You may have heard that the 2026 tax season, which begins January 26, is the first to be impacted by President Donald Trump’s 2025 tax law, known by some as the “big, beautiful bill.”
New tax changes, from revamped credits and one less free filing option to updated 1099‑K rules and new schedules for special breaks, could affect whether you owe money or get a tax refund, and how quickly the IRS processes your return.
On that note, the IRS is still implementing the changes and updating systems amid budget and staffing pressures. So be prepared this filing season for longer wait times for phone assistance and potentially slower resolution if your return needs extra review.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more – straight to your e-mail.
Profit and prosper with the best of expert advice – straight to your e-mail.
In the meantime, here are eight key 2026 tax season changes to know before you file.
1. The standard deduction is bigger
The 2025 Trump tax bill, signed into law on July 4, 2025, makes the lower individual tax brackets from the 2017 Tax Cuts and Jobs Act (TCJA, from Trump’s first term as president) permanent. That means the seven federal income tax rates remain and range from 10% to 37%.
But for 2025 returns you’ll file this tax season, the standard deduction increased to about $15,750 for single filers, $31,500 for married couples filing jointly, and $23,625 for heads of household.
(Those numbers reflect the higher base TCJA amount plus the Trump tax bill 2025 boost and inflation adjustment.) For more information, see 2025 Standard Deduction Changes Under the Trump Tax Law.
2. The SALT cap has increased — for now
Speaking of the state and local tax deduction, the “big beautiful bill” raises the SALT cap from $10,000 to $40,000 for 2025 returns.
- The cap will increase by 1% annually through 2029. Phase‑outs begin for households with modified adjusted gross income (MAGI) over $500,000.
- Note: This expansion is temporary. After 2029, the SALT deduction cap is scheduled to revert to $10,000.
The higher cap will likely have the most significant impact on joint filers with high property‑tax bills in high‑cost housing markets. For many in that group, itemizing could now result in a bigger deduction than claiming the standard deduction.
For more information, see SALT Deduction: Three Things to Know.
3. Child tax credit amounts and rules have changed
Taxpayers with children see a modestly higher federal child tax credit (CTC) for 2025, along with some eligibility rule changes.
- For 2025 returns, the maximum child tax credit is $2,200 per qualifying child under age 17. That’s up $200 from last year and is subject to income limits.
- Up to about $1,700 of the credit can be refundable for eligible lower‑income families through the additional child tax credit, depending on earned income and other requirements.
Income‑based phase‑outs still apply. For most single filers, the CTC begins to phase out when MAGI exceeds $200,000. For most married couples filing jointly, it begins to phase out at $400,000, with the credit shrinking as income rises above those thresholds.
Co‑parents should coordinate which parent will claim each child for the year to avoid duplicate claims and processing delays.
To learn more, see Child Tax Credit 2025 and 2026: How Much Is It?
4. Older adults get a ‘senior’ bonus deduction
Beginning with the 2025 tax year and running through 2028, individuals age 65 and older may claim an additional $6,000 deduction on top of their standard or itemized deduction, subject to certain conditions.
- This “senior bonus” deduction phase-out starts at modified adjusted gross income (MAGI) of $75,000 for singles (and $150,000 for joint filers), and disappears once income exceeds $175,000 (single) or $250,000 (joint).
- The deduction requires a Social Security number valid for work and is not available to those filing as married filing separately.
For retirees living on Social Security, pensions, and IRA withdrawals, that extra $6,000 can significantly reduce taxable income. That’s especially when it’s combined with the higher standard deduction and the existing extra standard deduction for people over 65.
Note: Tax software should automatically calculate the amount once the date of birth is entered, but paper filers should check the age boxes and follow the form instructions.
To learn more, see How the New Senior Bonus Deduction Works.
5. There are several new deductions and a Schedule 1‑A
The 2025 Trump tax bill also introduces several new “above‑the‑line” deductions and organizes them on redesigned schedules.
A revamped Schedule 1 now works with a new Schedule 1‑A to capture adjustments to income created by the new tax law. That includes the new car‑loan interest deduction and targeted tax relief for qualified tip income and overtime pay.
