Tax Law Changes and Your Guide to Filing Taxes in 2026

Take a closer look at each of the 2025 tax year OBBB provisions, since these directly shape how you’ll prepare and file your federal tax returns in early 2026.

Tax laws change often, but your confidence when filing shouldn’t budge. 

The key? Knowledge. As you head into this year’s tax return prep, we’re here to crystalize and simplify everything you need to know. This guide explains when to file, how to prepare, and what to expect in light of many new – and major – tax changes.

Key Takeaways

• The 2026 tax season brings changes that impact all taxpayers, due to the One Big Beautiful Bill Act – many of which will reshape how you prepare your own 2025 tax returns.
  
• Your filing approach in 2026 depends heavily on your unique situation. Go into tax prep fully aware of your employment status, income type(s), state tax environment, family structure, age, 2025 expenditures, and current assets.
  
• Planning matters more now than ever. Gather key forms early, get to know which old deductions or credits still apply to you, and learn how new tax changes can benefit you as you wrap up tax year 2025 and plan even more strategically for the future.

The best part is you don’t need to memorize every detail here to fearlessly file your tax returns. Meet with a TurboTax Expert who’s ready to prepare your taxes for you in a day or less.

Before diving into the newest tax law changes and their implications for your finances, let’s quickly cover the basics. 

When and how to file your 2025 tax returns

You can file your 2025 tax returns as soon as the IRS begins accepting prepared filings – typically, the last week of January. However, you don’t need to wait until then to prepare your 2025 tax filing. TurboTax helps many people prepare tax filings weeks before the official open date. 

The deadline to file your 2025 federal tax returns is Wednesday, April 15, 2026.

What is the standard deduction for 2025 and 2026 tax returns? 

Nearly 90% of taxpayers use the standard deduction, according to the most recent IRS data. For 2025 and 2026 tax returns, the inflation-adjusted standard deductions are:

Filing Status	2025 Tax Year Standard Deduction	2026 Tax Year Standard Deduction
Single; Married Filing Separately	$15,750	$16,100
Married Filing Jointly; Qualifying Widow/Widower	$31,500	$32,200
Head of Household	$23,625	$24,150

Knowing the standard deduction for your filing status helps you decide whether to go that route – or to itemize for potentially more savings.

What are the key tax law changes and the tax implications?

• The OBBBA introduces major changes starting in 2025. Key updates include: 
• New car loan interest deductions for some taxpayers on qualified purchases
• Increased standard deductions 
• Permanency for previously-expiring income bracket rates
• Relief for taxpayers in states with higher tax rates via revised State and Local Tax deduction limits (SALTs) 
• No tax on certain qualified tips and overtime for many workers 
• Big breaks for seniors, like a $6,000 deduction 
• A larger child tax credit 
• Enhanced credits for adoptions that allow part of the credit to be refundable

Major Tax Changes Under the OBBBA for Your 2025 Return

Now, let’s look more closely at the OBBB’s major retroactive adjustments – those that apply to your 2025 tax filing. 

Permanence for income bracket rate freezes

Tax brackets refer to the ranges of taxpayer income that determine that person’s tax rate. 

In the past, these ranges were frozen, but the tax rate could change. That hurt, because if you began receiving more compensation to offset inflation, you could be taxed at a higher rate. But under OBBBA, this is reversed: the thresholds may now flex to account for inflation while the tax rates themselves won’t creep up.  Now you get to keep more of your inflation-adjusted (and merit!) pay raises.

So as you prepare for 2025’s tax filing (coming up in early 2026), use your filing status to figure out where your taxable income falls within the ranges below.

Tax Rate	Single Filers	Married Filing Jointly (MFJ) / Qualifying Widow(er)	Married Filing Separately (MFS)	Head of Household
10 %	$0 – $11,925	$0 – $23,850	$0 – $11,925	$0 – $17,000
12 %	$11,926 – $48,475	$23,851 – $96,950	$11,926 – $48,475	$17,001 – $64,850
22 %	$48,476 – $103,350	$96,951 – $206,700	$48,476 – $103,350	$64,851 – $103,350
24 %	$103,351 – $197,300	$206,701 – $394,600	$103,351 – $197,300	$103,351 – $197,300
32 %	$197,301 – $250,525	$394,601 – $501,050	$197,301 – $250,525	$197,301 – $250,500
35 %	$250,526 – $626,350	$501,051 – $751,600	$250,526 – $375,800	$250,501 – $626,350
37 %	$626,351+	$751,601+	$375,801+	$626,351+

Relief for taxpayers in states with higher tax rates via revised SALTs 

If you itemize and live in a state with high state and local taxes (SALTs), the OBBBA brings highly relevant changes to your 2025 tax return:

• Higher deduction cap: Deduction cap increases from $10,000 to $40,000 for joint filers.
• Indexed the cap: OBBBA allows this limit to increase at a rate of 1% per year through 2028.
• Income limits clarified: Full benefits are available to single filers and married couples filing jointly with income up to $500,000-$600,000; married filing separately must be below $250,000 to qualify.
• Expiration date: These benefits will sunset in 2029 unless new legislation extends them.
  

