New 2026 tax rules add complexity that still trips up AI tools

In short: The One Big Beautiful Bill Act changes many U.S. tax rules starting in 2026, and the mix of new limits and exceptions is so complex that AI tax tools still need human oversight.

What's going on

A new federal law signed in July 2025, called the One Big Beautiful Bill Act, rewrites many parts of the tax rules that most people will use for their 2026 returns. It also makes many parts of the 2017 tax law permanent, instead of letting them expire.

Several major numbers change. The standard deduction rises in 2026, and the child tax credit increases to $2,200. The cap on the state and local tax deduction, often called SALT (the amount of state and local taxes you can subtract on your federal return), goes up to $40,000 in 2025 and then increases slightly through 2029, before reverting in 2030.

Other updates add more moving parts. The 20% deduction for some business owners becomes permanent, but it still has phase outs and tests (extra rules that can turn the deduction down or off depending on income, wages, and the type of business). The estate and gift tax exemption resets to $15 million per person starting in 2026. There are also new or temporary deductions, including a temporary extra senior deduction, and the federal electric vehicle credit ends after September 30, 2025.

Tax experts say AI struggles because these rules interact, and the best choice can change by year. Think of it like a set of traffic rules where the speed limit changes by street, day, and vehicle type, and some signs only apply if you took a different route earlier.

What to watch

Many professionals expect more people and firms to use AI for calculations and paperwork in 2026, but also to double check results with multi year projections. More guidance from the U.S. Treasury and annual inflation adjustments could also change how these rules work in practice.

Source: NYTimes