

One of the most significant "permanence" wins in the OBBBA is the estate tax exemption. The unified credit now protects up to $15,000,000 per individual ($30,000,000 for married couples) from federal estate and gift taxes. This amount will be indexed for inflation starting in 2027.

Business Tax: Bonus Depreciation and Section 179

Part 2 candidates need to pay close attention to the restoration of 100% Bonus Depreciation. Under previous law, bonus depreciation was phasing out (80% in 2023, 60% in 2024). The OBBBA restores 100% expensing permanently for qualified property placed in service after January 19, 2025.

Additionally, Section 179 expensing limits have been nearly doubled. The maximum deduction is now $2.5 million, with a phaseout threshold beginning at $4 million. This is a massive increase designed to encourage capital investment.

Business Expensing Comparison

Another critical change for business entities is the restoration of immediate expensing for R&D costs (Section 174). Since 2022, businesses were forced to amortize domestic R&D over 5 years. The OBBBA brings back the ability to deduct these costs in the year they are incurred, retroactive to 2025.

Clean Energy Credit Phase-Outs

Perhaps the most controversial part of the OBBBA is the early termination of many Inflation Reduction Act (IRA) credits. For the EA exam, you must know that the Electric Vehicle (EV) credits (Section 30D and 25E) expire on September 30, 2025. They are not available for vehicles purchased in 2026.

Similarly, residential energy credits (Section 25C and 25D) for home improvements like solar panels or heat pumps are terminated effective December 31, 2025. If a question asks about a 2026 purchase of a residential solar system, the answer is likely that no federal credit is available.

International Tax: NCTI and FDDEI

The OBBBA renames and restructures the two primary international tax regimes. GILTI (Global Intangible Low-Taxed Income) is now NCTI (Net CFC Tested Income), and FDII (Foreign-Derived Intangible Income) is now FDDEI (Foreign-Derived Deduction Eligible Income).

• NCTI (formerly GILTI): The Section 250 deduction is reduced to 40%, resulting in an effective tax rate of 12.6%. The 10% QBAI exclusion has been eliminated.
• FDDEI (formerly FDII): The Section 250 deduction is reduced to 33.33%, resulting in an effective tax rate of 14%.

Trump Accounts: A New Way to Save

The OBBBA introduces a new savings vehicle called Trump Accounts, established under Section 70204 of the Act. These are designed for children born between January 1, 2025, and December 31, 2028. Each eligible child receives a one-time $1,000 federal seed contribution, deposited tax-free and not counted against any annual cap.

Annual contribution limits are layered. Combined contributions from individuals (parents, family, or the child) and employers are capped at $5,000 per year. Within that cap, the employer's portion is sub-capped at $2,500 per year per employee under new IRC Section 128, and that employer contribution is excludible from the employee's income (subject to cost-of-living adjustments after 2027). State governments, Indian tribal organizations, and 501(c)(3) charities can also contribute on behalf of a “qualified class” of children; those amounts are not subject to the annual cap.

Funding cannot begin before July 4, 2026, exactly one year after OBBBA was signed. Funds must be invested in mutual funds or ETFs that track a U.S. stock index such as the S&P 500. Generally, money cannot be withdrawn before the year the child turns 18; after that, the account is treated like a traditional IRA. Qualified post-18 uses include higher education, a first-time home purchase, and starting a business.

Education and Savings: 529 Plan Expansion

The OBBBA significantly expands the use of 529 plans. The K-12 distribution limit has been raised from $10,000 to $20,000 per child per year. Additionally, qualified expenses now include vocational certification programs, homeschooling curriculum, and even standardized test fees like the SAT or ACT.

The 529-to-Roth IRA rollover provision (up to $35,000 lifetime) has also been made permanent, provided the account has been open for at least 15 years. This is a key point for Part 1 candidates to memorize, as it affects long-term tax planning advice.

Medicaid and SNAP: Non-Tax Changes on the Exam

While primarily a tax bill, the OBBBA includes changes to Medicaid and SNAP that are within the scope of the EA exam's "Representation" and "Advice" domains. Starting in 2027, adults aged 19–64 with income between 100% and 138% of the federal poverty level must meet work, volunteer, or study requirements of at least 80 hours per month to remain eligible for Medicaid.

For SNAP, the work requirement age range has been expanded to 18–64. These changes are critical for practitioners who advise low-income clients on their overall financial and tax situation.

Charitable Deductions: New Floors and Caps

The OBBBA introduces a new concept to charitable giving: the charitable deduction floor. Starting in 2026, individual itemizers can only deduct charitable contributions that exceed 0.5% of their AGI. This is a significant change from prior law, where every dollar of a qualified donation was deductible.

Example: If a taxpayer has an AGI of $200,000, the first $1,000 of their charitable donations (0.5% of $200,000) is not deductible. If they donate $5,000, they can only deduct $4,000.

For non-itemizers, the OBBBA provides a permanent above-the-line charitable deduction of up to $1,000 for Single filers and $2,000 for MFJ. This is limited to cash contributions to 501(c)(3) organizations and excludes donations to donor-advised funds (DAFs).

C Corporations are also subject to a new floor. Starting in 2026, corporate charitable deductions apply only to contributions exceeding 1% of taxable income. The existing 10% of taxable income ceiling still applies, creating a "window" of deductibility between 1% and 10%.

