2026 Standard Deduction Changes Explained in Under 3 Minutes: Will Your Tax Refund Be Bigger?

Categories: news, tax planning

NEW HAVEN, CT – Jose’s Tax Service – February 27, 2026

The 2026 tax filing season is officially in high gear, and if you haven’t sat down with your records yet, you need to pay attention to the new numbers. Internal Revenue Service (IRS) adjustments for the 2026 tax year have shifted the goalposts for almost every taxpayer in New Haven. Whether you are a single filer working downtown or a married couple running a business in Fair Haven, these changes dictate how much of your hard-earned money stays in your pocket.

At Jose’s Tax Service, we see the confusion every day. Clients walk in asking, "Is my refund going to be bigger this year?" The answer isn't a simple yes or no: it depends on how these new standard deduction limits interact with your specific income and your withholding.

The New 2026 Standard Deduction Benchmarks!

For the 2026 tax year, the IRS has implemented modest inflationary increases to the standard deduction. This is the "floor" amount that the government allows you to deduct from your taxable income without having to itemize every single receipt.

Here are the official 2026 figures you must use:

1. Single Filers: $16,100 (an increase of $350 from the previous year).
2. Married Filing Jointly: $32,200 (an increase of $700).
3. Head of Household: $24,150 (an increase of $525).

While these increases might seem small, they represent a higher threshold of tax-free income. However, a higher deduction does not automatically trigger a massive refund check. It lowers your taxable income, but if your employer adjusted your withholding correctly throughout 2025, you might find that your refund remains steady or even decreases slightly because you paid less in "excess" taxes throughout the year.

Huge Bonus For New Haven Seniors (65+)!

One of the most significant changes for 2026 involves a specialized deduction for taxpayers aged 65 or older. This is a critical update for our retired community members in New Haven.

In 2026, if you are 65 or older, you may qualify for an additional $6,000 deduction. This is a standalone bump that sits on top of the standard deduction. If you are a married couple and both spouses are 65 or older, that is a $12,000 deduction added to your standard joint filing amount.

Warning: Income Thresholds Apply!
This extra "senior boost" is not available to everyone. It begins to phase out if your Modified Adjusted Gross Income (MAGI) exceeds certain limits:

• $75,000 for single filers.
• $150,000 for joint filers.

If your income is above these levels, the deduction is reduced or eliminated. At Jose’s Tax Service, we provide personalized service to help seniors calculate their MAGI accurately to ensure they aren't leaving this $6,000 benefit on the table.

New Deductions for Side Hustlers and Service Workers!

The 2026 tax code has introduced specific breaks that target the modern workforce. If you work in New Haven’s vibrant restaurant scene or handle manufacturing shifts with heavy overtime, these updates are for you.

• Qualified Tip Income Deduction: You can now deduct up to $25,000 in qualified tip income. This is a massive win for servers, bartenders, and hospitality staff who often struggle with high tax liabilities on cash and credit tips.
• Qualified Overtime Pay Deduction: For those putting in extra hours at the hospital or the local plants, you can deduct up to $12,500 of qualified overtime pay.
• Qualified Vehicle Loan Interest: If you purchased a vehicle for work-related purposes (or meet specific usage criteria), you may be eligible to deduct up to $10,000 in loan interest.

These new deductions are designed to provide relief to middle-class earners, but they require precise documentation. You cannot simply "estimate" your overtime or tips. You must have records that match your W-2 and 1099 forms.

Why Your Refund Might Actually Be Smaller!

It sounds counterintuitive: the deductions went up, so why is my check smaller?

A tax refund is simply the government returning money that you overpaid throughout the year. If the standard deduction increases, your tax liability goes down. However, the IRS also updates the withholding tables that employers use. If your employer’s payroll system was updated correctly in early 2025, they took less tax out of your check because they knew you’d owe less.

In this scenario, you took home more money in your weekly or bi-weekly paycheck, which means there is less "excess" for the IRS to send back to you in April.

Pro-Tip: If you want a bigger refund next year, you must submit a new Form W-4 to your employer to increase your withholding. At Jose’s Tax Service, we offer competitive rates for tax planning sessions where we can help you calibrate your W-4 so you get the exact refund result you want: whether that’s more money every month or a big lump sum in the spring.

Itemizing vs. Standard Deduction in 2026!

With the standard deduction for married couples sitting at $32,200, the "bar" for itemizing is very high. To make itemizing worth it, your specific deductions (mortgage interest, state and local taxes, charitable gifts, and medical expenses) must exceed that $32,200 limit.

For many New Haven homeowners, the SALT (State and Local Tax) cap still limits the effectiveness of itemizing. However, if you had significant medical expenses in 2025 or made large charitable contributions to local New Haven non-profits, it is worth running the numbers both ways.

Steps You Must Take Before Filing!

To ensure you are maximizing these 2026 changes, follow these instructional steps:

1. Gather Official Documents: Collect all W-2s, 1099-NECs (for side hustles), and 1099-Ks from payment apps.
2. Verify Your Age: If you turned 65 in 2025, ensure you are claiming the new $6,000 additional deduction.
3. Calculate Tip and Overtime Totals: Do not rely on your final paycheck stub alone; verify against your year-end statements.
4. Check Vehicle Interest: If you are claiming the $10,000 vehicle interest deduction, have your loan amortization schedule ready.
5. Review Withholding: Look at your final 2025 pay stub. If the "Federal Tax Withheld" amount is lower than in 2024, prepare for a smaller refund, even with the higher deduction.

Why New Haven Chooses Jose’s Tax Service!

Navigating the 2026 tax changes shouldn't be a DIY project. The rules regarding the senior phase-outs and the new overtime deductions are technical and easy to mess up. One wrong entry on your return can lead to processing delays or unwanted correspondence from the IRS.

At Jose’s Tax Service, we provide the professional expertise you need with the casual, friendly atmosphere you want. We are local, we understand the New Haven economy, and we are committed to getting you every penny you deserve. Our Small Business Learning Center is also available for those of you running local shops and needing more specialized advice.

Final Reminder: Deadlines Matter!

The deadline to file your 2025 tax return (in this 2026 season) is Wednesday, April 15, 2026. Filing early is the best way to protect yourself against identity theft and to ensure that if you are owed a refund, you get it as quickly as possible.

Failure to file by the deadline may lead to penalties and interest, especially if you owe money. If you cannot file by April 15th, you must file an extension, but remember: an extension to file is not an extension to pay.

Stop by Jose's Tax Service today or visit our website to schedule your appointment. We offer personalized service that big-box retail tax chains simply can't match. Let’s make sure your 2026 taxes are handled right the first time.

Contact us today at josestaxservice.com to get started.