2.3. Education Credit SSN/EIN Requirements & IRS Math Error Authority

Child and Dependent Care Credit — OBBBA §70405

The Child and Dependent Care Credit maximum rate increased from 35% to 50% for TY2026. The credit continues to be calculated on Form 2441 and is nonrefundable. The expense limits remain $3,000 for one qualifying person and $6,000 for two or more. With the rate at 50%, the maximum credit is now $1,500 for one child and $3,000 for two or more — up from $1,050 and $2,100 previously. Both a dependent care FSA and the credit can be used, but the expense base must be reduced by the FSA amount.

Rule	TY2026 (OBBBA §70405)
Maximum credit rate	50% (was 35%)
Qualifying expense limit — 1 child/dependent	$3,000 (unchanged)
Qualifying expense limit — 2+ children/dependents	$6,000 (unchanged)
Maximum credit — 1 child	$1,500 (50% × $3,000)
Maximum credit — 2+ children	$3,000 (50% × $6,000)
Reported on	Form 2441, Child and Dependent Care Expenses

Education Credits — OBBBA §70606

The American Opportunity Credit and Lifetime Learning Credit now have strict Social Security Number (SSN) and Employer Identification Number (EIN) requirements for TY2026. Returns claiming these credits without the required SSN or EIN will be treated as math errors by the IRS — the credit is denied automatically without a full audit. This is a significant change in IRS enforcement posture. Practitioners should collect Form 1098-T from each educational institution before filing — the institution’s EIN on Form 1098-T must be transferred to Form 8863.

Requirement	Detail
Student SSN required	Valid SSN for the student must appear on Form 8863
Institution EIN required	EIN of the eligible educational institution must be reported on Form 8863
Form 1098-T	Institution EIN is reported on Form 1098-T — ensure clients provide this form before filing
Missing information	Returns without required SSN/EIN treated as math errors — credit denied automatically

529 Plan Changes — OBBBA §§70413 & 70414

Two changes expanded 529 plan flexibility. First, the annual K-12 distribution limit per beneficiary doubled from $10,000 to $20,000. Second, the definition of qualified higher education expenses now includes postsecondary credentialing expenses — covering certificate programs, trade credentials, and professional licensing programs that do not lead to a traditional degree. Previously, 529 distributions for these programs would be non-qualified and subject to income tax and a 10% penalty on the earnings portion. Starting TY2026, distributions for qualifying credentialing programs are fully tax-free.

Change	Before OBBBA	TY2026 (OBBBA)
K-12 tuition limit (§70413)	$10,000/year per beneficiary	$20,000/year per beneficiary
Credentialing programs (§70414)	Not eligible	Qualified — includes certificates and trade credentials
College expenses	Qualified — unchanged	Qualified — unchanged

Charitable Contributions — OBBBA §§70424 & 70425

Two charitable giving changes apply for TY2026. First, non-itemizers may now deduct up to $1,000 ($2,000 for MFJ) in cash charitable contributions as an above-the-line deduction on Schedule 1. Second, a new floor rule under §70425 requires that contributions exceed 0.5% of the taxpayer’s contribution base (AGI) before any charitable deduction is allowed.

The 0.5% floor applies to all charitable deductions — both the new non-itemizer deduction and itemized charitable deductions on Schedule A. Example: A taxpayer with AGI of $80,000 contributes $600. The floor is 0.5% × $80,000 = $400. The deductible amount is $600 minus $400 = $200. If contributions were only $300 (below the $400 floor), no deduction is allowed.

Rule	Detail
Non-itemizer deduction — Single/HOH	Up to $1,000 cash contributions
Non-itemizer deduction — MFJ	Up to $2,000 cash contributions
0.5% floor rule (§70425)	Total contributions must exceed 0.5% of AGI before any deduction is allowed
60% AGI limit	Still applies to cash contributions to public charities — unchanged
Documentation required	Written acknowledgment required for contributions of $250 or more — unchanged

Health Savings Account (HSA) Updates — OBBBA §§71306–71308

Three HSA-related provisions were modified or made permanent by the OBBBA, expanding who can contribute to an HSA. The most significant is the permanent extension of the telehealth safe harbor. Previously this was a temporary pandemic-era relief provision requiring periodic renewal. The bronze and catastrophic plan change also significantly expands HSA access — many marketplace participants previously had high-deductible plans that functioned as HDHPs but were not formally classified as such, blocking HSA contributions.

Provision	OBBBA Change
Telehealth safe harbor (§71306)	Made permanent — HDHPs may offer telehealth with no deductible without disqualifying HSA contributions
Bronze and catastrophic plans (§71307)	Now treated as HDHPs — enrollees may contribute to an HSA
Direct primary care (§71308)	Direct primary care arrangements now count — individuals may still contribute to an HSA