What Is the One Big Beautiful Budget Act (OBBBA)?
The One Big Beautiful Budget Act, signed into law in 2025 and effective for the 2026 tax year, is the most significant overhaul of the U.S. tax code since the Tax Cuts and Jobs Act (TCJA) of 2017. For solo operators — independent contractors, landlords, and self-employed service professionals — it introduced several provisions that directly change how you calculate your tax liability and price your work.
This guide covers every OBBBA change relevant to solo operators, with plain-English explanations and the exact dollar figures hard-coded into the SoloLandlordTools calculators.
Change 1: Standard Deduction Raised to $16,100 (Single Filers)
The standard deduction for single filers increased to $16,100 for 2026, up from $14,600 in 2024. This is an inflation-adjusted figure per IRS Revenue Procedure 2025-32. For married filing jointly, the 2026 standard deduction is $32,200.
What this means for you: The standard deduction is the baseline amount you subtract from your gross income before calculating federal income tax. A higher standard deduction means a lower taxable income — and a lower tax bill — for anyone who does not itemize. Most solo contractors and cleaners take the standard deduction.
Calculator impact: The SoloBid Estimator uses $16,100 to calculate your estimated net income after deductions when determining your target hourly rate.
Change 2: New $12,500 Overtime Premium Deduction (OBBBA)
The OBBBA introduced a new above-the-line deduction for overtime premium pay, capped at $12,500 per year. This is one of the most significant new provisions for solo contractors who regularly work more than 40 hours per week.
What qualifies: The overtime premium is the additional pay above your regular rate for hours worked over 40 per week. For example, if your regular rate is $50/hour and you earn $75/hour for overtime, the $25 premium per overtime hour is deductible, up to the $12,500 annual cap.
How to claim it: This is an above-the-line deduction, meaning you can take it whether you itemize or take the standard deduction. You will need to track your overtime hours and calculate the premium separately on your tax return. Consult a tax professional for the specific form and instructions.
Calculator impact: The SoloBid Estimator includes an overtime premium deduction input. If you regularly work overtime, entering your estimated annual overtime premium can meaningfully reduce your calculated tax burden and lower your required bid rate.
Change 3: SALT Cap Raised to $40,400
The state and local tax (SALT) deduction cap increased from $10,000 (where it had been since 2018 under TCJA) to $40,400 for 2026. This change primarily benefits taxpayers in high-tax states who itemize deductions.
Who this affects: If you live in California, New York, New Jersey, Illinois, or another high-income-tax state and you pay significant property taxes, the raised SALT cap may make itemizing more valuable than taking the standard deduction. Run the math: if your state income taxes plus property taxes exceed $16,100, itemizing could save you money.
Calculator impact: The SoloBid Estimator shows your estimated SALT deduction based on your state tax rate and income, and compares it against the standard deduction to help you decide which approach is more advantageous.
Change 4: QBI Deduction Made Permanent
The 20% Qualified Business Income (QBI) deduction, which was set to expire after 2025 under TCJA, has been made permanent by the OBBBA. This is significant for solo operators who structure their income as pass-through business income.
What it means: If you operate as a sole proprietor, single-member LLC, or S-corp, you may be able to deduct up to 20% of your qualified business income from your taxable income. This is in addition to the standard deduction and the new overtime premium deduction.
Important caveat: The QBI deduction has income thresholds and phase-outs, and certain service businesses (including some consulting and financial services) face additional restrictions. Consult a tax professional to confirm your eligibility.
What Has Not Changed in 2026
- Self-employment tax: Still 15.3% on net self-employment earnings up to the Social Security wage base ($176,100 for 2026), then 2.9% above that.
- Mortgage interest deduction cap: Still $750,000 for primary and secondary residences under TCJA. Investment properties remain fully deductible with no loan cap.
- Section 179 expensing: Still available for business equipment purchases. Consult IRS Publication 946 for 2026 limits.
- Depreciation for rental properties: Residential rental property is still depreciated over 27.5 years under MACRS.
Action Items for Solo Operators
- Update your quarterly estimated tax payments to reflect the new $16,100 standard deduction and any overtime premium deduction you qualify for.
- If you work overtime regularly, start tracking your overtime hours and premium pay separately now — you will need this documentation to claim the $12,500 deduction.
- If you live in a high-tax state, compare your SALT + mortgage interest + charitable contributions against the $16,100 standard deduction to determine whether itemizing makes sense.
- Confirm with your tax professional whether the QBI deduction applies to your business structure and income level.
Use the SoloBid Estimator to see how these 2026 OBBBA changes affect your specific bid pricing and net income.