5 Steps How to Maximize Your Tax Refund Using New OBBBA Credits

Categories: news, tax planning
Tags: 2026 tax season, 2026 taxes, tax planning, tax refund, OBBBA, Child Tax Credit, Child and Dependent Care Credit, charitable deduction, 529 plan, American Opportunity Tax Credit, Lifetime Learning Credit, New Haven, Connecticut, IRS Form 1098-T

DATELINE: March 30, 2026
LOCATION: New Haven, CT
ORGANIZATION: Jose's Tax Service

Hey there, it’s Jose Morales. We are officially in the home stretch of the 2026 tax season. If you haven't filed yet, you’re actually in a great spot because the rules have been shifting under the new Omnibus Budget Bill and Business Act (OBBBA).

The OBBBA has introduced some of the most aggressive tax credits and deductions we've seen in a decade. My team at Jose's Tax Service has been digging through the fine print to make sure our New Haven neighbors aren't leaving money on the table. If you want to see that refund check grow, you need to understand these five specific steps to maximize your return.

1. Claim the Increased Child Tax Credit and Expanded Child Care Credit!

The OBBBA didn't just tweak the numbers; it gave them a serious boost. For the 2025 tax year (the one you are filing for right now in 2026), the Child Tax Credit (CTC) has been increased to $2,200 per qualifying child, up from the previous $2,000.

But the real "hidden gem" is the Child and Dependent Care Credit (CDCC). Under the new guidelines:

• Maximum Credit Percentage: You can now claim up to 50% of your eligible childcare expenses.
• Phase-out Ranges: These have been moved to much higher income levels. This means even if you thought you "made too much money" to qualify in the past, you might be eligible now.
• Action Step: Gather all receipts from daycare centers, summer camps, or after-school programs. You must provide the Care Provider's Tax Identification Number (TIN) or Social Security Number (SSN).

Failure to include the provider’s info will result in the IRS rejecting the credit, which may lead to penalties or significant delays in your refund processing. If you're unsure if your provider qualifies, head over to our download center to grab a checklist of required documents.

2. Deduct New Income Categories: Tips, Overtime, and Vehicle Loans!

This is where the OBBBA really steps up for the working class in New Haven. For the first time, the government is allowing specific exclusions and deductions for income that used to be fully taxable.

The $25,000 Tip Exclusion
If you work in the service industry: whether you're a server at a restaurant downtown or a stylist: you can now deduct up to $25,000 in tip income. This is massive. It effectively lowers your Adjusted Gross Income (AGI), which can qualify you for even more credits.

The Overtime Compensation Deduction
For those of you pulling long hours, the OBBBA allows you to deduct up to $12,500 in qualified overtime compensation ($25,000 for joint filers).

• Constraint: The overtime must be documented on your W-2 or pay stubs as "Qualified Overtime."
• Action Step: Double-check your year-end pay stubs. If your employer didn't categorize it correctly, you need to address it now before you file.

New Vehicle Loan Interest
Did you buy a car last year? You can now deduct up to $10,000 annually in personal-use vehicle loan interest. This was previously reserved for business vehicles, but the OBBBA opened it up to everyone to stimulate the economy.

If you aren't sure how these deductions impact your bottom line, use our estimate portal to see your projected numbers.

3. Claim the Nonitemizer Charitable Deduction!

Most people in New Haven take the Standard Deduction because it’s easier. Usually, that means you lose out on deducting your donations to local charities or churches. The OBBBA changed the game by reinstating the Nonitemizer Charitable Deduction.

Even if you do not itemize your deductions, you can still claim:

• $1,000 for individual filers.
• $2,000 for joint filers.

Required Documentation:

1. Cash Contributions: You must have a bank record or a written communication from the charity (like a receipt or letter) showing the name of the organization, the date, and the amount.
2. Qualified Charities: Ensure the organization is a 501(c)(3) nonprofit.
3. Action Step: Do not guess. If you donated $50 a month to your local food bank, that’s $600. File that amount! It’s a "top-line" deduction that reduces your taxable income directly.

4. Maximize 529 Plan Withdrawals for K-12 Education!

Education is expensive, and the OBBBA recognizes that. Starting in 2026, the annual limit for tax-free 529 plan withdrawals for elementary and secondary school expenses has been increased to $20,000 per beneficiary.

Previously, the limit was much lower ($10,000). If you used your 529 funds to pay for private school tuition or specialized tutoring for your kids in 2025, you can now pull more of that money out without hitting a tax penalty.

Pro-tip from Jose: If you have multiple children, each child has their own limit. Make sure you are tracking these expenses separately to avoid an audit. If you need help calculating your basis, you can check your status on our jts-capital-dashboard.

5. Verify Eligibility for Senior and Education Credits!

Finally, we need to look at age-based and higher-education benefits. The OBBBA has added a "Kicker" for our seniors and students.

For Filers Age 65 or Older:
If you or your spouse turned 65 by December 31, 2025, you are entitled to an additional $6,000 deduction. This is an automatic boost to your standard deduction, but many DIY tax softwares miss the toggle for it. At Jose's Tax Service, we double-check your birthdate against your filing to ensure this is applied.

American Opportunity Tax Credit (AOTC) & Lifetime Learning Credit (LLC):
These credits remain available and are more valuable than ever because they can be combined with the new OBBBA interest deductions.

• AOTC: Worth up to $2,500 per student.
• LLC: Worth up to $2,000 per tax return.
• Mandatory Form: You must have Form 1098-T from the educational institution. Without the school’s Employer Identification Number (EIN), the IRS will automatically flag the return for a manual review, which can delay processing by 6-8 weeks.

Summary of the OBBBA Strategy

To wrap this up, the 2026 tax season is all about stacking. You stack the increased Child Tax Credit with the higher Child Care Credit. You stack your standard deduction with the new nonitemizer charitable deduction. And if you’re a working person in New Haven, you absolutely must take advantage of the tip and overtime exclusions.

Crucial Reminders:

• The Deadline: Tax Day is Wednesday, April 15, 2026. Do not wait until the 14th to find your 529 statements or your vehicle loan interest forms.
• Accuracy Matters: The IRS is using updated AI matching for the OBBBA credits. If your W-2 doesn't match your overtime claim, you will get a letter in the mail (and not the good kind).
• Professional Help: These rules are brand new. Using a "big box" software might not give you the specific New Haven context or the manual oversight needed for the overtime and tip deductions.

If you’re ready to get started and want to make sure you’re hitting all 5 of these steps, head over to josestaxservice.com/jts-tax-start to begin your filing process. You can also get a tax quote to see how our fees compare to the value we provide.

Don't let the government keep your money. The OBBBA was designed to put cash back into your pocket: let’s make sure it stays there.

Stay sharp, New Haven!

Jose Morales
CEO, Jose's Tax Service

For more tools and resources, visit our JTS Tools page or check your refund status through our e-signing portal.