New Tax Law Changes for 2026: What Changed
OBBBA reshaped 2026 taxes: a higher standard deduction, new deductions for tips, overtime, and seniors, a raised SALT cap, and more.
Tax law changes are easier to handle when someone translates them into plain language. The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, made the 2017 tax cuts permanent and added a set of new deductions that take effect for 2026 — the tax year you will report on the return you file in early 2027. Here is what changed, in practical terms.
The 2026 Standard Deduction
The standard deduction for 2026 is $16,100 for single filers, $32,200 for married couples filing jointly, and $24,150 for heads of household. If you do not itemize, this amount is claimed automatically, so it is the starting point of nearly every individual return.
New Deductions for 2026
OBBBA created several new deductions that can directly reduce taxable income for 2026. Workers can deduct up to $25,000 of tips and up to $12,500 of overtime pay. Taxpayers can deduct up to $10,000 of interest on car loans, and taxpayers age 65 and older can claim an additional deduction of up to $6,000.
The SALT Cap Is Raised
The deduction for state and local taxes (SALT) was capped at $10,000 for years. For 2026, that cap rises to $40,400. If you itemize and pay significant state and local taxes, this change can meaningfully lower your taxable income.
Other Changes Worth Knowing
A new charitable deduction is available even if you do not itemize: up to $1,000 for single filers or $2,000 for joint filers. For businesses, 100% bonus depreciation is now permanent, making it easier to deduct the full cost of qualifying equipment in the year it is placed in service. The reporting threshold for Form 1099-NEC and 1099-MISC is now $2,000, so businesses that pay contractors should review their reporting before year-end. And the estate and gift tax exemption is $15 million per individual starting in 2026.
Tax Rates Stay the Same
One thing did not change: federal tax rates remain at 10% to 37%. Only the income thresholds for each bracket move with inflation.
Make the New Rules Work for You
New deductions only help when they are claimed correctly, with the documentation to support them. The Queens Financial Group team tracks IRS changes and prepares returns that take advantage of every deduction you qualify for — for individuals and business owners alike. Contact us today for help with your filing, and let us make the 2026 rules work for you.
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