The One Big Beautiful Bill Act (OBBBA), which passed in July 2025, included significant changes to individual and business tax rules. Though some provisions took effect in 2025, several key tax provisions are scheduled to go into effect throughout 2026. These changes will directly impact client access to care, practice operations, and personal and business tax planning. 

Because many of the most impactful provisions take effect in 2026, Counselors have a critical window to prepare. Please review these provisions as they may affect you individually and/or your counseling practice.

New Tax Provisions for 2026

Some of the key tax provisions of the OBBBA that go into effect for the tax year starting Jan. 1, 2026, include significant changes to individual, business, and international  tax rules and other provisions. 

Business and Other Provisions

• Qualified Business Income (QBI) Deduction: The 20% deduction for QBI for noncorporate taxpayers is made permanent, with relaxed phase-in thresholds.
• Business Interest Deduction Limit: The calculation of the interest expense limitation is made more favorable by excluding depreciation, amortization, and depletion from Adjusted Taxable Income (ATI).
• Excess Business Loss Limit: The limitation on excess business losses for noncorporate taxpayers is made permanent.
• Corporate Charitable Contributions: A floor is introduced, meaning corporations can only deduct contributions to the extent they exceed 1% of their taxable income (up to the existing 10% cap).
• Reporting Thresholds: The threshold for reporting payments on Forms 1099-NEC and 1099-MISC is raised from $600 to $2,000.
• Employer-Provided Childcare Credit: The maximum Employer-Provided Childcare Credit significantly increases to $500,000 for most employers and up to $600,000 for eligible small businesses. 
• Student Loan Repayment: The OBBBA made permanent the annual exclusion for employer-provided education and tuition assistance under Section 127, allowing employers to cover up to $5,250 tax-free (indexed for inflation from 2026).
• Paid Family & Medical Leave Credit: The expanded credit is now permanent, and includes amounts paid for state-mandated paid leave and insurance premiums (from 2026).
• Dependent Care Flexible Spending Accounts: The OBBBA increased the annual contribution limit for dependent care FSAs to $7,500 ($3,750 for married filing single) from 2026.

For more details on these changes, resources are available from the IRS and the Tax Foundation. 

Action Steps for Counselor Practices

The OBBBA represents a sea of change in the field of tax reforms, payroll, and employee benefits. Because many of the changes take effect in 2026, counseling practices should begin preparing now by doing the following:

• Update Payroll Systems
• Prepare for new reporting fields and withholding tables for 2026
• Track “qualified tips” and “qualified overtime compensation” separately
• Review Benefit Plans
• Amend plan documents for new limits and eligibility rules
• Communicate changes to employees
• Vendor/Contractor Payments
• Adjust processes for higher Form 1099 thresholds
• Executive Compensation
• Aggregate compensation across entities for Section 162(m) and Section 4960 compliance
• Consider New Benefits
• Evaluate offering Trump accounts and expanded child/dependent care benefits
• Stay Informed
• Monitor IRS guidance and BDO updates for further details and implementation requirements

Key Health Care Implementation Dates and Provisions in 2026

The OBBBA timeline for 2026 brings major shifts, starting Jan. 1 with ACA premium tax credit changes, Medicare fee schedule boosts, and Medicaid funding changes for ACA expansion states. This leads to HHS releasing rules by June 1, with full Medicaid work requirement implementation by Dec. 31, impacting eligibility, requiring significant updates throughout the year. 

DATES:

Jan. 1, 2026

• ACA Marketplaces: Premium Tax Credit eligibility changes begin, ending the continuous Special Enrollment Program (SEP) for low-income individuals and lawfully present immigrants below 100% FPL.
• ACA High-deductible Health Plan Expansion: Treats individual market bronze and catastrophic health plans as high-deductible health plans eligible for health savings accounts (HSAs), which will disproportionately benefit higher-income marketplace enrollees.
• Medicare: A 2.5% temporary increase to the Physician Fee Schedule starts.
• Medicaid: The enhanced federal matching for states that expanded Medicaid under the ACA begins phasing out.

By June 1, 2026

• Health & Human Services (HHS): Must release interim final rules for Medicaid work requirements and other provisions. 

By July 4, 2026

• Medicare: Notification for ineligibility for some lawfully present immigrants begins. 

By Sept. 30, 2026

• Medicaid: States must provide enrollee notifications about upcoming work requirements. 

By Oct. 1, 2026

• Medicaid: Eligibility changes for some lawfully present immigrants take effect. 

Dec. 31, 2026 (or earlier at state discretion) 

• Medicaid: States must begin implementing work requirements for beneficiaries. 

Implications of Health Care Reforms

The 2026 OBBBA health care implementation timeline could significantly impact Mental Health Counselors and the clients they serve. Throughout the year, Counselors should expect to see clients lose Medicaid coverage due to work requirements and eligibility changes, face higher costs or reduced access through ACA marketplace changes, and experience coverage disruptions as policies take effect.

Many clients—particularly low-income individuals, immigrants, and those with chronic mental health conditions—may struggle to navigate these complex changes, leading to treatment interruptions, medication non-adherence, and worsening mental health outcomes.

Counselors should proactively educate clients about upcoming eligibility changes, connect them with health care navigators and enrollment assistance resources, and prepare for increased demand for sliding-scale services and crisis intervention as coverage losses occur.

The 2.5% Medicare Physician Fee Schedule increase is a positive development for Counselors serving older adults, but it does not address the underlying payment equity issues that continue to undervalue counseling services. NBCC will monitor OBBBA implementation throughout 2026 and provide updates on advocacy opportunities to protect client access to mental health care.