REG & TCP Updates
OBBBA Tax Changes Hit the CPA REG and TCP Exam on July 1, 2026: What's New
By Burak Genc · June 2026 · 10 min read
If you're studying REG or TCP right now, mark your calendar: on July 1, 2026, the AICPA blueprint update for the One Big Beautiful Bill Act (OBBBA) takes effect. It's a hard cutoff, not a gradual rollout — sit before that date and OBBBA won't appear; sit on or after that date and the old TCJA-sunset assumptions become wrong answers. This guide covers exactly what changes, why, and how to avoid getting burned by a rule that was correct six months ago and isn't anymore.
Why July 1, 2026 — and why only REG and TCP
The AICPA's testing-eligibility rule (covered in depth in our full 2025-2026 CPA exam changes guide) makes a new pronouncement testable in the later of (1) the first calendar quarter beginning after its earliest mandatory effective date, or (2) the first calendar quarter beginning six months after issuance. OBBBA was signed into law on July 4, 2025. Its core individual and business provisions carry 2024 and 2025 effective dates, which pushes eligibility to the next full calendar quarter — July 1, 2026.
OBBBA is federal tax law, so the AICPA limited the blueprint update to the two sections that test individual and entity taxation at depth: REG (Regulation, part of the Core) and TCP (Tax Compliance and Planning, one of the three Discipline options). FAR, AUD, BAR, and ISC are untouched by this update.
The Changes at a Glance
Every row below replaces a rule that pre-OBBBA materials (and pre-July-2026 exams) treat as correct. After July 1, 2026, the right-hand column is the testable answer.
| Provision | Pre-OBBBA / TCJA-sunset rule | OBBBA rule (testable 7/1/2026) |
|---|---|---|
| Individual tax brackets | TCJA rates (10%-37%) scheduled to sunset after 2025 | TCJA's seven brackets (10%, 12%, 22%, 24%, 32%, 35%, 37%) made permanent |
| Standard deduction | Scheduled to roughly halve after 2025 | TCJA levels made permanent and indexed: $15,750 single / $31,500 MFJ / $23,625 HoH (2025) |
| Senior deduction | Did not exist | New $6,000 deduction for taxpayers 65+ (2025-2028), phases out above MAGI $75,000 single / $150,000 MFJ |
| Tip income | Fully taxable, no special deduction | New above-the-line deduction for qualified tips, up to $25,000 (2025-2028), with a MAGI phaseout |
| Overtime pay | Fully taxable, no special deduction | New above-the-line deduction for qualified overtime premium, up to $12,500 ($25,000 MFJ), 2025-2028 |
| Car loan interest | Personal interest — nondeductible | New above-the-line deduction up to $10,000 for interest on a loan for a U.S.-assembled vehicle (2025-2028), with a MAGI phaseout |
| QBI deduction (§199A) | 20% deduction scheduled to expire after 2025 | Made permanent; new $400 (indexed) minimum deduction for taxpayers with ≥$1,000 of active QBI |
| SALT cap (itemized) | $10,000 cap (the most-memorized TCJA number on REG) | Raised to $40,000 (2025), rising ~1%/year through 2029; phases down above MAGI $500,000 (2025) / $505,000 (2026); reverts to $10,000 in 2030 |
| Bonus depreciation | Phasing down — 40% for property placed in service in 2025 under prior law | Restored to 100% and made permanent for qualifying property acquired and placed in service after January 19, 2025 |
| Section 179 expensing | $1,250,000 limit, $3,130,000 phase-out threshold | Raised to $2,500,000 limit, $4,000,000 phase-out threshold, for property placed in service after 2024 |
| Estate & gift exclusion | Scheduled to roughly halve (to ~$7M) after 2025 | Unified basic exclusion permanently set at $15,000,000 per decedent (2026, indexed); 40% top rate unchanged |
The tip, overtime, car-loan, and senior deductions are temporary (2025-2028) — don't confuse “new” with “permanent.” Everything else in this table is permanent law.
