Jan 27, 2026
3 min read
Trump's big tax overhaul is changing the way taxes are calculated this year.Here's what you need to know.
The "One Big, Beautiful Bill," which took effect last year, made major changes to the U.S. tax code to increase tax deductions and credits for the 2026 tax season.
Tax deductions reduce the amount of your income, and tax credits reduce your tax bill dollar for dollar.Both are valuable tools for reducing what you have to pay.
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When you file your return, you can choose to take the standard deduction or itemize deductions.To decide which is best for you, calculate your total deductibles.Compare this amount to your standard deduction.A wide choice between the two options will allow you the greatest tax savings.
If you're eligible for tax credits, you can claim them whether you itemize your deductions or take the standard deduction.
The IRS will start accepting returns on January 26th and the filing deadline is April 15th.
Standard tax deductions
The standard deduction will increase for the 2026 tax season, reducing the amount of taxpayers' taxable income.
Below are the standard deductions under President Donald Trump's Tax and Spending Act, which he signed into law on July 4, 2025.
| Single | 15.750 USD |
|Head of household |$23,625 |
Marriage, joint application |$31,500 |
Taxpayers over 65 are eligible for even larger deductions:
|Single senior (65 years or older) with adjusted income less than $75,000 |Additional $6,000 |
|Elderly couple (both 65 or older) with total income less than $150,000 |Additional $12,000 |
From tax years 2025 through 2029, the amount of the state and local tax deduction for income under $500,000 is quadrupled from $10,000 to $40,000.
With this increase, taxpayers in high-tax states will likely choose the itemized deduction over the standard deduction.
Itemized discounts also include:
- Medical and dental expenses, if they exceed 7.5% of adjusted gross income for the year.This only applies to expenses not covered by insurance.
- Interest on a mortgage loan up to $750,000 ($375,000 for married couples filing jointly).
- Losses due to damage or theft in the event of an event notified at the federal level.
Child tax credit
This year, the child tax credit increased from $2,000 to $2,200 per eligible child.It is available to all eligible taxpayers, regardless of whether they take the standard deduction or personal deduction.
To qualify for this tax credit, a child must:
- Be under 17 years of age at the end of the financial year.
- Being a son, daughter, stepson, eligible stepson, brother, sister, stepfather, stepfather, half-brother, half-sister or descendant of any of them (for example, grandson, niece or nephew).
- Not paying more than half of your aid in the fiscal year
- Staying with the declaration for more than half of the financial year.
- Must be recognized as a dependent on the tax return.
- A child must not file a joint return with another person (eg, your spouse) to claim any credit. A child can only file a joint tax return to claim back payroll taxes or estimated taxes paid.
- Be a U.S. citizen, a U.S. citizen (such as American Samoa), or a permanent resident alien as determined by the IRS, meet the requirements for your green card, or have a substantial presence in the U.S. during the year.
To qualify for the full amount of the child tax credit for each qualifying child, your annual income must not exceed $200,000, or $400,000 if you file a joint return.If your income exceeds this limit, you can request a partial credit.
Do you get more time or tips?
Income tax deductions for qualified tips and overtime are available to all qualified taxpayers.They are also available to self-employed workers.
Peak discounts:
|Single, with income less than $150,000 |Deductions up to $25k |
|Married filing jointly with income less than $300,000 |Limited to $25K |
Overtime deduction:
If regular pay is $10 and overtime pay is $15, you can only add an additional $5 in overtime pay.
|Single with income less than $150,000 |Up to $12,500 can be deducted from income above your regular salary |
|Married joint, income less than $300,000 |Up to $12,500 can be deducted for income that exceeds your regular salary |
Did you buy a car made in the United States in 2025?
A new tax deduction allows taxpayers to deduct up to $10,000 in interest paid on a qualified auto loan for vehicles assembled in the United States.
To qualify, your income must be less than $100,000 per year if you file individually or $200,000 per year if you file jointly.This deduction is available whether you itemize your deductions or use the standard deduction.
An eligible vehicle includes a passenger car, minivan, van, SUV, truck, or motorcycle that is last assembled in the United States and has a gross vehicle weight of less than 14,000 pounds.
Have you sold or traded cryptocurrencies?
For tax purposes, digital assets are considered property and not money.Any income from digital assets, such as cryptocurrencies or NFTs (non-profitable tokens), will be taxed.
Tax filing requirements have changed this tax season.The Internal Revenue Service (IRS) is now requiring brokers to file Form 1099-DA, a new form designed to help investors accurately report cryptocurrency-related transactions.
Do you sell items on eBay, Etsy or Poshmark?
If you earn income from apps or online sales platforms, these platforms are now only required to issue a 1099-K if your payments exceed $20,000 and you have made more than 200 transactions on one platform in a year.
However, even if you do not receive or are not eligible to receive a Form 1099-K, you must still report all taxable income earned on the Platform.
