OBBB Act: Personal and Dependency Exemptions

July 16, 2026

On July 4, 2025, President Trump signed the One Big Beautiful Bill (OBBB) Act into law. The OBBB Act includes a number of tax changes, including permanent and limited modification of many soon-to-expire tax provisions, new provisions, elimination or modification of most green energy provisions, and dozens of other changes affecting individuals and businesses. The OBBB Act permanently repeals deductions for personal and dependency exemptions for tax years beginning after 2025.

Background

In tax years beginning before 2018, an individual, in determining taxable income, may reduce adjusted gross income (AGI) by claiming a personal exemption deduction and an exemption deduction for each person they claim as a dependent on their tax return. The deductions for personal and dependency exemptions by an individual taxpayer are temporarily repealed for tax years beginning after December 31, 2017, and before January 1, 2026, by making the amount of the exemption deductions zero.

Personal and Dependency Exemptions Deductions Repeal

The deductions for personal and dependency exemptions by an individual taxpayer is permanently repealed for tax years beginning after 2025, as amended by the OBBB Act. The deductions for personal and dependency exemptions are zero for tax years after 2025. For tax years beginning after 2025, an individual may no longer claim a personal exemption deduction or an exemption deduction for each dependent on their tax return, but the rules for determining who is a dependent of the taxpayer are applicable for claiming other tax benefits (e.g., the child tax credit).

Temporary Senior Deduction

For tax years beginning after December 31, 2024, and before January 1, 2029, certain qualified individuals are allowed an additional $6,000 deduction, as added by OBBB Act. A qualified individual means a taxpayer who has reached age 65 before the close of the tax year (and in the case of a joint return, the taxpayer’s spouse, if such spouse has reached age 65).

The senior deduction begins to phase out when the taxpayer’s modified adjusted gross income exceeds $75,000 ($150,000 for a joint return). The temporary senior deduction is reduced (but not below zero) by six percent of modified AGI in excess of the applicable threshold amount. For purposes of this limitation, modified AGI means AGI increased by any amount excluded from gross income under the foreign earned income exclusion or exclusions of income for bona fide residents of Puerto Rico or American Samoa.

Additionally, no senior deduction is allowed unless the qualified individual includes their social security number on the tax return for the tax year (and if the qualified individual is married, the return must also include the social security number of their spouse).

Qualified Disability Trusts

The annual amount a qualified disability trust is allowed to deduct is $5,100 for 2025, adjusted annually for inflation.

Levies

The amount exempted from an IRS levy on an individual's wages or salary for personal services for tax years is equal to the sum of the standard deduction and the total of $5,100 for 2025 and $5,300 for 2026 (adjusted annually for inflation), multiplied by the number of the individual’s dependents for the tax year in which the levy occurs, divided by the number of times the taxpayer is paid, except for the first 15 percent.