The federal government has made many tax changes through the OBBA bill that will be implemented in the 2025 tax year. The 2026 tax season is approaching fast, and taxpayers with tax responsibilities should be aware of the changes. The article covers new IRS rules for the 2026 tax season.
Many changes include typical annual inflation adjustments, while others come from new legislation. The individuals, small business owners, and self-employed individuals will all be affected by the changes.
New deductions, TCJA extension, and many others are coming into effect for the 2025 tax year. The federal income tax brackets for the 205 tax year and average adjustments were increased by 2.8%. To ensure you plan along with changes, you must understand the new changes and their effect.
What changes has new legislation brought for the 2026 tax season?
The One Big Beautiful Bill was signed into law on 04 July 2025 and brought the following changes to the tax provisions that will be effective from the 2026 tax season:
- The seven tax brackets 10%, 12%, 22%, 24%, 32%, 35%, and 37% have become permanent as the TCJA act was extended.
- The child tax credit under OBBA is increased to $2200 for the qualifying child, with an additional or refundable credit being the same $1700.
- The SALT Deduction limit is enhanced to $40,000 from $10,000 for married people filing a tax return jointly. But you should remember that the cap can be reduced if the income is over a certain threshold, such as:
| Filing status | MAGI threshold | SALT Deduction |
| Married filing jointly | <$500,000 | $40,000 |
| $500,000 – $600,000 | Reduced by 30% for every dollar over the limit, but not lower than $10,000 | |
| Above $600,000 | $10,000 | |
| Married filing jointly | <$250,000 | $20,000 |
| $250,000 – $300,000 | Reduced by 30% for every dollar over the limit, but not lower than $5,000 | |
| Above $300,000 | $5000 |
- The standard deduction for the 2026 tax season was increased along with the 2026 tax year, and the government also introduced an additional deduction for seniors, such as:
| Filing status | Standard deduction |
| Single/ Married filing separately | $15,750 |
| Married Filing Jointly | $31,500 |
| Head of Households | $23,625 |
| Additional deduction for seniors | $6000 (deduction phase-out on income over $75,000 for individuals, and $150,000 for joint filers) |
- The bill also introduced new tax deductions and exemptions, such as no tax on tips or overtime, etc.
- The bill expired the clean vehicle credits for vehicles bought after 30 September 2025.
What is the tax bracket for the 2026 tax season?
If you are planning to file the tax return in the 2026 tax season, you should know in what tax bracket you fall to know your taxable income. Here is the table of tax brackets and rates for the 2025 tax year:
| Tax Rate | Singles or Individuals/ Married filing separately | Married Filing Joint Returns | Head of Households |
| 10% | $0 – $11,925 | $0 – $23,850 | $0 – $17,000 |
| 12% | $11,925 – $48,475 | $23,850 – $96,950 | $17,000 – $64,850 |
| 22% | $48,475 – $103,350 | $96,950 – $206,700 | $67,850 – $103,350 |
| 24% | $103,350 – $197,300 | $206,700 – $394,600 | $103,350 – $197,300 |
| 32% | $197,300 – $250,525 | $394,600- $501,050 | $197,300 – $250,500 |
| 35% | $250,525 – $626,350 | $501,050 – $751,600 | $250,500 – $626,350 |
| 37% | $626,350 and above | $751,600 or above | $626,350 or above |
What are the other new deductions introduced in the new legislation?
Apart from the major tax changes in the tax laws, the new legislation has introduced some new deductions that may help many people, such as:
- No tax on tips:
- Employees and self-employed individuals can deduct the qualified tips from their occupation on or before 31 December 2024, reported in the Form 1099, Form W-2, and others
- No tax on overtime:
- The individuals who receive overtime may deduct the pay that is over the regular rate of pay. The maximum annual deduction allowable is $12,500 for individuals and $25,000 for joint filers.
- The deduction will be phased out if the MAGI is over $150,000 for individuals and $300,000 for joint filers.
- No tax on car loan interest:
- Individuals can deduct the interest paid on the car loan that purchased a qualified vehicle purchased for personal use.
- The maximum deduction permissible is $10,000, which will phase out if the MAGI is over $100,000 for individuals, and $200,000 for joint filers.
What will be the change in paper checks from the 2026 tax season?
The Trump administration has urged the government agencies to eliminate the paper check transaction, as it costs a lot, plus it has a higher chance of getting lost, damaged, or ruined. The 2026 tax season will be the beginning of the no-paper-check refund.
The IRS will soon release the guidelines on the no-paper-check refund for the 2026 tax season, so all taxpayers may have to opt for direct deposit or other electronic payment methods.
The 2026 tax season is just two or three months away, as it will begin in the last week of January 2026, so taxpayers, start your preparation to complete your responsibility on time.
Disclaimer: This content outlines upcoming IRS rule changes for the 2026 tax season. Always confirm details through official IRS announcements.