State and local taxes are now among the most significant factors in deciding whether to itemize or take the standard deduction. So to get the most mileage from your deductions, read up on the SALT provision basics before preparing your 2025 tax returns. 

No tax on tips and overtime for many workers

For tax years 2025-2028, many workers can deduct up to $25,000 in qualified tips and premium overtime pay. This isn’t an exemption or credit; it’s a straightforward deduction for:

• Qualified tips earned in traditionally tipped occupations (like restaurant servers, bartenders, salon workers, and some delivery drivers).
• Premium overtime, meaning time-and-a-half pay for hours worked beyond 40 in a week under federal labor rules. 

All tips and overtime income must still be reported to employers and the IRS, and regular payroll and state taxes still apply. The deduction phases out for higher earners, starting at $150,000 for individuals and $300,000 for married couples filing jointly.

Bigger reductions for seniors

People ages 65+ enjoy an expanded benefit when preparing their 2025 tax returns: an additional $6,000 per person deduction. This deduction is set to expire after 2028 and phases out for taxpayers earning more than $75,000 (single) or $150,000 joint. It is separate from standard/itemized deductions and is available to taxpayers who use either method to calculate their other deductions.

Expanded child tax credit

For your 2025 tax return, the Child Tax Credit (CTC) has been increased from $2,000 to $2,200 per qualifying child (under age 17 with a valid Social Security number) and is now indexed for inflation. Individual filers who make over $200,000 (and joint filers whose income is over $400,000) will see less of this credit as it phases out for the country’s highest earners.

Partially refundable adoption credits

The OBBBA didn’t increase the federal Adoption Tax Credit, but it made it partially refundable. In 2025, the maximum credit amount is $17,280, up from $16,810 in 2024 due to inflation indexing.  However, what has changed is the new refundable amount ($5,000) for families who owe little or no income tax. 

Imagine it this way: Say you adopt an eligible child in 2025, but after all deductions and adjustments, you only owe $1,000 in taxes as you file. The new partially refundable Adoption Tax Credit law allows you to receive $4,000 back from the IRS. The remaining $12,280 of the credit is nonrefundable, which means it’s used to offset your gross income or carried forward under existing rules.

Many families in the middle- to low-income categories will take advantage of this benefit to expand their families, since those groups are often the people who owe little or no federal taxes.

New car loan interest deductions

Under OBBBA, you can now deduct up to $10,000 per year of interest paid on qualifying auto loans. Details:

• Only passenger cars, minivans, SUVs, pickups, vans, or motorcycles under 14,000 pounds qualify.
• Qualifying vehicles only include new rides that are purchased originally – not used or leased.
• The vehicle must be used for personal purposes, not to earn income or loan out.
• The final assembly of the vehicle must have been in the United States.
• You’ll need to keep all documentation to prove the purchase qualifies.

The deduction phases out above $100,000 for single filers ($200,000 for joint).

What are some other adjustments to key amounts that impact my taxes?

A few other changes you should know about include:

• The expiration of the new and used Clean Vehicle Credits. If you purchased a new or used electric vehicle anytime before September 30, 2025, you can still take advantage of this credit. It allows a credit of up to $7,500 for new and $4,000 for used clean energy vehicles, but only if the purchase was made before the cutoff date.
• The expiration of non-taxable student loan debt. This will be the last year you won’t receive a Form 1099-C to report the federal income on your forgiven amount of student loan debt.  Beginning in 2026, the amount of your loan forgiven will be considered taxable federal income.   The ability to deduct up to $2,5000 of student loan interest remains unchanged for single filers whose income is $100,000 and joint filers with income under $200,000.
• Upcoming changes to deductions for charitable donations. Starting in 2026, big givers who itemize may not get the same benefits as they used to on large, bunched, or front-loaded donations due to the introduction of “floors” and “ceilings”.  However, taxpayers who take the standard deduction will once again be able to deduct a portion of the cash they donate to qualified charitable organizations. 