IRS Implementation Guidance (Spring 2026)

The original OBBBA statute is the law, but the IRS has spent the first half of 2026 issuing implementation guidance — proposed regulations, notices, and FAQ updates that flesh out how the new rules actually work in practice. These are the most likely sources of new exam items beyond the headline OBBBA provisions.

Qualified Production Property — 100% First-Year Depreciation (Section 70307)

Treasury and the IRS issued interim guidance on February 20, 2026 (IR-2026-25) for a brand-new depreciation category created by OBBBA: qualified production property. Businesses can deduct 100% of the cost in the first year for qualifying property bought and placed in service after January 19, 2025. This sits parallel to the restored 100% bonus depreciation, but covers a distinct category — Part 2 candidates should know both pathways and how they interact for property eligible under either rule.

Clean Fuel Production Credit (Section 70521)

Proposed regulations issued February 3, 2026 (IR-2026-20) cover the OBBBA-modified clean fuel production credit. The credit is available for fuel sold before January 1, 2030, at an applicable amount of either $0.20 or $1.00 per gallon depending on facility status. Critically, the feedstock must be exclusively produced or grown in the United States, Mexico, or Canada. This is a Part 2 business credit that may also surface in Part 3 representation scenarios.

Prohibited Foreign Entity Rules for Energy Credits

On February 12, 2026 (IR-2026-23), the IRS issued guidance defining when a qualified energy facility, storage technology, or eligible component is “receiving material assistance from a prohibited foreign entity (PFE).” If material assistance is found, the project is ineligible for the credit — even if the project would otherwise qualify under the underlying section. This is a layered rule: even pre-phase-out energy projects can lose their credits if PFE involvement exists.

Dyed Fuel Excise Tax Recovery (Section 70525)

Temporary regulations issued April 30, 2026 (IR-2026-59) created a new method for recovering federal excise tax previously paid on clear diesel fuel or kerosene that is later indelibly dyed and removed at a terminal for nontaxable use. The rule applies to eligible dyed diesel fuel and kerosene removed on or after December 31, 2025. Niche, but a clean Part 2 question about excise tax mechanics could ride on these dates.

ERC Claim Disallowance — New Time Extension Option (Section 70605)

Announced April 27, 2026 (IR-2026-58), this is a Part 3 representation update. The IRS now allows certain taxpayers a streamlined extension to respond to a disallowance of an Employee Retention Credit claim — extending the IRS and Independent Office of Appeals review window to avoid forcing the taxpayer into refund litigation. OBBBA itself limited ERC credits for the third and fourth quarters of 2021 that were filed after January 31, 2024; this new procedure tells practitioners how to navigate disputes that result.

Section 127 Educational Assistance — Updated FAQ

On April 20, 2026 (IR-2026-55), the IRS updated Fact Sheet 2026-10 with refreshed FAQs about employer-provided educational assistance under Section 127, including OBBBA's permanent extension of the rule allowing employers to pay down employees' student loans tax-free. This is a Part 1 fringe benefits topic and a Part 3 advisory topic worth re-reviewing for the 2026 cycle.

Key Timeline: Dates to Memorize

The OBBBA has several critical effective dates that you must memorize for the 2026 EA exam. These dates determine whether a credit or deduction is available for a given tax year.

What This Means for Each Exam Part

Part 1: Individuals (85 Questions)

Part 1 candidates will see the most significant changes. You must be prepared to calculate the new above-the-line deductions for tips, overtime, and seniors. The SALT cap increase to $40,000 is a major change that will affect itemized deduction calculations. You should also be aware of the 35% tax benefit cap for itemized deductions for taxpayers in the 37% bracket.

The Child Tax Credit increase to $2,200 and the $15 million estate tax exemption are now permanent, so you should focus on the long-term planning implications of these rules. The HSA expansion to include Bronze and Catastrophic plans is another key area for Part 1.

Read our Part 1 Individuals Study Guide for a deeper dive into these topics.

Part 2: Businesses (85 Questions)

For Part 2, the restoration of 100% bonus depreciation and the $2.5 million Section 179 limit are the most critical updates. You must also understand the immediate expensing of domestic R&D costs and the 100% business meals deduction for 2025 and 2026.

The Section 199A QBI deduction is now permanent, so you should focus on the phaseout ranges for Specified Service Trades or Businesses (SSTBs). The NCTI and FDDEI name changes and rate adjustments are also essential for the international tax portion of Part 2.

Check out our Part 2 Businesses Study Guide for more details.

Part 3: Representation (85 Questions)

Part 3 candidates must be aware of the 1099-K threshold restoration to $20,000. This is a major reversal of the previously proposed $600 threshold. You should also know the filing requirements for the new Schedule 1-A and the compliance obligations for the 1% remittance tax on foreign transfers.

The PTC excess repayment limitation removal is another critical area for Part 3, as it affects how you advise clients who received advance premium tax credits. Finally, be aware of the testing vendor change from Prometric to PSI starting in March 2026.

Review our Part 3 Representation Study Guide to stay current.

Conclusion: Don't Study the Past

The 2026 EA exam will be the first to fully test the OBBBA. This is not a year where you can rely on hand-me-down textbooks or outdated question banks. The difference between a passing score and a failing one often comes down to knowing the specific dollar amounts and phaseout thresholds that changed on July 4, 2025.

At Enrolled Angel, we've done the hard work for you. Our AI-powered study tools and mock exams are fully updated for the 2026 testing window. We've integrated every OBBBA provision into our practice sessions so you can study with confidence.

For more tips on tackling the exam, read our guide on how to pass the EA exam the first time or compare our course with other providers.