Tax law changes every year, but the changes affecting the 2026 filing season (for 2025 tax returns) are significant. Whether you’re filing for yourself or helping someone else, knowing these updates can help you file more confidently and make sure you aren’t missing valuable tax breaks.
Below are eight important tax law changes many taxpayers will encounter this year.
Before we dive in, you can always review the official IRS guidance on the One, Big, Beautiful Bill provisions — the legislation behind many of these changes here:
IRS One, Big, Beautiful Bill provisions for individuals and workers: https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions-individuals-and-workers
1. New Overtime Deduction
A major change this year is a new deduction for qualified overtime compensation. Under this rule, workers who earned overtime can deduct part of that overtime pay on their federal return. Specifically, the amount that exceeds their regular rate of pay (sometimes called the premium portion).
This deduction:
- Is available to both itemizing and non-itemizing taxpayers
- Has annual limits ($12,500 for individuals, $25,000 if married filing jointly)
- Begins to phase out at higher income levels
This change seeks to put more money back into the pockets of workers who regularly earn overtime.
2. New Tip Income Deduction
Another big provision allows many workers to deduct tip income up to certain limits on their federal taxable income. Reported tips from customers, like those earned by servers, bartenders, and hairstylists, can now be deducted up to set annual limits for taxpayers who meet eligibility rules.
This is often referred to in headlines as the “no tax on tips” change, though tips still must be reported on tax forms.
3. Expanded Standard Deduction
The standard deduction amounts, the default deduction most people take instead of itemizing, increased for 2025 filings, giving most taxpayers more room to reduce taxable income without itemizing.
Higher standard deductions mean more filers can benefit without keeping detailed expense records, which simplifies filing for many households.
4. Higher Child Tax Credit
The Child Tax Credit has increased slightly for 2025 tax returns, offering additional support for families with qualifying children under age 17.
This change can result in a larger credit for eligible families, which directly reduces the amount of tax owed.
5. Increased SALT Deduction Cap
The limit on the state and local tax (SALT) deduction, which many taxpayers previously could only deduct up to $10,000, has been substantially raised under recent tax law changes.
This can benefit homeowners and taxpayers in high-tax states by allowing more SALT expenses to be deducted for those who itemize.
6. New and Expanded Deductions for Seniors
Taxpayers age 65 and older may qualify for a new additional deduction of up to $6,000 (or $12,000 if both spouses qualify) on federal returns.
This deduction is available even if you don’t itemize and is designed to reduce taxable income for eligible older filers.
7. Adoption and Other Credit Adjustments
Some credits have been adjusted for inflation or expanded. For example:
- The adoption credit amount has increased to reflect higher qualified expenses.
- Credits like the Earned Income Tax Credit (EITC) are indexed annually, which can mean more benefit for certain taxpayers.
These adjustments can make a meaningful difference for families and qualifying taxpayers.
8. IRS Tools and Filing Season Changes
The IRS has released updated tools and guidance in preparation for the 2026 filing season, and they remind taxpayers of important dates like the April 15 deadline. The agency also provides resources to help with filing, such as online tools, calculators, and frequently asked questions. Please feel free to check out the IRS website.
Final Thoughts
These changes reflect one of the most comprehensive updates to the tax code in recent years. From new deductions for overtime and tips to increased standard and child tax credits, the 2026 filing season will look different for many taxpayers. Staying informed before you file helps you make better decisions and avoid missed opportunities.
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