Navigating the 2026 Tax Changes — What the New Law Means for You

The One Big Beautiful Bill Act (OBBBA), signed on July 4, 2025, rewrote a large part of the individual tax code. Some changes took effect for 2025 returns. Others start with tax year 2026, the return you'll file in early 2027.

This guide walks through the changes most likely to affect your 2026 return. It also flags which ones are permanent and which are set to expire, so you can plan more than one year ahead.

Tax brackets are now permanent

The seven federal rates of 10%, 12%, 22%, 24%, 32%, 35% and 37% were scheduled to expire after 2025. OBBBA made them permanent. The income ranges for each bracket still adjust for inflation every year.

Here are the 2026 thresholds for the two most common filing statuses:

Rate	Single (2026)	Married filing jointly (2026)
10%	Up to $12,400	Up to $24,800
12%	$12,400 to $50,400	$24,800 to $100,800
22%	$50,400 to $105,700	$100,800 to $211,400
24%	$105,700 to $201,775	$211,400 to $403,550
32%	$201,775 to $256,225	$403,550 to $512,450
35%	$256,225 to $640,600	$512,450 to $768,700
37%	Over $640,600	Over $768,700

A bigger standard deduction

OBBBA also made the higher standard deduction permanent and raised it. For 2026, it is $16,100 for single filers and married people filing separately, $24,150 for heads of household, and $32,200 for married couples filing jointly.

Say you're single and earn $60,000 in wages with no other adjustments. The first $16,100 isn't taxed, so your taxable income is $43,900 before any other deductions.

Four new deductions (2025 through 2028)

The law created four new deductions. You can claim them whether you itemize or take the standard deduction. All four are temporary: they apply for tax years 2025 through 2028.

Qualified tips. Up to $25,000 a year for tips received in an occupation the IRS lists as customarily receiving tips. The deduction phases out above $150,000 of modified adjusted gross income (MAGI), or $300,000 for joint filers.
Qualified overtime. Up to $12,500 a year ($25,000 for joint filers). Only the premium portion counts: the "half" in "time-and-a-half" required by the Fair Labor Standards Act. It phases out above $150,000 of MAGI ($300,000 joint).
Car loan interest. Up to $10,000 a year of interest on a loan taken out after December 31, 2024, to buy a new personal-use vehicle whose final assembly happened in the United States. You must report the vehicle's VIN. It phases out above $100,000 of MAGI ($200,000 joint).
Seniors. An extra $6,000 for each person who is 65 or older by the end of the year ($12,000 for a married couple who both qualify). This is on top of the existing additional standard deduction for seniors. It phases out above $75,000 of MAGI ($150,000 joint).

For the tips, overtime and senior deductions, you need a valid Social Security number on the return, and married couples must file jointly.

A higher SALT cap, for now

If you itemize, the cap on deducting state and local income, sales and property taxes (SALT) rose from $10,000 to $40,000 for 2025. For 2026, it is $40,400 ($20,200 if married filing separately).

The cap shrinks once your MAGI is above $505,000 in 2026 ($252,500 if married filing separately), but it never drops below $10,000 ($5,000 if married filing separately). The higher cap applies for 2025 through 2029, then reverts to $10,000.

Child Tax Credit

The Child Tax Credit is $2,200 per qualifying child for 2026, and up to $1,700 of it is refundable. The higher amount is now permanent and adjusts for inflation. A new rule also requires the filer to have a valid Social Security number; on a joint return, only one spouse needs one. Our Child Tax Credit guide covers eligibility in detail.

Charitable giving if you don't itemize

Starting in 2026, people who take the standard deduction can deduct up to $1,000 of cash gifts to eligible charities ($2,000 for married couples filing jointly). This is permanent. Only cash counts: donated clothing, stock or other property doesn't, and gifts to donor-advised funds and supporting organizations are excluded.

If you do itemize, a new floor also starts in 2026: your charitable contributions count only to the extent they exceed 0.5% of your contribution base.

Form 1099-K goes back to $20,000

Payment apps and online marketplaces must send a Form 1099-K only when your payments for goods or services exceed $20,000 and you have more than 200 transactions. That restores the threshold that applied before 2021.

The reporting threshold doesn't change what's taxable. If you sell goods or services, you must report all of that income whether or not you get a form. Separately, for payments made after December 31, 2025, the threshold for businesses to issue Forms 1099-NEC and 1099-MISC rises from $600 to $2,000.

What to do now

Check your withholding. The new deductions may mean too much tax is being withheld from your pay, or too little if your income has changed. The IRS Tax Withholding Estimator includes the new rules.
Keep records. Save pay stubs that show overtime premium pay, tip records, your car loan statements and the vehicle's VIN, and receipts for cash gifts to charity.
Revisit itemizing. With the higher SALT cap, some people who took the standard deduction in past years may now come out ahead by itemizing. Others won't. Run the numbers both ways.

When it's worth getting help

Most of these rules have income phase-outs, documentation requirements or both. If you earn tips or overtime, bought a car in the past two years, are 65 or older, or are close to the SALT phase-out range, a preparer can check which breaks you qualify for and how they interact. Our personal tax preparation team works with these rules every day, and you can book a time to talk whenever it suits you.

This article is general information, not advice for your specific situation.

Sources

General information, not tax advice. Tax rules change and depend on your situation. Figures are for tax year 2026 unless noted; confirm current amounts at IRS.gov or talk to a Stellar Tax professional before acting.