- For 2025 through 2028, individuals may deduct interest paid on a loan used to purchase a “qualified vehicle,” subject to a $10,000 annual cap and strict requirements, including final assembly in the United States and other eligibility rules.
- This deduction is treated as an adjustment to income, meaning eligible borrowers can benefit even if they don’t itemize.
- For more information, see New Car Loan Interest Deduction: Which Buyers and Vehicles Qualify.
In addition, workers can claim new deductions for certain earnings: up to $25,000 of qualified tip income (subject to income phaseouts and specific occupation eligibility) and up to $12,500 of overtime pay for single filers ($25,000 fo joint filers), subject to income limits and qualifying work definitions.
These overtime pay and tip income amounts are generally claimed through the new schedules rather than directly on Form 1040, and they depend on accurate employer reporting of wages and tip income.
Note: For many filers who previously used only Form 1040, taking full advantage of these breaks may now require completing Schedule 1 and Schedule 1‑A. Expect your tax software or preparer to ask extra questions about car loans, tip reporting, and overtime pay in its income and deductions sections.
6. IRS Direct File is gone for 2026
After piloting a free Direct File tool in limited states for the past two filing seasons, the IRS is not offering Direct File for the 2026 tax season.
Taxpayers seeking free filing options must instead rely on IRS Free File (if eligible), commercial software (some exceptions may mean filing isn’t free), volunteer tax‑prep programs such as VITA and Tax Counseling for the Elderly (TCE), or paper forms (IRS Free Fillable Forms) to file 2025 federal tax returns.
Learn more: A Free Tax Filing Option Has Disappeared for 2026.
7. Casual sellers get 1099-K rule relief
Third‑party payment platforms remain a major source of information for the IRS. But the 2025 tax law backs away from the controversial $600 threshold for Form 1099‑K reporting.
Instead, the tax agency reverts to an old rule: platforms send a 1099‑K if you have more than $20,000 in gross payments and over 200 transactions in a year. That gives casual online sellers far more breathing room.
Some side‑gig workers and people who regularly use payment platform apps for business activity will still receive 1099‑Ks, and the IRS can compare those gross amounts to what’s reported on the return.
- Because a 1099‑K can also reflect non‑taxable reimbursements and sales at a loss, it helps to keep good records. Those records should separate actual taxable income from personal transfers and other non‑taxable amounts.
- Good records can help lower the odds of an IRS mismatch notice or make it easier to straighten things out if the tax agency flags a discrepancy.
See: Another 1009-K Rule Change for Your 2025 Taxes.
8. Small‑business owners see full expensing again
For 2025 returns,100% bonus depreciation (or full expensing) is available and can increase the deduction you claim for the year. However, the tax break only applies to qualified business equipment placed in service after January 19, 2025.
- Business owners should confirm the “placed in service” date for major purchases.
- The January 19 date, not when the equipment was ordered or paid for, determines how much can be expensed on the 2025 return.
How to get ready before you file
Given this mix of higher and new deductions, new schedules, and reworked rules, it makes sense to treat this filing season as more of a reevaluation rather than an automatic replay of last year.
- Check your withholding or estimated tax payments against the new tax brackets and deductions, gather any 1099‑K and new‑account forms, and confirm that you’re eligible to use your desired filing method.
- As mentioned, because the IRS is rolling out these changes while managing budget and staffing cuts, taxpayers should anticipate longer phone wait times and slower processing for returns that need human review.
The IRS advises not waiting until the last minute to file, responding promptly to legitimate IRS letters (beware of tax scams), and using online tools where possible can also help reduce friction and improve the odds of a timely refund, if you’re due one.
And, speaking of tax refunds…
As Kiplinger has reported, U.S. House of Representatives tax writers have said many filers could see 2026 refunds jump by roughly $1,000 under the new law if they claim every tax break they are entitled to.
Though, as always, whether a taxpayer receives a refund—and how much—will depend on their individual tax situation.