12/31/2025
Major IRS tax changes for the 2026 tax year include new rules under the "One, Big, Beautiful Bill Act" regarding standard deductions and a potential deduction for tips and overtime, as well as the expiration of key provisions from the Tax Cuts and Jobs Act of 2017.
Key changes and updates for the 2026 tax year (filed in early 2027) include:
Expiring Provisions
Several significant provisions of the Tax Cuts and Jobs Act of 2017 (TCJA) are set to expire at the end of 2025, which will impact the 2026 tax year:
Individual Income Tax Rates: The current tax brackets are scheduled to change, potentially increasing rates for some taxpayers as pre-TCJA rates are reinstated.
Standard and Itemized Deductions: The increased standard deduction amounts are expected to revert to previous levels (adjusted for inflation), making itemized deductions more common for some taxpayers.
Estate and Gift Tax Exemptions: The current high exemption amounts for estate and gift taxes are set to be significantly reduced.
Child Tax Credit: The enhanced rules for the Child Tax Credit are expected to expire, changing the credit amount and refundability rules.
New Legislation & Adjustments
Recent legislation has introduced new rules and annual adjustments have been made for inflation:
Standard Deduction Increase: The "One, Big, Beautiful Bill Act" introduces a significant, separate increase to the standard deduction for qualifying seniors and working Americans.
Deduction for Tips and Overtime: New guidance provides for a deduction for qualifying tips and overtime compensation. A list of qualifying occupations is available from the U.S. Department of the Treasury.
Inflation Adjustments: The IRS has released the annual inflation adjustments for over 60 tax provisions for the 2026 tax year, which includes updates to tax rate schedules, retirement contribution limits (such as 401(k) and IRA limits), and other thresholds.
SECURE 2.0 Act: The Treasury and IRS have issued final regulations on provisions within the SECURE 2.0 Act, including new Roth catch-up contribution rules.
For official information and detailed guidance, you should consult the Internal Revenue Service (IRS) website or a qualified tax professional.