Tax changes for 2026 include significantly higher deductions and expanded credits under the Working Families Tax Cuts, putting more money in the pockets of millions of Americans when they file their returns next year. The standard deduction rises to $32,200 for married couples filing jointly, $16,100 for single filers, and $24,150 for heads of households, according to the Internal Revenue Service.
The increase in standard deductions marks a substantial boost for working families. For context, the IRS confirmed in October 2025 that these adjustments reflect both inflation indexing and amendments from the One Big Beautiful Bill, which was signed into law in July 2025. The larger standard deduction will cut taxes by between $75 and $278 for single taxpayers depending on their tax bracket, according to the Bipartisan Policy Center.
Beyond deductions, the tax law expands credits that directly reduce what families owe. The Child Tax Credit increases from $2,000 to $2,200 per qualifying child, according to the IRS. Up to $1,700 of that credit per child may be refundable, meaning families can receive the benefit even if they owe no federal income tax. Over 34 million families have already claimed the enhanced Child Tax Credit, according to the White House.
New deductions also target workers in specific occupations. The “No Tax on Tips” provision allows tipped workers to claim an above-the-line deduction up to $25,000 for qualified tips earned from 2025 through 2028. According to the U.S. Department of the Treasury, over 7.5 million filers claimed this deduction, with an average deduction of over $7,000. Similarly, the “No Tax on Overtime” deduction permits workers to deduct up to $12,500 in qualified overtime compensation annually, or $25,000 for joint filers, through 2028. Over 29 million filers claimed the overtime deduction with an average of over $3,100, according to the Senate Finance Committee.
Seniors receive targeted relief through a new $6,000 deduction available to individuals age 65 and older, allowing them to exclude that amount from taxable income. The law also enhances the adoption credit, raising the maximum to $17,670 for 2026, up from $17,280 in 2025, with up to $5,120 of the credit now refundable.
The expansion of deductions and credits represents a shift from prior tax law. When the Tax Cuts and Jobs Act of 2017 increased the standard deduction, it eliminated personal exemptions entirely. The One Big Beautiful Bill makes that change permanent while layering on new benefits for workers in specific situations. The law also permanently increased the Child Tax Credit and indexed it to inflation, ensuring the benefit grows with the cost of living in future years.
For families navigating 2026 tax planning, the combination of higher standard deductions, expanded credits, and new occupational deductions offers multiple avenues for tax relief. The Working Families Tax Cuts expand deductions and credits, and the IRS has published detailed guidance to help taxpayers understand which provisions apply to their situation. Taxpayers should review their withholding to ensure they’re not overpaying throughout the year, and those in affected occupations should track qualifying tips and overtime to claim the new deductions.
Sources
- Internal Revenue Service — Standard deduction amounts for 2026, Working Families Tax Cuts provisions, adoption credit maximums, and tip and overtime deduction details
- U.S. Department of the Treasury — First-year results of Working Families Tax Cuts including No Tax on Tips deduction usage statistics
- Senate Finance Committee — No Tax on Overtime deduction usage data and average deduction amounts
- Bipartisan Policy Center — Tax savings analysis for standard deduction increases by income bracket
- White House — Child Tax Credit claiming statistics and program impact
- Tax Foundation — Tax bracket and deduction information for 2026
