Master the 2026 Tax Changes, Stimulus Reality, and Economic Policy | KudosKuber

Master the Money: 25 Must-Know Questions on the 2026 Tax Shifts, Stimulus Reality, and Economic Policy Triggers

As we navigate late 2025, the U.S. financial environment is dominated by two major forces: the sweeping, retroactive tax changes introduced by the One, Big Beautiful Bill Act (O.B.B.B.A.) and the ongoing confusion surrounding federal stimulus checks.

The O.B.B.B.A. promises significant shifts in your 2026 tax filing season, potentially delivering larger refunds that some economists suggest might "feel a lot like getting another round of stimulus checks." But while tax cuts are real, the noise around new federal direct payments is not.

To ensure you stay ahead of the curve and optimize your financial strategy, we have distilled the most critical information into 25 comprehensive quiz questions. Test your knowledge on new deductions, the status of direct payments, and the policy debates shaping future economic aid.

Section 1: The One, Big Beautiful Bill Act (O.B.B.B.A.) and 2026 Tax Changes

1. OBBBA Tax Law

Question: The sweeping set of retroactive tax breaks scheduled to kick in on January 1st, associated with potentially larger tax refunds that "feel a lot like getting another round of stimulus checks," was enacted under which piece of legislation?

1. The CARES Act
2. The American Rescue Plan
3. The Taxpayer's Bill of Rights (TABOR)
4. The One, Big Beautiful Bill Act (O.B.B.B.A.)

Click to Reveal Answer & Explanation

Correct Answer: D. The One, Big Beautiful Bill Act (O.B.B.B.A.)

Explanation: The source identifies the legislation that rolled out these retroactive tax breaks as The One, Big Beautiful Bill Act (O.B.B.B.A.), signed earlier this year. Economists noted that the resulting higher refunds could feel like a new round of stimulus checks, adding to consumer demand and inflation pressures early in 2026.

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2. Tax Deduction for Tips

Question: Effective for the years 2025 through 2028, what is the maximum annual deduction for qualified tips an eligible employee or self-employed individual can claim under the new provisions?

1. $10,000
2. $12,500
3. $25,000
4. $40,000

Click to Reveal Answer & Explanation

Correct Answer: C. \$25,000

Explanation: For the years 2025 through 2028, eligible employees and self-employed individuals may take a federal income tax deduction for qualified tips, provided they are filed on a Form W-2, Form 1099, or Form 4137. The maximum annual deduction for qualified tips is \$25,000.

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3. Overtime Pay Tax Exemption

Question: Under the O.B.B.B.A., what is the designated amount of qualifying overtime pay exempt from federal income tax for taxpayers filing as married filing jointly?

1. Up to $12,500
2. Up to $25,000
3. Up to $31,500
4. Up to $50,000

Click to Reveal Answer & Explanation

Correct Answer: B. Up to \$25,000

Explanation: Starting January 1, 2025, qualifying overtime pay will be exempt from federal income tax under the O.B.B.B.A.. Most filers can deduct up to \$12,500, or \$25,000 for those married filing jointly, from their taxable income. This benefit phases out for higher earners starting at \$300,000 for married filing jointly.

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4. Auto Loan Interest Deduction

Question: What is the maximum annual deduction allowed for excluding interest paid on auto loans from taxable income?

1. $5,000
2. $10,000
3. $12,500
4. $20,000

Click to Reveal Answer & Explanation

Correct Answer: B. \$10,000

Explanation: Borrowers can now exclude the interest they pay on auto loans from taxable income, with a maximum annual deduction of \$10,000. This deduction is not available for joint filers making over \$200,000.

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5. Senior Tax Deduction

Question: Taxpayers aged 65 and older who file jointly are eligible for an additional deduction of how much on top of the standard deduction?

1. $3,000
2. $6,000
3. $12,000
4. $15,750

Click to Reveal Answer & Explanation

Correct Answer: C. \$12,000

Explanation: Taxpayers 65 and older can claim an additional deduction of \$6,000, or \$12,000 for joint filers, on top of the standard deduction. This additional benefit phases out for joint filers with a modified adjusted gross income over \$150,000.

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6. SALT Cap Increase

Question: The O.B.B.B.A. temporarily raises the State and Local Tax (SALT) deduction cap from $10,000 to what amount?

1. $15,750
2. $25,000
3. $31,500
4. $40,000

Click to Reveal Answer & Explanation

Correct Answer: D. \$40,000

Explanation: The O.B.B.B.A. temporarily raises the State and Local Tax (SALT) deduction cap from \$10,000 to \$40,000. This change is noted as a benefit for residents of high-tax states like New York, California, and New Jersey, but phases out for those earning \$250,000 or more.

