“Change is the law of life. And those who look only to the past or present are certain to miss the future.” —John F. Kennedy
We’ve got another tax season arriving, and it’s going to be a doozy thanks to the varying changes brought about by the One Big Beautiful Bill Act.
Today, I want to cover the highlights for tax changes coming in 2026 and which ones will have the biggest impact on your return.
The 2026 tax brackets and standard deduction
All income thresholds moved upward (with an extra inflation bump to the 10 percent and 12 percent brackets). So, a slightly larger portion of your income is taxed at lower rates than it would have been otherwise.
The standard deduction also increased by 350 for single filers (to 16.1K) and by 700 for married couples filing jointly (to 32.2K).That’s in addition to the sizable boost that already took effect last year.
Itemizing
The SALT deduction cap has jumped to 40K, where it will remain through 2029 (with a yearly 1 percent increase for inflation).
This expansion opens the door for many high-income households (especially those in higher-tax states) to reconsider itemizing. There are a decent number of caveats with this. (Just shoot me a reply if this applies to you and you want to discuss them.)
With all of that said, if you have substantial property or state income taxes, 2026 is a year to consider revisiting your deduction strategy.
Deductions for tips and overtime
Beginning with tax year 2025 (the W-2s you’re receiving this month), qualifying workers can claim new federal deductions for overtime pay and tips.
For the overtime deduction, employees may deduct up to 12.5K of premium overtime pay (25K for joint filers). The tip deduction goes up to 25K per return, and applies only to qualified tips – those customarily earned and properly reported.
What will this look like on your tax return this year? Because the IRS hasn’t revised W-2 reporting for this change yet, as an employee, you’ll calculate the deduction using:
– Social Security tips in Box 7
– Monthly tip reports (Form 4070)
– Certain Box 14 disclosures
– Or Form 4137, if applicable
(Independent contractors can use receipts, POS reports, or tip logs.)
Family credits
Taxpayers age 65 and older may qualify for a refundable credit up to 6K, designed to offset rising costs. In typical credit fashion, it phases out at higher incomes.
Also, you can now permanently reduce your tax bill by up to 2.2K for every qualifying child with the Child Tax Credit. And even if you don’t owe any taxes, you could still receive a cash refund of up to 1.7K per child through the credit’s refundable portion.
Final thoughts
Because of these changes, most filers will either see a small tax cut (or at least gain new options worth reviewing) when they go to file their taxes this spring.
But the key is NOT waiting until spring to review those options. Let’s get a strategy session on the calendar now, so we have the time we need to make sure these updates are working for you.
