Filing Your Taxes in 2026: What’s Changed and What You Should Do Next

Key takeaways

• The standard deduction will likely save most 2026 filers more than itemizing
• Updated income rules mean tips and overtime could reduce taxable income for some workers
• Understanding which credits apply to you can matter more than how complicated your return is

Filing taxes can feel complicated, even when your situation isn’t. For the 2026 tax season, a handful of updates could change how much you owe or get back, depending on your income and filing situation — and what hasn’t changed — can help you file with more confidence and fewer surprises.

These updates matter most if you file with W-2 income, take the standard deduction, earn tips on overtime, own a small business, or live in a high-tax state.

What’s different for the 2026 tax season

The One Big Beautiful Bill Act (OBBBA) introduced changes that affect most taxpayers. How those changes impact you depends on your income, filing status, and life situation.

No need to memorize every new rule, focus on the areas where the biggest shifts happened.

How income brackets now work in your favor

Under OBBBA, income tax brackets are now indexed more consistently for inflation. Even modest raises or cost-of-living increases are less likely to push you into a higher tax bracket, which can help protect your take-home pay.

What that means for you:

• Raises and cost-of-living increases are less likely to push you into a higher tax bracket.
• You keep more of inflation-adjusted income instead of losing it to a bracket creep.

Your tax rate matters just as much as your income, and this change helps protect both. Use this tax reform calculator to see how these changes directly impact your situation.

If you live in a high-tax state

If you live in a high-tax state and itemize, you may be able to deduct more state and local taxes than in prior years. The State and Local Tax (SALT) cap was expanded and is indexed for inflation, which can make itemizing more worthwhile, especially if you have higher income or property taxes. These changes are temporary and scheduled to sunset in 2029, so timing and planning matter.

What this means for you: Choosing the wrong deduction can mean paying more than necessary, especially if your state and local taxes already take a larger bite.

This is most relevant if your state and local taxes alone push you close to — or past — the standard deduction. Find what option best fits your situation with this standard vs itemized tax deductions calculator.

If you earn tips on overtime, this may lower your taxable income

For certain workers, qualified tips and premium overtime pay may now be deductible.

This doesn’t eliminate reporting requirements — income must still be reported — but it can reduce taxable income for eligible workers below certain income thresholds.

What this means for you: If you work in a tipped or overtime-heavy role, this change could directly affect your take-home pay.

If you’re over 65, you may qualify for an extra deduction

Taxpayers age 65 or older may be eligible for an additional deduction on top of the standard or itemized deduction. 

This benefit phases out at higher income levels, but for many retirees and near-retirees, it can meaningfully reduce taxable income.

How family credits changed and who benefits most

Some family-focused credits were expanded or adjusted, including:

• A higher Child Tax Credit
• Adoption credits that are now partially refundable for eligible families

What this means for you: These credits can reduce your tax bill — and in some cases increase your refund — depending on income and household structure.

If you bought a new car in 2025, this deduction may apply

Interest paid on certain new auto loans may now be deductible, subject to income limits and vehicle requirements.

What this means for you: The deduction phases out for higher earners and only applies to qualifying purchases, but for eligible buyers, it can offset some borrowing costs.

What business owners should know before filing

If you’re self-employed or own a business, a few rule changes could affect cash flow and timing this year:

• Immediate expensing of certain capital investments
• Restored R&D deductions
• Updated reporting rules for platforms and third-party payments

These updates can affect cash flow, planning, and compliance — especially if you experienced growth in 2025. For example, changes to expensing rules can affect how and when you deduct major purchases, which can directly impact cash flow during the year.

What tax forms and documents should I gather?

Your individual situation determines what you’ll need, but common documents include:

• W-2s or 1099s for income
• Forms reporting investments, unemployment, or retirement distributions
• Records for deductions or credits you plan to claim

Having these ready early makes filing faster and more accurate.

How to file with confidence

You don’t need to navigate these changes alone. TurboTax helps you account for new rules, apply credits correctly, and understand how changes affect your return so you can file with clarity instead of guesswork.