THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2026 67 AFSA NEWS These resources aim to help members navigate U.S. tax laws and life abroad, while reminding readers that professional tax advice should be sought for individual circumstances. The most significant addition to our federal guide is the inclusion of many provisions from the One Big Beautiful Bill Act (OBBBA), a sweeping reform measure signed into law on July 4, 2025. The OBBBA introduces a range of temporary and permanent changes that will affect 2025 tax returns and beyond. Among its temporary measures, the law provides deductions through 2028 for voluntary tips received by service workers; the overtime premium portion of earned income; qualified car loan interest on new vehicles assembled in the United States; and a temporary enhanced personal exemption for seniors, offering up to $6,000 per qualifying individual. The legislation also expands the cap on state and local itemized tax deductions to $40,000 through 2029. In addition to these temporary deductions, the OBBBA makes several permanent adjustments to the tax code that will affect many taxpayers. It eliminates the personal exemption, makes permanent the 2017 Tax Cut and Jobs Act tax brackets, phases out energy credits, increases the maximum child tax credit, expands the definition of qualifying expenses for 529 education accounts, and establishes new reporting requirements for digital assets. Looking ahead to 2026, additional OBBBA provisions will take effect, including the introduction of new “Trump Accounts,” designed to help minors begin retirement savings; an increased withdrawal maximum from 529 education plan funds for K–12; and the introduction of a new floor for charitable giving deductions. Together, these provisions represent some of the most substantial tax changes in recent years, with implications for both domestic and overseas filers. Members can now read the complete 2025 AFSA Federal and State Tax Guides online at https://afsa.org/ afsa-tax-guide n The most significant addition to our federal guide is the inclusion of many provisions from the One Big Beautiful Bill Act (OBBBA), a sweeping reform measure signed into law on July 4, 2025. The OBBBA introduces a range of temporary and permanent changes that will affect 2025 tax returns and beyond.
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