One Big Beautiful Bill tax updates and changes for families

The One Big Beautiful Bill Act passed in July 2025 and includes sweeping changes to family-focused tax benefits. For families, the OBBBA means increases in certain tax credits, new savings opportunities, and expanded eligibility for existing benefits. These changes could impact how much filers owe — or get back — at tax time. 

What’s changed? 

Specifically, it increases $200 to expand tax savings for American families. The Child Tax Credit is now $2,200 per child, up from $2,000, with the changes from the OBBBA.

Phaseout thresholds for the Child Tax Credit for 2025 are $200,000 for single filers and $400,000 for married filing jointly couples. These thresholds will remain in place for 2026. 

The credit will be adjusted annually for inflation starting in 2026. Social Security numbers for parents and children will be required to claim the credit. 

Other dependent credit 

Families who have dependents that don’t qualify for the child tax credit — such as older children, parents, or other adult relatives — may still be eligible for the Other Dependent Credit. The $500 credit is now permanent — it was previously subject to expiration.

The credit remains non-refundable, meaning it can reduce a filer’s tax liability to zero but won’t result in a refund if the credit exceeds tax owed. The OBBBA fixes the credit amount so there’s no inflation adjustment in coming years. 

529 plan expansion

529 plans are tax-advantaged savings accounts parents and students can use for educational expenses. The OBBBA expands how 529 Plan funds may be spent to cover additional scenarios and amounts. 

What’s changed? 

• The OBBBA expands use of funds for non-tuition qualified expenses for K-12 costs, such as books, online learning materials, and tutoring fees. This change is effective beginning in 2025.

• The law now allows 529s to cover expenses for additional post-secondary educational costs such as tuition, fees, books, supplies, and equipment for credentialed programs (like testing fees for college credentials, or continuing education fees). This change is effective beginning in 2025. 

• Filers can withdraw up to $20,000 per year in a 529 plan to pay for K-12 expenses (up from the previous $10,000). This change is effective beginning in 2026. 

Starting in 2026, a Social Security number will be required to claim the American opportunity credit and lifetime learning credit as well as to claim the student loan debt cancelation exclusion. 

Child and

dependent care credit

The Child and Dependent Care Credit is another valuable tax credit for families. It covers a percentage of childcare expenses for children under 13 or dependents who can’t care for themselves. 

The OBBBA changes a few elements of the child and dependent care credit. Starting in 2026, filers can claim up to 50% of eligible expenses, but the amount of expenses used to calculate the credit stays the same at $3,000 (one person) or $6,000 (two or more people). 

Additionally, the phase-down ranges are at higher income levels than previously. For example: 

For single filers: 

• Between $0 and $15,000, the credit percentage is 50%. 

• Between $15,000 and $45,000, the credit phases down from 50% to 35%.

• Between $45,000 through $75,000, the credit percentage is 35%. 

• Between $75,000 and $105,000, the credit percentage phases down from 35% to 20%.

• Over $105,000, the credit percentage is 20%. 

For married filing jointly filers: 

• Between $0 and $15,000, the credit percentage is 50%. 

• Between $15,000 and $45,000, the credit phases down from 50% to 35%.

• Between $45,000 and $150,000, the credit percentage is 35%. 

• Between $150,000 and $210,000, the credit percentage phases down from 35% to 20%. 

• Over $210,000, the credit percentage is 20%. 

The credit is still worth up to 50% of $3,000 in expenses for one child or $6,000 for two or more. 

Adoption tax credit 

The adoption credit reduces the tax liability on a dollar-for-dollar basis for adoptive families. 

The OBBBA makes the adoption tax credit for 2025 and beyond partially refundable, up to $5,000. Previously, the credit was non-refundable, meaning it could reduce the tax owed to zero, but it couldn’t provide a tax refund. 

The new law allows more families to benefit from the credit as well as make adoption more financially accessible. 

The total credit remains up to $17,280 in 2025. 

Trump savings accounts 

The OBBBA introduces the Trump Child Savings Account, a new type of savings account for children under the age of 18. 

What are Trump accounts? Trump accounts are tax-advantaged savings accounts intended to give newborns and children a financial head start and to encourage early savings for a child’s future.

• The contribution limit is $5,000 per tax year (and will adjust for inflation after 2027) until the child turns 18. When the child turns 18, the contribution rules are the same as those for traditional IRAs. 

• The new accounts will likely work like traditional IRAs with special rules before the child turns 18. The account is a custodial trust account where the beneficiary is the minor. 

• For babies born between 2025 and 2028, who are U.S. citizens and whose parents have a valid Social Security number, the federal government will make a one-time $1,000 contribution to a Trump Savings Account. 

Get help 

Navigating tax law changes like those in the One Big Beautiful Bill can be overwhelming — but you don’t have to do it alone. At H&R Block, we’re here to help you understand how the 2025 Child Tax Credit, Child and Dependent Care Credit, and other tax updates affect your return.

—H&R Block