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7. Permanent Standard Deduction

Question: Starting in 2025, the new permanent standard deduction threshold for married filing jointly is set at:

1. $15,750
2. $25,000
3. $31,500
4. $40,000

Click to Reveal Answer & Explanation

Correct Answer: C. \$31,500

Explanation: The standard deduction was permanently increased due to the O.B.B.B.A.. Starting in 2025, the new thresholds are \$15,750 for single filers and \$31,500 for married filing jointly.

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8. Child Tax Credit 2025

Question: What is the permanently increased federal Child Tax Credit amount for 2025?

1. $1,400
2. $2,000
3. $2,200
4. $2,500

Click to Reveal Answer & Explanation

Correct Answer: C. \$2,200

Explanation: Families will benefit from a permanently larger child tax credit. The 2025 federal child tax credit is \$2,200, which is up from \$2,000, and is indexed for inflation.

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9. Tax Refunds 2026

Question: J.P. Morgan estimated the average payment the IRS could process in 110 million refunds during the current calendar year to be approximately what amount?

1. $2,000
2. $2,200
3. $3,150
4. $3,743

Click to Reveal Answer & Explanation

Correct Answer: D. \$3,743

Explanation: J.P. Morgan estimated that the IRS could process 110 million refunds for an average payment of \$3,743 in the current calendar year.

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Section 2: Stimulus Checks, Rebates, and Scams in 2025/2026

10. Federal Stimulus 2025 2026

Question: As of late 2025, what is the status of a new federal stimulus check confirmed by Congress or the IRS for 2025 or 2026?

1. A new round of checks ranging from \$1,390 to \$2,000 has been officially confirmed.
2. Payments have been approved but are delayed until Q1 2026.
3. There is no new federal stimulus check confirmed or planned.
4. The government is currently issuing inflation relief checks federally.

Click to Reveal Answer & Explanation

Correct Answer: C. There is no new federal stimulus check confirmed or planned.

Explanation: The IRS confirmed there are no stimulus checks or federal relief payments being sent for the rest of 2025, and none are planned for 2026. Online claims suggesting new federal payments are false, and the IRS has warned taxpayers about scams related to these rumors.

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11. Recovery Rebate Credit Deadline

Question: The deadline to file for the final \$1,400 Recovery Rebate Credit (the final COVID-era stimulus payment) was:

1. December 31, 2024
2. April 15, 2025
3. July 7, 2025
4. September 18, 2025

Click to Reveal Answer & Explanation

Correct Answer: B. April 15, 2025

Explanation: The first, second, and third COVID-era stimulus payments are closed for claims. The deadline to file for the final \$1,400 Recovery Rebate Credit for 2021 was April 15, 2025. Unclaimed funds now revert to the U.S. Treasury, with no appeals available.

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12. American Worker Rebate Act

Question: What is the current status of the American Worker Rebate Act of 2025, a proposal backed by Senator Josh Hawley?

1. It has been passed, and checks are currently being issued.
2. It was passed by the House but blocked by the Senate.
3. It was rejected due to legal challenges regarding tariffs.
4. It has not moved through Congress, and no checks are being issued as a result of it.

Click to Reveal Answer & Explanation

Correct Answer: D. It has not moved through Congress, and no checks are being issued as a result of it.

Explanation: The American Worker Rebate Act of 2025 is a proposal suggesting payments between \$600 and \$2,400 to qualifying taxpayers. However, the bill has not moved through Congress, so no checks are currently being issued as a result of it.

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13. State Relief Payments 2025

Question: Which states were identified in the sources as issuing inflation relief or surplus tax rebate checks to residents in 2025?

1. Alaska and New Jersey only
2. New York, Colorado, Georgia, New Jersey, and Virginia
3. California and Texas
4. Florida, Georgia, and New York only

Click to Reveal Answer & Explanation

Correct Answer: B. New York, Colorado, Georgia, New Jersey, and Virginia

Explanation: The sources specifically mention New York, Pennsylvania, Georgia, and Colorado distributing one-time inflation relief payments, and New Jersey continuing ANCHOR property tax relief payments. Other reports confirm Colorado, New York, New Jersey, Georgia, and Virginia are sending out tax refund checks and rebates in 2025.

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14. ANCHOR Property Tax Relief

Question: In New Jersey's ANCHOR property tax relief program, what is the maximum benefit amount for eligible homeowners aged 65 or older with incomes of $150,000 or less, based on 2025 information?

