2026 tax season has several changes that are very measurable. Not all of them apply to everyone, but the ones that do, they can save real money. We compile the following list:
1. Standard Deduction Increases Significantly
Due to inflation adjustment and new tax rules, the standard deduction reaches a new high.
- Single filers: $15,750
- Married filing jointly: $31,500
- Head of household: $23,625
This means more income becomes automatically tax-free before any tax calculation begins. For many households, it is a direct reduction in taxable income.
2. SALT Deduction Cap Increases to $40,000
This is a major change for people in high-tax states (California, New York, New Jersey, and similar).
- Previous cap: $10,000
- New cap (2025 tax year): $40,000
- Phase-out: starts when MAGI exceeds $500,000 (gradual reduction)
If you usually take the standard deduction, this is the year you should re-check itemizing. Some people will find itemizing suddenly becomes worth it again.
3. Child Tax Credit Increases
The Child Tax Credit (CTC) increases to:
- $2,200 per qualifying child
- Up to about $1,700 may be refundable
Refundable means you may still get money back even if your tax owed is zero. Make sure the child has a valid SSN, and parents should coordinate who claims the child, duplicate claims can trigger delays.
4. Extra Deduction for Taxpayers Age 65 and Older
If you or your spouse is age 65 by the end of 2025, you may qualify for an additional deduction on top of the standard deduction.
- Maximum additional deduction: up to $6,000
- Income limit (single): below $75,000
- Income limit (married filing jointly): below $150,000
This can be meaningful for retirees living mainly on Social Security and pension income.
5. New Schedule 1-A, Auto Loan Interest, Tips, and Overtime Exclusions
A new form, Schedule 1-A, is used to claim several new exclusions or deductions.
- Auto loan interest (U.S.-assembled vehicles): deductible up to $10,000
- Tip income exclusion (eligible workers): up to $25,000
- Overtime pay exclusion (single filers): up to $12,500
These are straightforward on paper, but you still want clean documentation. This is where people often get sloppy.
6. 1099-K Reporting Threshold Relaxed
The widely discussed “over $600 must report” rule is not being applied here.
You will receive a 1099-K only if both conditions are met in the same year.
- More than $20,000 in transactions, and
- More than 200 transactions
This applies to platforms such as Venmo, PayPal, and eBay, and it gives casual sellers room to breathe.
7. 100 Percent Bonus Depreciation Returns for Small Businesses
For business equipment placed into service after January 19, 2025, small business owners may claim:
- 100 percent bonus depreciation (full deduction in the purchase year)
This can materially reduce taxable business income in the current year. It is one of those items where the savings can be very large if you have real equipment purchases.
8. Bracket Expansion Bonus, Real Numbers for 12 Percent and 20 Percent
Rates do not change, but thresholds increase. That means you can earn, withdraw, or convert more income before hitting a higher rate. Here are the concrete numbers and the percentage changes.
12 percent ordinary income bracket (top of bracket)
- Single: $47,150 (2025) to $48,500 (2026 est.), change +$1,350, about +2.9%
- Married filing jointly: $94,300 (2025) to $97,000 (2026 est.), change +$2,700, about +2.9%
If you do Roth conversions or controlled withdrawals, this extra room is not huge, but it is real, and it repeats year after year.
20 percent long-term capital gains bracket (threshold where 20 percent begins)
- Single: $518,900 (2025) to $534,000 (2026 est.), change +$15,100, about +2.9%
- Married filing jointly: $583,750 (2025) to $600,500 (2026 est.), change +$16,750, about +2.9%
This matters if you live off taxable accounts and you realize gains intentionally. A little more gain can stay at 15 percent instead of being pushed into 20 percent.
9. Retirement Contribution Limits Increase (This Can Be Large Savings)
These are not exciting, but for higher income households, the savings can be substantial because more income can be sheltered.
- 401(k) employee limit: $24,000
- IRA limit (Traditional or Roth): $7,500
- 401(k) catch-up (age 50+): $7,500
- IRA catch-up (age 50+): $1,000
If you are in a 24 percent bracket, every extra $1,000 sheltered is roughly $240 less federal tax today. People ignore small increments, then wonder why they missed easy savings.
10. A Practical Roth Conversion Bonus, Bigger Conversions at the Same Rate
This is not a new law by itself. It is a consequence of the bracket expansion above. If you do annual Roth conversions, your “same bracket” conversion room grows.
- Example, married filing jointly, the top of the 12 percent bracket rises from about $94,300 to about $97,000, that is about $2,700 more conversion room at the same marginal rate.
- Example, single, the top of the 12 percent bracket rises from about $47,150 to about $48,500, that is about $1,350 more room.
Over multiple years, this is how people reduce lifetime taxes. Not by one heroic move, but by repeating small, controlled moves in a predictable way.