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Important Tax Law Changes for 2026
(tax year 2025)
Important Tax Law Changes — 2026 Filing Season (Tax Year 2025)
Standard Deduction Increase UPDATED
The One Big Beautiful Bill Act (OBBBA) boosted the 2025 standard deduction above prior IRS projections.
Tip Income Deduction NEW
Qualified tip income may be deducted up to $25,000 for tax years 2025–2028. Applies to workers in qualifying service occupations. Available whether or not you itemize. Phases out for income above $150,000.
Overtime Pay Deduction NEW
Workers may deduct up to $12,500 in overtime pay (up to $25,000 on a joint return) for tax years 2025–2028. Available with or without itemizing. A valid Social Security number is required. Phases out above $150,000 income.
Senior Deduction — Ages 65+ NEW
Taxpayers aged 65 or older as of December 31, 2025 may claim an additional $6,000 deduction. Couples where both spouses qualify can claim up to $12,000 total. Phases out for income over $75,000 (single) or $150,000 (joint). Available for tax years 2025–2028.
Auto Loan Interest Deduction NEW
Taxpayers who purchased a new, US-assembled vehicle in 2025 may deduct up to $10,000 in qualified loan interest. Available with or without itemizing. Phases out for income above $100,000 ($200,000 joint). Available for tax years 2025–2028.
Child Tax Credit (CTC)
The CTC increases to $2,200 per qualifying child for tax year 2025, up from $2,000. The OBBBA made the expanded credit permanent.
Tax Bracket Adjustments
Income thresholds for all seven federal tax brackets were adjusted approximately 2.75% for inflation for the 2025 tax year. The seven rates remain: 10%, 12%, 22%, 24%, 32%, 35%, and 37%.
Retirement Contribution Limits
The 2025 401(k), 403(b), and 457 plan contribution limit is $23,500. Catch-up contributions for those 50+ are also available. Consult your advisor for income-based IRA deductibility rules.
Health Savings Account (HSA) Limits
2025 HSA contribution limits: $4,300 for self-only coverage and $8,550 for family coverage under a qualifying high-deductible health plan (HDHP).
Earned Income Tax Credit (EITC)
The maximum EITC for tax year 2025 is $8,046 for qualifying taxpayers with three or more qualifying children. Lower credit amounts are available for smaller families and individuals.
Electric Vehicle (EV) Credits Ended ENDED
The New Clean Vehicle Credit, Used Clean Vehicle Credit, and Commercial Clean Vehicle Credit are no longer available for vehicles acquired after September 30, 2025.
IRS Direct File Discontinued ENDED
The IRS will not offer its free Direct File e-filing program for 2025 returns. The IRS Free File partnership program through commercial tax software providers remains available for eligible taxpayers.
* Tax laws are subject to change. The information above is based on current IRS guidance for tax year 2025. Consult a qualified tax professional for advice specific to your situation.
Important Tax Dates 2025
2026 Filing Dates
2026 Filing Dates
* If any date falls on a weekend or federal holiday, the deadline typically shifts to the next business day.
2026 Federal Legal Holidays
2026 Federal Legal Holidays