1. Up to $1,500
2. Up to $1,250
3. Up to $700
4. Up to $1,750

Click to Reveal Answer & Explanation

Correct Answer: D. Up to \$1,750

Explanation: New Jersey's ANCHOR property tax relief continued in 2025. For homeowners age 65 or older with incomes of \$150,000 or less, the benefits may be up to \$1,750.

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15. Stimulus Scam Warning

Question: According to IRS warnings, which of the following is a common tactic used by scammers related to fake stimulus checks?

1. Mailing official government checks requiring immediate identity confirmation online.
2. Requiring a fee to process the "fast stimulus approval."
3. Only contacting taxpayers via registered mail.
4. Using unsolicited text messages or emails asking for bank details.

Click to Reveal Answer & Explanation

Correct Answer: D. Using unsolicited text messages or emails asking for bank details.

Explanation: The IRS warns that scammers are very active, and people should avoid fake messages, calls, or emails. The IRS will never ask you to enter your bank account information through an unsolicited text, email, or website to claim a payment. Additionally, government payments never charge processing fees.

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Section 3: Economic Principles and Policy Design

16. Automatic Stabilizers Principles

Question: The GAO identified four core principles for assessing the design of effective automatic stabilizers. These four principles are:

1. Universal, Ongoing, Funded, and Predictable
2. Timely, Temporary, Targeted, and Predictable
3. Transparent, Taxable, Triggered, and Temporary
4. Timely, Total, Transactional, and Transparent

Click to Reveal Answer & Explanation

Correct Answer: B. Timely, Temporary, Targeted, and Predictable

Explanation: The GAO identified four principles that could be used to assess the design or reform of automatic stabilizers: they should be timely, temporary, targeted, and predictable. These principles ensure that stimulus is provided when needed most, ends as the economy recovers, has the greatest economic impact, and is established in advance.

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17. Trigger Mechanisms

Question: What is the primary advantage of using a "trigger" in an automatic stabilizer program?

1. To allow policymakers more flexibility to tailor assistance to specific circumstances.
2. To reduce the federal deficit automatically during downturns.
3. To automatically initiate or expand economic stimulus based on a predetermined rule tied to real-time economic conditions.
4. To guarantee that all high-income households are immediately excluded from benefits.

Click to Reveal Answer & Explanation

Correct Answer: C. To automatically initiate or expand economic stimulus based on a predetermined rule tied to real-time economic conditions.

Explanation: A trigger is a pre-determined set of rules used to automatically initiate or expand economic stimulus at the beginning of an economic downturn and end it when conditions no longer call for it. Well-designed triggers have the potential to match stimulus to real-time economic conditions and avoid the delays that may occur with discretionary action.

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18. Sahm Rule

Question: Which economic indicator pattern is proposed by the Sahm Rule to potentially trigger automatic fiscal stimulus?

1. GDP decreases for two consecutive quarters.
2. Inflation exceeds 5% year-over-year.
3. The national 3-month average unemployment rate increases by 0.5 percentage points relative to the prior year low.
4. The employment-to-population ratio decreases in 26 states.

Click to Reveal Answer & Explanation

Correct Answer: C. The national 3-month average unemployment rate increases by 0.5 percentage points relative to the prior year low.

Explanation: Several experts suggest policymakers consider the Sahm Rule, which proposes that stimulus could automatically be initiated when the national 3-month average unemployment rate increases by 0.5 percentage points relative to the prior year low.

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19. Fiscal Stimulus Inflation Risk

Question: A general trade-off of strengthening automatic stabilizers is the potential risk to the economy if:

1. They require an increased administrative burden on states.
2. They fail to reach the entire eligible population.
3. They generate a large amount of spending that causes demand for goods and services to exceed the economy’s capacity (contributing to inflation).
4. They increase the risk of improper payments.

Click to Reveal Answer & Explanation

Correct Answer: C. They generate a large amount of spending that causes demand for goods and services to exceed the economy’s capacity (contributing to inflation).

Explanation: While strengthening automatic stabilizers is generally beneficial, a key risk is that if they cause demand to exceed the economy's capacity, they could potentially contribute to inflation.

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20. Targeted vs. Timely Stimulus

Question: In the economic model studying the trade-off between targeting and timeliness of fiscal stimulus payments, the key result found in the baseline symmetric calibration was:

1. Fully targeting the affected sector yields the highest total welfare.
2. Untargeted transfers with no delay maximize welfare.
3. Intermediate levels of targeting and timeliness maximize household welfare.
4. Timeliness always outweighs targeting in terms of total welfare.

Click to Reveal Answer & Explanation

Correct Answer: C. Intermediate levels of targeting and timeliness maximize household welfare.

