What’s New for Tax Year 2026

These are changes for income earned in 2026, the return you generally file in 2027.

Reviewed October 15, 2026. Federal overview only. Massachusetts can treat these items differently; ask us before planning around them.

A larger standard deduction

For 2026, the basic standard deduction is $16,100 for single or married-filing-separately taxpayers, $32,200 for married couples filing jointly, and $24,150 for heads of household. Additional amounts can apply for age or blindness. A higher deduction does not mean every return will produce a larger refund.

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Charitable giving for people who do not itemize

Beginning in 2026, eligible cash contributions to certain qualified organizations may be deductible up to $1,000, or $2,000 on a joint return, even if you take the standard deduction. Keep donation records. Gifts to individuals do not qualify.

Deductions that continue from 2025

The temporary deductions for qualifying tips, overtime, seniors, and qualifying personal vehicle loan interest generally continue through 2028. They have income limits and eligibility rules. They are not a blanket exemption from tax on all tips, all overtime, Social Security, or car payments. Payroll taxes can still apply.

Overtime: the premium is the starting point

The qualified overtime deduction concerns the eligible premium above regular pay required by the Fair Labor Standards Act. It does not automatically cover the whole overtime paycheck or every payment an employer calls overtime. Retain employer reporting and pay records.

Energy credits: old articles may lead you astray

The federal home improvement credit under section 25C ended for property placed in service after December 31, 2025. The residential clean energy credit under section 25D ended for expenditures after that date. New and used clean vehicle credits generally ended for vehicles acquired after September 30, 2025. Timing and transitional rules matter; do not assume an old article still applies to a 2026 purchase.

State and local taxes: the cap rises again

For 2026, the federal SALT deduction cap is $40,400, or $20,200 if married filing separately. The cap is reduced above modified AGI of $505,000, or $252,500 for separate filers, with a floor of $10,000 or $5,000 respectively. This is an itemized deduction, not a credit or a deduction available in addition to the standard deduction.

Itemized charitable gifts have a new floor

Starting in 2026, itemizers generally deduct qualifying charitable contributions only to the extent they exceed 0.5% of AGI. That is a separate rule from the new deduction for eligible cash gifts by non-itemizers. Review the timing and documentation of larger gifts.

Retirement contribution limits increase

The 2026 employee contribution limit for 401(k) plans rises to $24,500, and the IRA contribution limit rises to $7,500. Eligibility, income limits, and catch-up rules still need review. A contribution limit does not mean the entire contribution is deductible.

Senior deduction: check eligibility, not just age

For 2026, the additional senior deduction can be up to $6,000 per eligible person age 65 or older. Income limits and other eligibility rules apply. It is a deduction, not a blanket exemption for Social Security benefits. IRS senior deduction guidance.

Dependent care and HSA limits

For 2026, the dependent care assistance exclusion increases to $7,500, or $3,750 for married employees filing separately. Employer-plan and other eligibility rules still apply. IRS dependent care correction.

The 2026 HSA contribution limits are $4,400 for self-only coverage and $8,750 for family coverage. Your eligibility, coverage months, and any catch-up contribution need separate review. IRS Revenue Procedure 2025-19.

Business payments and 1099 reporting

For certain business payments made in 2026, the reporting threshold for Forms 1099-NEC and 1099-MISC rises to $2,000. This does not apply to every type of payment or change whether income is taxable. Keep complete income records even if you do not receive a form. IRS Publication 15, 2026 reporting changes.

What to do before the year ends

Tell us about a job change, retirement, business income, tips or overtime, a new vehicle loan, or changes in dependents. Review withholding and estimated payments rather than waiting to see the result at filing time.

IRS: 2026 SALT cap · IRS: 2026 charitable deduction rules · IRS: retirement limits

Official sources

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