The 2026 tax filing season is officially here with some of the most substantial updates for taxpayers in recent history. Due to a major legislative package known as the One Big Beautiful Bill Act, millions of Americans are eligible for a much larger refund this year. These changes were designed to provide relief by expanding credits and introducing brand new deductions that were not available in the past. If you are preparing your return now, understanding these new rules could lead to a significantly higher payout from the government.
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Increased Standard Deductions for All Filers
One of the most impactful changes for the current tax year is the increase in the standard deduction. Nearly nine out of ten taxpayers choose this option because it is simpler than listing every individual expense. For the 2025 tax year that we are filing for now, the amount for married couples has jumped to $31,500. This higher threshold means that a larger portion of your income is completely shielded from federal taxes, which naturally helps increase the final amount you get back.
No Tax on Tips and Overtime Pay
Workers who earn a living through tips or overtime are seeing some of the biggest benefits in the new law. For the first time, people in qualified service occupations can deduct up to $25,000 in cash tips from their taxable income. Additionally, a new deduction for overtime pay allows workers to deduct the premium portion of their time and a half earnings. This means that if you worked long hours to support your family last year, a significant part of that extra pay might not be subject to federal income tax at all.
Huge Benefits for Seniors and Car Owners
The government has introduced specialized support for older Americans and people who purchased new vehicles. Taxpayers who are at least 65 years old can now claim an additional $6,000 deduction on top of the standard amounts. Furthermore, if you bought a new car for personal use that was assembled in the United States, you may be able to deduct up to $10,000 in loan interest. This is a rare benefit because car loan interest is usually not deductible for personal vehicles, making it a valuable win for new buyers.
Quadrupled SALT Deduction for Homeowners
For those who live in states with higher local taxes, the state and local tax deduction cap has been raised significantly. Previously capped at $10,000, the new limit is now $40,000 for married couples filing jointly. This change is specifically helpful for homeowners who pay substantial property taxes and state income taxes throughout the year. By allowing a much larger portion of these local payments to be subtracted from your federal taxable income, the new law provides much needed relief for residents in high tax areas.
Comparison of 2026 Tax Deduction Changes
This table provides a quick look at the old limits versus the new benefits available for the current filing season.
| Tax Category | Previous Limit | New 2026 Benefit |
| Standard Deduction (Married Joint) | $29,200 | $31,500 |
| Standard Deduction (Single) | $14,600 | $15,750 |
| SALT Deduction Cap | $10,000 | $40,000 |
| Senior Deduction (Age 65+) | $1,550 | $6,000 |
| Tip Income Deduction | $0 | Up to $25,000 |
| Overtime Pay Deduction | $0 | Up to $12,500 |
| Car Loan Interest | $0 | Up to $10,000 |
Important Things to Keep in Mind
To ensure you get the maximum benefit from these new laws, remember these key points:
- Most of these new deductions are available even if you do not itemize your taxes.
- You must file your return electronically to receive your money in the fastest possible timeframe.
- Paper checks are no longer being sent out so you must have a bank account for direct deposit.
- The car loan interest deduction requires the vehicle to be assembled in the United States.
- Tipped workers must be in specific occupations listed by the IRS to claim the full deduction.