Explanation: The paper analyzing the targeting vs. timeliness trade-off found that intermediate levels of targeting and timeliness can maximize household welfare. This balances the benefits of speed (timeliness) against the efficiency of reaching only those who need it most (targeting).

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21. Arguments Against Stimulus

Question: Which of the following was cited as a reason why sending more stimulus checks would be ineffective and wasteful, according to The Heritage Foundation commentary?

1. Unemployment systems are entirely too complex for proper aid distribution.
2. Savings rates are exceptionally high among many Americans.
3. The government debt level is currently below 50% of GDP.
4. Most Americans were negatively impacted regardless of job status.

Click to Reveal Answer & Explanation

Correct Answer: B. Savings rates are exceptionally high among many Americans.

Explanation: One argument against further stimulus checks was the observation that savings rates are exceptionally high (averaging 19.9% during one referenced period), suggesting that further federal debt should not be incurred just to boost already record-high household savings rates.

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Section 4: Alternative Policy Options and Concerns

22. Earned Income Tax Credit Enhancement

Question: Which option was identified by the GAO as a potential policy change to strengthen the Earned Income Tax Credit (EITC) as an automatic stabilizer?

1. Permanently eliminating the credit for taxpayers with qualifying children.
2. Allowing all taxpayers to use income from three prior years to calculate EITC.
3. Temporarily increase EITC amounts for eligible taxpayers without qualifying children.
4. Automatically making the EITC fully non-refundable during downturns.

Click to Reveal Answer & Explanation

Correct Answer: C. Temporarily increase EITC amounts for eligible taxpayers without qualifying children.

Explanation: The GAO identified several options to strengthen the EITC, including temporarily increasing EITC amounts for eligible taxpayers without qualifying children. This specific expansion was previously implemented temporarily in response to the COVID-19 pandemic.

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23. Direct Payments and Poverty Reduction

Question: What evidence supports the "Targeted" principle for fiscal transfers, such as the direct payments made during the COVID-19 pandemic?

1. High-income individuals are more likely to spend large lump sums.
2. Payments had no discernible effect on consumer demand in the short run.
3. The second and third Economic Impact Payments (EIPs) were projected to keep millions of people, including children, out of poverty.
4. The quick phase-out of the credits created undesirable high marginal tax rates.

Click to Reveal Answer & Explanation

Correct Answer: C. The second and third Economic Impact Payments (EIPs) were projected to keep millions of people, including children, out of poverty.

Explanation: The policy was highly effective at targeting those most in need. Supporting this, the Department of Health and Human Services projected that the second and third EIPs kept 2.9 million and 7.9 million people, respectively, out of poverty in 2021.

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24. Policy Recommendation Recapture

Question: To achieve better ex-post targeting (targeting "after the event") and vertical equity for advanced recovery rebates, what policy mechanism was recommended for future crises concerning taxpayers whose income increased significantly?

1. Increasing the tax liability for the following year uniformly.
2. Forgiving the entire overpayment unconditionally.
3. Implementing a recapture (repayment) requirement at the end of the tax year for taxpayers whose income surpassed the phase out threshold, subject to a safe harbor.
4. Automatically reducing their next Social Security payment.

Click to Reveal Answer & Explanation

Correct Answer: C. Implementing a recapture (repayment) requirement at the end of the tax year for taxpayers whose income surpassed the phase out threshold, subject to a safe harbor.

Explanation: The recommended policy is to implement a recapture (repayment) requirement at the end of the tax year. This prevents taxpayers who became significantly wealthier during the crisis from retaining aid intended for struggling households.

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25. Tariff Revenue Rebate Amount

Question: The proposed American Worker Rebate Act of 2025 sets the baseline figure for the rebate at what amount per adult and per qualifying child?

1. $2,000
2. $1,400
3. $600
4. $300

Click to Reveal Answer & Explanation

Correct Answer: C. $600

Explanation: The American Worker Rebate Act of 2025 intends to recycle tariff revenue back to working people. The headline figure proposed is \$600 per adult and \$600 per qualifying kid. This is presented as a floor, which could increase if tariff collections exceed projections.

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Final Takeaway

Navigating the financial landscape of 2026 requires separating fact from fiction. The tax breaks under O.B.B.B.A. are significant, focusing on areas like tips, overtime, and senior deductions, while the clamor for new federal stimulus checks remains unfounded.

By understanding the legislative reality and the core economic principles driving policy—specifically the need for timely, targeted, and predictable automatic stabilizers—you are better equipped to make informed financial decisions.

Stay sharp, stay financially savvy, and keep checking back with KudosKuber for the latest insights.