Working Families Tax Cuts for EA Exam

The IRS's Working Families Tax Cuts hub summarizes OBBBA provisions that can affect individual, healthcare, and business tax topics relevant to the EA exam. For candidates, the key is not memorizing every press release detail, but understanding which provisions change credits, deductions, HSA eligibility, and reporting rules.

What EA candidates should focus on first

From an exam perspective, this topic matters because it touches multiple tested areas:

• Part 1 Individuals: adoption credit changes, family-related provisions, and health-related tax benefits
• Part 2 Businesses: faster cost recovery for qualifying property and reporting rules affecting payors and platforms
• Part 3 Representation: less likely as a direct topic, but law changes can still show up in taxpayer guidance questions

One example from the IRS summary is the adoption credit update: for tax years beginning after Dec. 31, 2024, a portion of the credit may be refundable, subject to the law’s limits. For EA prep, the takeaway is simple: when Congress changes a credit, always check whether the change affects refundability, carryforwards, timing, or eligibility.

Healthcare and HSA changes to know

Several provisions in the IRS summary affect Health Savings Account (HSA) eligibility and use.

Key study points:

• Telehealth services can be provided before the deductible is met without automatically disqualifying an otherwise eligible taxpayer from contributing to an HSA, for applicable plan years.
• Beginning in 2026, certain bronze and catastrophic plans are treated as HSA-compatible.
• Certain direct primary care (DPC) arrangements may no longer prevent HSA eligibility, and HSA funds may be used tax-free for qualifying periodic DPC fees.

For the EA exam, expect the concept more than the politics: know how plan design affects HSA eligibility, and be careful with effective dates. If a question asks whether a taxpayer can contribute to an HSA, the right answer often depends on the type of coverage and when the rule applies.

Business provisions and reporting changes

The IRS page also highlights business-side changes.

First, the law allows 100% first-year deduction for certain qualifying business property placed in service after the applicable date. That is a major depreciation concept for Part 2. On the exam, watch for questions asking whether property must be depreciated over time or can be immediately expensed under updated rules.

Second, the summary discusses proposed rules for third-party payment platforms and backup withholding. The important point is that the updated standard described by the IRS is tied to both:

• payments over $20,000, and
• more than 200 transactions

That is different from the previously discussed lower reporting threshold many candidates have heard about. Read carefully: backup withholding rules and information reporting thresholds are related topics, but they are not always tested in exactly the same way.

Practical takeaway

For EA candidates, the best approach is to treat the Working Families Tax Cuts as a law-change framework: identify what changed, who it affects, and when it applies. Focus especially on HSA eligibility, refundable credits, depreciation, and reporting thresholds. If you want to drill these topics with fresh practice questions across all three parts, Enrolled Angel at enrld.com is built for study sessions that fit around work.