Tax

If you deduct mortgage interest, the One Big Beautiful Bill Act (OBBBA) brings some important updates.

First, it permanently caps the mortgage interest deduction for interest on up to $750,000 of acquisition debt ($375,000 if married filing separately). Interest on home equity loans remains deductible only if the loan is used to improve your home—and stays within that cap.

Starting in 2026, you may also deduct mortgage insurance premiums—but only if your AGI is under $100,000 (filing jointly) or $50,000 (filing separately). Above that, the deduction phases out quickly.

Homeowners with grandfathered debt predating December 16, 2017, still benefit from the higher $1 million cap.

If you would like to discuss mortgage interest, please call me on my direct line at 408-778-9651.

• By Leon Clinton
• September 5, 2025

Are you at risk of paying the alternative minimum tax (AMT)? You might be—especially starting in 2026, thanks to recent changes under the One Big Beautiful Bill Act (OBBBA). While the AMT hasn’t affected most taxpayers in recent years, the new rules could change that.

Here’s what you need to know.

What Is the AMT?

The AMT is a parallel federal tax system designed to ensure higher-income taxpayers pay at least a minimum amount of tax. It operates by disallowing certain deductions and treating some otherwise tax-free income as taxable. If your AMT is higher than your regular tax, you pay the AMT amount instead.

Recent Changes: What the OBBBA Did

For tax years 2018 through 2025, the Tax Cuts and Jobs Act (TCJA) made the AMT more forgiving. It raised exemption amounts and significantly increased the income levels at which those exemptions start to phase out.

The OBBBA partially reverses that, starting in 2026.

Exemption Phaseout Thresholds Drop

• From $1,252,700 in 2025 for joint filers to $1,000,000 in 2026.
• From $626,350 to $500,000 for others.

Phaseout Accelerates

The phaseout rate doubles—from 25 to 50 percent, meaning your AMT exemption disappears faster as your income rises.

These changes mean more taxpayers could owe the AMT and those already subject to it could pay more.

Risk Factors for AMT Exposure

You may be more likely to owe AMT in 2026 and beyond if any of the following apply:

• High capital gains from sales of stocks, real estate, or precious metals
• Exercise of incentive stock options (ISOs), which are tax-favored under regular rules but trigger AMT when exercised
• Large itemized deductions for state and local taxes, which are not deductible under AMT rules
• Standard deduction use, which the AMT disallows
• Tax-exempt income from private activity bonds (e.g., certain municipal bonds), which is included in AMT income

Planning Considerations

Consider strategies like

• spreading out the exercise of ISOs over multiple years;
• timing capital gains and losses; and
• adjusting your regular income to reduce AMT exposure.

A Potential Safety Net: The Minimum Tax Credit 

If you pay AMT because of timing-related tax preferences (like exercising ISOs), you may be eligible to claim a minimum tax credit in future years. This credit can offset regular tax liability, but it only applies to specific types of AMT adjustments.

If you want to discuss the AMT, please call me on my direct line at 408-778-9651.

• By Leon Clinton
• September 2, 2025

Filing tax forms is never fun—but it’s important to stay ahead of changes that can reduce your reporting burden.

If your business pays independent contractors (non-employees) for services, you are required to file IRS Form 1099-NEC if total payments exceed a specific threshold. For decades, this threshold has been $600 or more in a calendar year. Failing to file can result in substantial penalties.

That threshold is about to change.

Thanks to the One Big Beautiful Bill Act (OBBBA), beginning with payments made in 2026, you file Form 1099-NEC if you pay an independent contractor $2,000 or more during the year. Starting in 2027, this amount will be adjusted annually for inflation in $100 increments.

This welcome update means many businesses will have fewer 1099-NEC filing obligations.

Changes to Form 1099-K Thresholds

The OBBBA also revised the filing rules for Form 1099-K, which is used by third-party settlement organizations (TPSOs) such as PayPal, Uber, and eBay. These platforms are responsible for issuing 1099-Ks when payments meet certain criteria. For example, if you pay a contractor via PayPal, you (the contractor’s client) do not file a 1099-K—PayPal does, if the 1099-K filing threshold is met.

Previously, the 1099-K threshold was set to drop to $5,000 in 2025 and then to $600 in 2026—potentially triggering billions of filings. However, the OBBBA reverses this change.

Effective retroactively to 2022 (yep, three years ago), TPSOs need to file Form 1099-K if both of the following apply:

• The recipient is paid more than $20,000.
• The recipient has more than 200 transactions during the year.

This rollback to the 2022 threshold means far fewer Forms 1099-K will be issued. Both TPSOs and recipients can breathe a sigh of relief.

A Final Reminder

Regardless of whether a 1099 form is issued, all taxpayers must report all taxable income on their tax returns—even if it’s not reported to the IRS by a third party.

If you would like to discuss the new 1099 rules, please call me on my direct line at 408-778-9651.

• By Leon Clinton
• August 29, 2025