If you’re a business owner, you should familiarize yourself with the following changes under OBBBA, as well, as they impact how you’ll file your 2025 tax returns in early 2026:

• The 100% bonus depreciation provision has been reinstated and expanded. This means that for the year 2025, you can enjoy full first-year expensing on qualifying capital expenditures (applying to both new and used property) in the year that the property is placed in service.
• You can now expand or change benefit plans and get more favorable tax treatment. For example, you can opt for first-dollar telehealth coverage (meaning no deductible) under High Deductible Health Plans (HDHPs) without sacrificing the employees’ eligibility for Health Savings Accounts (HSAs). And if you’ve already offered these perks, then great news: the new benefits are retroactive to January 1, 2025.
• New W-2 reporting begins for 2026. Employers must report qualified tips, qualified overtime, and employee occupation codes for tipped employees .
• The pre-2021 requirements for third party settlement organizations (TPSOs) have been reinstated with the passing of the OBBBA. This means that from now on, PTSOs must only issue a Form 1099-K if their payee’s gross yearly payments exceed $20,000 and there are over 200 transactions. (They may still send you a 1099-K voluntarily if you’re under these thresholds, but they’re not obligated to do so).
• Domestic R&D (research and development) costs can now be deducted immediately instead of amortized over years. 

What else should I look out for when filing my taxes?

To maximize your savings and avoid overpaying, you should also look for soon-to-expire benefits as well as the ones that don’t take effect until tax year 2026. With this knowledge, you can strategically spend or save immediately (in the weeks before 2026 begins). These moves may further reduce your tax burden..

Soon-to-Expire deductions and credits

Look beyond the newly created tax provisions, and familiarize yourself with the credits and deductions that are expiring. The OBBBA accelerated the retirement of a number of tax laws you should know. 

For example, The Energy Efficient Home Improvement Credit and the Residential Clean Energy Property Credit still apply for improvements placed in service by December 31, 2025. These credits may still reduce your federal taxes this year. 

Tax laws that take effect in 2026 or have new permanency under OBBBA

Another thing to look for is the OBBBA changes that take effect starting in 2026. For example, Trump Accounts and new dependent-care FSA limits promise to be great resources for those who take advantage of the perks.

Additionally, the OBBBA has increased and made permanent the “unified” exemption for gifts and estate, so there’s now no pressure to rush big gifts.

To get the most out of these federal breaks, you’ll need to think ahead and plan, earn, invest, save, and spend strategically going into the new year.

Finally, keep a list of any opportunities you learn about but didn’t enjoy because you didn’t know. Because in the coming year, you can set yourself up for a more fruitful (and we’d even say fun) tax filing next year.

What tax forms and documents should I gather?

What you’ll need on hand for your tax return filing depends on a variety of elements, but one deciding factor is whether you’ll be itemizing your deductions. So to gather the right documentation, know which of the new provisions (and enduring deductions/credits) can be combined with the standard deduction and which require itemizing. 

Some, like the tips deduction, student loan interest, and senior deduction, apply to all taxpayers, no matter which route you take. Others, such as SALT provisions and charitable giving benefits, apply only to certain groups. 

Here’s a list of the documents you may need to get started. 

• W-2: employer-provided form if you earned wages this year
• 1099-NEC: what you receive from your client to report your nonemployee income if you were contracted or performed gig work as a self-employed worker. You’ll use the information on this form to populate your Schedule C (Form 1040), the actual document that will be filed.
• Form 1099-G if you collected unemployment benefits from your state this year.  This form also reports state tax refunds received this year, which may be taxable income for some taxpayers.
• 1099-DIV/1099-INT: to report income from bank and brokerage accounts, as well as investments, including qualified dividends and capital-gain distributions
• 1099-MISC: for reporting rental income, royalties, awards, etc.
• 1099-B: to report sales of stocks, bonds, mutual funds,ETFs and proceeds from broker and bartering exchanges.
• 1099-K: you may receive this to help you report income from platforms like Etsy, PayPal, Stripe, etc.
• 1099-R: distribution information that applies to income from pensions, IRAs, 401(k)s, and annuities
• 5498: reports how much you contributed to your IRA in 2025 as well as the Fair Market Value (FMV) at the end of the tax year and other helpful information related to your IRAs.  This form often arrives after the initial tax filing deadline, since that is also the deadline to make contributions.  This form provides some valuable information, but it isn’t entered on your tax return.  You don’t need to wait to file your taxes until you’ve received this document.
• 1098-T and 1098-E: tuition statement and document showing student loan interest, respectively.

Big tax overhauls like this don’t happen often. While the OBBBA changes will shape how you file your 2025 return, they also open up new opportunities as you earn and plan throughout the 2026 tax year.

You don’t have to navigate any of it alone. TurboTax can guide you through simple, step-by-step questions to make sure you get every credit and deduction you’re eligible for. Prefer hands-on help? A TurboTax Expert can prepare, sign, and file your return for you. Either way, you can file with confidence, even as the rules continue to evolve.