Get Ready for Tax Season 2026: Major Changes You Need to Know!

The 2026 tax filing season is just around the corner, and thanks to the “One Big, Beautiful Bill Act” enacted last year, there are some significant updates to the U.S. tax code that could put more money back in your pocket! These changes could boost your deductions and tax credits, making it crucial to understand how they might impact your return.

Remember, tax deductions reduce the amount of income you pay taxes on, while tax credits directly lower your tax bill dollar-for-dollar. Both are powerful tools for minimizing what you owe. The IRS starts accepting returns on January 26th, with the final deadline set for April 15th, so let’s dive into what’s new!

Standard vs. Itemized Deductions: Choose Wisely!

When preparing your return, you’ll need to decide whether to take the standard deduction or itemize. To make the best choice, calculate your total itemized deductions first. Then, compare that figure to the standard deduction available to you. Picking the higher of the two will lead to the greatest tax savings.

Good news for 2026 filers: standard deductions have increased, lowering your taxable income even further! Here are the updated amounts from President Donald Trump’s tax and spending law, signed on July 4, 2025:

• Single: $15,750
• Head of Household: $23,625
• Married Filing Jointly: $31,500

Taxpayers aged 65 and older can qualify for even larger deductions:

• Single Senior (65+) below $75k adjusted income: Additional $6,000
• Married Seniors (both 65+) below $150k total adjusted income: Additional $12,000

Key Itemized Deductions You Should Know

SALT Deduction Quadrupled!

The State and Local Tax (SALT) deduction has seen a monumental increase, quadrupling from $10,000 to $40,000 for tax years 2025 through 2029, for incomes under $500,000. If you live in a high-tax state, this significant jump might make itemizing a more attractive option than ever before!

Other Itemized Deductions Include:

• Medical and dental expenses: If these expenses exceed 7.5% of your adjusted gross income (AGI) for the year, you can deduct them. This applies only to expenses not reimbursed by insurance.
• Interest on mortgage loans: You can deduct interest on mortgage loans up to $750,000 ($375,000 for married filing jointly).
• Casualty or theft losses: Only in the case of a federally declared disaster.

Boost Your Savings with Tax Credits!

Tax credits are incredibly valuable because they reduce your tax bill dollar-for-dollar, and you can claim them whether you itemize or take the standard deduction.

Child Tax Credit Increase

The Child Tax Credit has increased from $2,000 to $2,200 per qualifying child this year! This credit is available to all eligible taxpayers. To qualify, your child must:

• Be under 17 at the end of the tax year.
• Be your son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or a descendant of one of these (e.g., grandchild, niece, or nephew).
• Not provide more than half of their own support for the tax year.
• Have lived with you for more than half the tax year.
• Be claimed as a dependent on your return.
• Not have filed a joint return with another person (unless solely to get a tax refund on tax withheld or estimated tax paid).
• Be a U.S. citizen, U.S. national, or U.S. resident alien meeting the green card or substantial presence tests.

To qualify for the full credit, your annual income cannot exceed $200,000 ($400,000 if filing jointly). If your income is higher, you might still be eligible for a partial credit.

New Opportunities for Deductions

Did You Earn Overtime or Tips?

Good news! New income tax deductions for qualified tips and overtime are now available for all eligible taxpayers, including self-employed individuals.

Tip Deductions:

• Single, earning less than $150k: Deduct up to $25,000
• Married Filing Jointly, earning less than $300k: Deduct up to $25,000

Overtime Deductions:

If your typical wage is $10 and overtime is $15, only the additional $5 can be added to the overtime deduction.

• Single, earning less than $150k: Deduct up to $12,500 of income exceeding the typical rate of pay
• Married Filing Jointly, earning less than $300k: Deduct up to $25,000 of income exceeding the typical rate of pay

Did You Buy an American-Made Car in 2025?

There’s a new tax deduction allowing taxpayers to deduct up to $10,000 in interest paid on a qualifying auto loan for vehicles assembled in the United States!

To qualify, your income must be less than $100,000 as a single filer or $200,000 for joint filers. This deduction is available whether you itemize or take the standard deduction. A qualifying vehicle includes a car, minivan, van, SUV, pickup truck, or motorcycle that underwent final assembly in the U.S. and has a gross vehicle weight rating of less than 14,000 pounds.

Digital Assets & Online Marketplace Reporting Updates

Did You Sell or Trade Crypto?

Remember, digital assets like cryptocurrency and NFTs are considered property for tax purposes, not currency, and any income derived from them is taxable. Reporting requirements have changed this season: the IRS now requires brokers to file a new form, Form 1099-DA, to help ensure accurate reporting of crypto-related transactions.

Did You Sell Items on eBay, Etsy, or Poshmark?

If you earn income through third-party apps or online marketplaces, these platforms are now generally required to issue Form 1099-K only if your total payments exceed $20,000 and you completed more than 200 transactions on a single platform during the year.

Important: Even if you don’t receive a 1099-K, you are still required to report all taxable income earned on these platforms.

With these significant changes, it’s more important than ever to review your tax situation carefully. Consider consulting a tax professional to ensure you’re taking advantage of all eligible deductions and credits for the 2026 filing season!

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