The “One Big, Beautiful Bill Act,” which became law last year, introduced major changes to the U.S. tax code that could increase your deductions and tax credits for the 2026 tax filing season.
Tax deductions decrease the amount of taxable income you report, while tax credits lower your tax bill dollar for dollar. Both are valuable tools for minimizing what you owe.
When filing your return, you have the option to choose between taking the standard deduction or itemizing your deductions. To determine which benefits you most, calculate your total itemized deductions. Compare that amount to the standard deduction available to you. Selecting the higher of the two will result in the greatest tax savings.
If you are eligible for tax credits, you can claim them regardless of whether you itemize your deductions or take the standard deduction.
The IRS will start accepting returns on Jan. 26, and the filing deadline is April 15.
Standard tax deductions have increased for the 2026 filing season, lowering the amount of taxable income for filers.
Here are the standard deductions under President Donald Trump’s tax and spending law, which he signed on July 4, 2025.
Taxpayers 65 and older can qualify for even larger deductions:
The state and local tax deduction quadrupled from $10,000 to $40,000 for tax years 2025 through 2029 for incomes under $500,000.
Filers in high-tax states may be more likely to switch from standard to itemize deductions with this increase.
Itemized deductions also include:
Child tax credits for this year increased from $2,000 to $2,200 per qualifying child. It is available to all eligible taxpayers, whether they take the standard deduction or itemize their deductions.
To qualify for this tax credit, the child must:
To qualify for the full amount of the child tax credit for each qualifying child, your annual income cannot exceed $200,000 or $400,000 if filing jointly. If your income exceeds this, you may be able to apply for a partial credit.
Income tax deductions for qualified tips and overtime are available for all eligible taxpayers. They are also available for self-employed individuals.
If a typical wage is $10 and overtime is $15, only the additional $5 can be added to the overtime deduction.
A new tax deduction allows taxpayers to deduct up to $10,000 in interest paid on a qualifying auto loan for vehicles assembled in the United States.
To qualify, your income muse be less than $100,000 a year as a single filer or $200,000 a year for joint filers. This deduction is available whether you itemize deductions or take the standard deduction. .
A qualifying vehicle includes a car, minivan, van, SUV, pickup truck or motorcycle that underwent final assembly in the United States and has a gross vehicle weight rating of less than 14,000 pounds.
For tax purposes, digital assets are considered property and not currency. Any income from digital assets, like cryptocurrency or NFTs, nonfungible tokens, is taxable.
Reporting requirements have changed this tax season. The IRS now requires brokers to file a new form, Form 1099-DA, which is designed to help ensure that investors are accurately reporting crypto-related transactions.
If you earn income through third-party apps or online marketplaces, those platforms are now required to issue Form 1099-K only if your total payments are over $20,000 and you completed more than 200 transactions on a single platform during the year.
However, even if you do not receive or are eligible for the 1099-K form, you are still required to report all taxable income earned on the platform.
