2026 Tax Changes Every New Haven Taxpayer Needs to Know Right Now

New Haven, CT – February 15, 2026 – Tax season is underway, and this year brings significant changes that will directly impact your refund or tax liability. If you're filing in New Haven, understanding these 2026 tax updates can save you thousands of dollars. Here's what changed and what you need to do now.

Major Federal Tax Changes for 2026!

The federal government introduced several new deductions and credits that affect nearly every taxpayer. Review these changes carefully before you file.

New Deduction for Seniors Age 65 and Older

Taxpayers who are 65 or older can now claim a $6,000 seniors deduction. This deduction averages approximately $1,000 in tax savings for eligible filers. You qualify if you turned 65 by December 31, 2025.

Action required: Enter your birthdate accurately on your tax return. The deduction applies automatically if you meet the age requirement, but incorrect dates can delay processing.

Tips and Overtime Income Deduction

If you earned tips or overtime pay in 2025, you may qualify for a new deduction. This benefit provides an average tax cut of approximately $1,400 for each category of income.

Who qualifies:

• Food service workers, bartenders, and hospitality employees earning tip income
• Hourly workers who earned overtime pay in 2025

Keep all W-2 forms and paystubs showing tips and overtime as separate line items. You'll need these documents to claim the deduction properly.

Auto Loan Interest Deduction

Taxpayers can now deduct interest paid on auto loans. This applies to vehicle loans for personal use, not just business vehicles.

Requirements:

• Loan must have been active during the 2025 tax year
• You must have documentation showing interest paid (Form 1098 from your lender)
• The vehicle must be titled in your name

Contact your auto lender to request interest statements if you haven't received them yet.

Increased Standard Deduction

The standard deduction increased for all filing statuses. This change saves single filers between $75 and $278 depending on tax bracket, and married couples filing jointly save between $150 and $555.

2026 Standard Deduction Amounts:

• Single filers: $14,600
• Married filing jointly: $29,200
• Head of household: $21,900

You should compare itemizing versus taking the standard deduction. Most taxpayers benefit from the standard deduction, but those with significant mortgage interest, medical expenses, or charitable contributions may save more by itemizing.

Expanded Child Tax Credit

The Child Tax Credit increased, reducing taxes by up to $200 per qualifying child. This credit phases out at higher income levels.

Qualifying criteria:

• Child must be under age 17 at the end of 2025
• Child must have lived with you for more than half the year
• You must provide more than half the child's financial support

Enter each child's Social Security number correctly on your return. Errors in dependent information can delay refunds by weeks.

SALT Deduction Cap Increased

The state and local tax (SALT) deduction cap rose above the $10,000 limit that was in place from 2018 through 2024. This benefits New Haven taxpayers who itemize deductions, particularly those with high property taxes.

If you previously hit the $10,000 cap, calculate your 2025 SALT deductions again. You may save significantly more by itemizing this year.

Connecticut State Tax Updates!

Connecticut implemented several tax changes that affect New Haven residents and businesses.

Estate Tax Exemption Raised to $15 Million

Effective January 1, 2026, Connecticut's estate tax exemption increased from $13.99 million to $15 million per person. Married couples can exempt up to $30 million when filing jointly.

This change affects estate planning strategies. Review your will, trusts, and beneficiary designations with a qualified professional if your estate value approaches these thresholds.

Farm Investment Tax Credits and Property Tax Relief

Connecticut farmers received expanded refundable business tax credits for investments in eligible machinery, equipment, and buildings. Property tax exemptions for farm equipment more than doubled.

If you operate a farm in the New Haven area:

• Document all equipment purchases made in 2025
• Maintain receipts for building improvements and machinery
• File the appropriate schedules with your state return to claim credits

Cryptocurrency Gains Taxed at State Level

Connecticut continues to tax cryptocurrency gains at rates up to 6.99% at the state level. Unlike federal rules, Connecticut makes no distinction between short-term and long-term capital gains rates for crypto transactions.

Important: If you sold, traded, or exchanged cryptocurrency in 2025, you owe Connecticut income tax on gains. This applies even if you reinvested proceeds into other cryptocurrencies.

New Haven-Specific Tax Considerations

New Haven does not impose a municipal income tax or crypto-specific taxes. City residents pay only federal IRS obligations and Connecticut state income tax.

However, large cryptocurrency holdings may affect estate or business tax obligations at the municipal level. Consult a concierge tax pro if you hold substantial digital assets.

Cryptocurrency Reporting Requirements Changed!

The IRS implemented strict new reporting requirements for cryptocurrency transactions in 2026.

Exchanges Must Issue 1099 Forms

Cryptocurrency exchanges must now issue 1099 forms for transactions above $600. You should receive these forms from platforms like Coinbase, Kraken, and Binance.US by January 31, 2026.

Check your email and exchange accounts now. Missing 1099 forms can lead to reporting errors and IRS notices.

Wash Sale Rule May Soon Apply to Crypto

The wash sale rule, which prevents claiming losses on securities sold and repurchased within 30 days, may soon apply to cryptocurrency. While not yet in effect for 2025 returns, expect this change in future tax years.

Mining and Staking Income Are Taxable Events

Cryptocurrency mining and staking rewards are taxable as ordinary income at both federal and Connecticut state levels. You must report the fair market value of coins received on the date you gained control of them.

If you mine crypto as a business:

• Self-employment tax applies at 15.3%
• You can deduct electricity costs, hardware expenses, and internet service
• Maintain detailed records of mining pool payments and dates

Calculate estimated quarterly tax payments if mining generates significant income. Failure to pay quarterly may result in underpayment penalties.

What New Haven Taxpayers Must Do Now

Review these action items before filing your 2025 tax return:

1. Gather all 1099 forms from employers, banks, investment accounts, and cryptocurrency exchanges
2. Verify birthdate accuracy if claiming the seniors deduction
3. Request auto loan interest statements from your lender
4. Calculate SALT deductions to determine if itemizing saves more than the standard deduction
5. Review cryptocurrency transactions and compile gain/loss records
6. Update W-4 withholding for 2026 if your tax situation changed significantly

When Professional Tax Preparation New Haven Services Make Sense

These 2026 changes are complex. DIY software may miss deductions you qualify for, especially regarding:

• Cryptocurrency reporting and optimization
• SALT deduction calculations after the cap increase
• Farm investment credits and property tax exemptions
• Multi-state income reporting

A concierge tax pro reviews your complete financial picture to maximize your tax refund. Unlike software that relies on what you enter, professional tax preparation New Haven experts ask the right questions to uncover deductions you didn't know existed.

File Accurately to Avoid Penalties

Incorrect reporting can delay refunds and trigger IRS audits. Double-check Social Security numbers, dependent information, and income amounts before submitting your return.

The IRS imposes penalties for:

• Underpayment of estimated taxes (typically 0.5% monthly)
• Failure to report cryptocurrency transactions (penalties start at $10,000)
• Inaccurate dependent claims (loss of Earned Income Credit eligibility)

Tax filing deadline: April 15, 2026. Extensions are available, but you must still pay estimated tax owed by this date to avoid penalties.

Get Expert Help for 2026 Tax Changes

Jose's Tax Service specializes in helping New Haven taxpayers navigate complex tax changes. Our concierge tax pro services ensure you claim every deduction, credit, and benefit you're entitled to receive.

Contact us today to schedule your tax preparation appointment. We offer virtual and in-person consultations to fit your schedule.

Don't leave money on the table this tax season. Understanding these 2026 changes is the first step to maximizing your tax refund.