Tax changes for 2026 include higher deductions and new credits for workers and seniors, part of the Working Families Tax Cuts that significantly reshape the federal tax landscape. The standard deduction increased to $32,200 for married couples filing jointly and $16,100 for single filers, according to the Internal Revenue Service.
Seniors age 65 and older gained a new $6,000 deduction effective 2025 through 2028, available in addition to the standard deduction for seniors under existing law, the IRS reported. For married couples where both spouses qualify, the deduction reaches $12,000. The deduction phases out for taxpayers with modified adjusted gross income over $75,000 ($150,000 for joint filers).
The Child Tax Credit was permanently increased to $2,200 per qualifying child, up from $2,000, according to the House Ways and Means Committee. The credit increased by $200 per child and is now indexed for inflation starting in 2026.
Workers gained new deductions that eliminate tax on certain income. The no-tax-on-tips deduction allows employees and self-employed individuals to deduct up to $25,000 annually in qualified tips received in occupations customarily receiving tips, the IRS stated. A separate no-tax-on-overtime provision lets workers deduct the portion of qualified overtime pay exceeding their regular rate, with a maximum of $12,500 per individual or $25,000 for joint filers.
A new deduction for car loan interest provides up to $10,000 annually for interest paid on loans used to purchase qualified vehicles for personal use, according to IRS guidance. The vehicle must have been originally used by the taxpayer, assembled in the United States, and have a gross vehicle weight rating under 14,000 pounds.
The overall tax relief proved substantial. The U.S. Department of the Treasury reported that American families and workers received $325 billion in total tax refunds in 2026, with $82 billion claimed directly from individual tax relief provisions. The House Ways and Means Committee stated that the working families tax cuts delivered $191 billion in net new tax relief in 2026.
These changes apply through 2028 for most provisions, providing a temporary but multi-year boost to household finances. The IRS emphasized that taxpayers must include their Social Security number on returns to claim most of these deductions and credits, and married couples should file jointly to maximize benefits where applicable.
Sources
- Internal Revenue Service — Official guidance on Working Families Tax Cuts including standard deduction amounts for 2026, senior deduction details, no-tax-on-tips and no-tax-on-overtime provisions, and car loan interest deduction rules
- U.S. Department of the Treasury — Total tax refund figures and individual tax relief amounts for 2026
- House Ways and Means Committee — Child Tax Credit increase to $2,200 and net new tax relief figures
