What’s New for Filing Taxes in 2026?

2026 Tax Filing Season Updates (For 2025 Income)

The 2026 tax filing season covering 2025 income includes major changes from the One Big Beautiful Bill Act that affect deductions, credits, reporting rules, and how refunds are handled.

These updates can significantly change taxable income and refund timing, making it important to understand what’s new before filing.

All federal tax rules are administered by the Internal Revenue Service.

When the 2026 Filing Season Runs

The filing season opens in late January 2026 and runs through April 15, 2026, unless extended.

Taxpayers who file electronically and choose direct deposit generally receive refunds faster—if all information is correct.

Key 2026 Tax Updates (Based on 2025 Income)

Standard deduction increase:
The standard deduction rises again, reducing taxable income for most filers.

• Married filing jointly: $32,200
• Single filers: $16,100

Example: A married couple earning $120,000 lowers its taxable income to $87,800 by taking the standard deduction.

New tip and overtime deductions:
Eligible workers may deduct:

• Up to $25,000 in qualified cash tips
• Up to $12,500 in qualified overtime income

These deductions are subject to income limits and reporting rules.

Tip: This is especially helpful for service workers and hourly employees who rely on tips or overtime pay.

Senior “bonus” deduction:
Taxpayers age 65 or older may claim an additional $6,000 deduction on top of the standard deduction.

Example: A single filer over 65 could reduce taxable income by more than $22,000 when combining both deductions.

Child Tax Credit increase:
The Child Tax Credit increases to $2,200 per qualifying child.

Tip: A portion of the credit may be refundable, potentially increasing your refund even if you owe little tax.

SALT deduction cap increase:
The state and local tax (SALT) deduction cap increases to $40,000 for taxpayers who itemize.

Example: A homeowner paying $30,000 in property and state income taxes may now deduct the full amount instead of being limited to $10,000.

1099-K reporting threshold:
Payment platforms such as PayPal, Venmo, and Etsy will issue Form 1099-K only if:

• Payments exceed $20,000, and
• There are more than 200 transactions

This reduces reporting for casual sellers and side hustles.

Digital asset reporting:
Taxpayers must report all transactions involving digital assets, including cryptocurrency and NFTs, and must answer the digital asset question on Form 1040.

Tip: Even small crypto transactions can create reporting obligations, so keeping accurate records is essential.

Direct deposit refund rules:
The IRS will now freeze refunds if direct deposit information is missing, incorrect, or rejected, rather than immediately mailing a paper check.

Tip: Double-check routing and account numbers before filing to avoid refund delays.

Why These Changes Matter

These updates affect:

• How much income is taxable
• Whether itemizing deductions makes sense
• Refund timing and processing
• Reporting requirements for side income and digital assets

Example: A tipped worker who qualifies for the new deduction may see a much lower taxable income than in prior years.

Practical Recommendation: File Electronically 💻

Electronic filing is strongly recommended for the 2026 tax season.

Electronic filing helps by:

• Automatically applying new deductions and credits
• Reducing math and reporting errors
• Flagging missing or invalid direct deposit details
• Speeding up refunds when information is accurate

Tip: Tax software is especially useful this year due to new deductions for tips, overtime, seniors, and expanded SALT limits.

Final Thoughts

The 2026 tax filing season introduces expanded deductions, higher credits, and stricter refund handling rules.

While many taxpayers will benefit from lower taxable income, accuracy is more important than ever—especially for tips, overtime, and digital asset reporting.