Where Each Change Lands on the Blueprint
OBBBA touches REG Areas III, IV, and V, and TCP Areas I, III, and IV. Here's the practical map:
- Property transactions (REG Area III / TCP Area IV) — 100% permanent bonus depreciation and the higher Section 179 limits change every cost-recovery computation. Section 1231 and recapture mechanics (§1245/§1250) are unchanged by OBBBA, but a higher depreciable basis means larger recapture amounts on disposal.
- Individual taxation (REG Area IV / TCP Area I) — the permanent standard deduction and bracket structure, the four new temporary deductions (tips, overtime, car-loan interest, senior), the permanent §199A QBI deduction with its new $400 floor, and the $40,000 SALT cap all live here. This is the highest-density area for OBBBA questions.
- Entity and transfer taxation (REG Area V / TCP Areas I & III) — the permanent $15,000,000 unified estate-and-gift exclusion is the headline change for estate, gift, and trust questions and for entity-level tax planning.
Trap Patterns to Watch For
The exam's favorite OBBBA trap is simple: it reuses a number that was correct under prior law as a distractor. If you memorized REG/TCP material before mid-2026, these are the instincts to retrain.
| Old instinct (now a distractor) | Current rule (testable 7/1/2026) |
|---|---|
| “SALT is capped at $10,000” | Cap is $40,000 (2025), subject to a MAGI phasedown above $500,000/$505,000 |
| “Bonus depreciation is 40% this year” | 100% bonus depreciation, permanent, for property placed in service after 1/19/2025 |
| “Tip and overtime income are just wages — fully taxable” | Each has its own above-the-line deduction (2025-2028) with a MAGI phaseout — apply the deduction, but watch the cap and the phaseout |
| “The QBI deduction expires after 2025” | Permanent, plus a new $400 minimum deduction for active QBI ≥ $1,000 |
| “The estate exclusion drops to ~$7M after 2025” | Permanently set at $15,000,000 (2026, indexed) — no sunset |
| “Section 179 caps out around $1.25M” | $2,500,000 limit, $4,000,000 phase-out threshold (property placed in service after 2024) |
Where to Practice This
Every provision above is built into our REG and TCP study guides, already written for the post-OBBBA rules — no need to mentally translate “old law” into “new law” while you study.
- Depreciation, Section 179, and bonus depreciation — REG R9: Basis and Cost Recovery and TCP T13: Basis, Depreciation, and Cost Recovery Planning.
- §1231 and recapture (now operating on the larger post-OBBBA depreciable basis) — REG R11: Section 1231 Assets and Depreciation Recapture, with an interactive recapture-splitting diagram.
- Standard deduction, the four new OBBBA deductions, and §199A/QBI — REG R14: Adjustments, Deductions, and the QBI Deduction.
- Estate, gift, and the $15M exclusion — REG R20: Estate, Gift, and Trust Taxation and TCP T4: Estate and Gift Tax Planning.
FAQ
When does OBBBA become testable on the CPA exam?
July 1, 2026, for REG and TCP only. Provisions with 2024-2025 effective dates become eligible on that date; it's a hard cutoff, not a gradual phase-in.
What if I sit before July 1, 2026?
You'll be tested on the prior law — $10,000 SALT cap, the pre-OBBBA Section 179/bonus depreciation limits, no tips/overtime/car-loan/senior deductions. Don't study the OBBBA numbers if your exam date is before the cutoff; you'll just confuse yourself on test day.
What's the single biggest change to watch?
The SALT cap jump from $10,000 to $40,000 and the restoration of 100% bonus depreciation — both directly invert numbers that were drilled into pre-2026 REG/TCP prep. Any time your gut answer is “$10,000” or “40%” on these topics, double-check the date in the question.
Does this affect FAR, AUD, BAR, or ISC?
No. OBBBA is federal tax law, so only REG and TCP got a blueprint update. The other four sections are unaffected.
Study REG and TCP With the Post-OBBBA Rules Built In
Every lesson, MCQ, and simulation in our REG and TCP guides already reflects the law that's testable from July 1, 2026 — free, with spaced repetition built in.
CPA Exam Lab is an independent study resource published by Arc & Ledger LLC. It is not affiliated with, endorsed by, or sponsored by the AICPA® or NASBA. “CPA” is a registered trademark of the AICPA. This article is educational content, not professional advice — always verify exam logistics with NASBA and your state board of accountancy.