7 New Tax Deductions in 2026 You Might Be Missing (Car Loans, Tips, and More Explained)

New Haven, CT – February 17, 2026 : The 2026 tax year brings significant changes that could put hundreds or even thousands of dollars back in your pocket. Under the "One Big Beautiful Bill," Congress introduced five major new deductions plus restored several others that expired in previous years.

If you're a New Haven resident who earns tips, works overtime, pays car loan interest, or gives to charity, you need to know about these changes right now. Missing even one of these deductions could cost you serious money when you file your return.

Here's what changed and how to maximize your tax refund this year.

Deduction #1: The New Tips Deduction (Up to $25,000!)

Service industry workers and tipped employees can now deduct up to $25,000 in qualified tip income. This applies whether you're a server at a New Haven restaurant, a bartender, a delivery driver, or anyone else who receives tips as part of their compensation.

The Tax Policy Center estimates that approximately 5 million taxpayers will claim this deduction in 2026, with an average tax cut around $1,400. The Treasury Department projects that number could reach 10 million returns.

Who qualifies:

• Restaurant servers and bartenders
• Delivery drivers
• Hair stylists and barbers
• Hospitality workers
• Rideshare drivers who receive in-app tips

Important: The tips must be "qualified tip income" as defined by IRS regulations. Your concierge tax pro can verify whether your tip income qualifies and ensure you claim the maximum amount allowed.

Deduction #2: Overtime Pay Deduction (Up to $25,000 for Couples)

If you work overtime hours, you can now deduct up to $12,500 as a single filer or $25,000 if you're married filing jointly. This applies to qualified overtime compensation you received during the tax year.

This deduction benefits wage earners across Connecticut who put in extra hours: whether you're in manufacturing, healthcare, retail, or any other industry that pays overtime rates.

Key requirements:

• Must be actual overtime pay (typically time-and-a-half or double-time)
• Must be properly documented on your W-2
• Subject to income phase-out limits

Deduction #3: Car Loan Interest Deduction (Up to $10,000)

Here's a big one that many New Haven families will miss: You can now deduct up to $10,000 in qualified passenger vehicle loan interest for new personal-use vehicles.

If you financed a car purchase in 2025 or 2026, the interest you paid on that loan may now be deductible. This is a significant change from previous years when personal vehicle loan interest was not deductible.

What you need:

• Loan documents showing interest paid
• Proof the vehicle is for personal use
• Vehicle must be a new purchase (used vehicles may not qualify)

Save your loan statements and bring them to your tax preparation appointment. A professional tax prep service in New Haven can verify eligibility and calculate the exact deduction amount.

Deduction #4: Enhanced Senior Deduction (Extra $6,000-$12,000)

Seniors age 65 and older can now claim an additional $6,000 deduction ($12,000 for married couples filing jointly) on top of the standard deduction. This enhanced deduction is available for tax years 2025 through 2028.

Phase-out details:

• Begins phasing out for individuals with modified adjusted gross income over $75,000
• Completely phases out at higher income levels
• Applies to both full-year and partial-year residents

If you or your spouse turned 65 during 2025, you may qualify for this deduction. Don't leave this money on the table.

Deduction #5: Above-the-Line Charitable Deduction

Non-itemizers can now deduct cash donations to qualified charities without having to itemize. Single filers can deduct up to $1,000, and married couples filing jointly can deduct up to $2,000.

This is huge for New Haven residents who give to local charities, churches, schools, and nonprofits but don't typically itemize because their total deductions don't exceed the standard deduction.

Requirements:

• Must be cash donations (not goods or property)
• Must be to qualified 501(c)(3) organizations
• Must have proper documentation (receipts, bank records, written acknowledgment)

Deduction #6: Increased Standard Deduction

The standard deduction increased to $16,100 for single filers and $32,200 for married couples filing jointly. This increase saves single taxpayers between $75 and $278, and married taxpayers between $150 and $555, depending on your tax bracket.

Even if you don't qualify for any of the new deductions above, you'll automatically benefit from this increase when you file.

Deduction #7: Private Mortgage Insurance (PMI) Restored

PMI becomes deductible again starting in 2026. If you're paying private mortgage insurance on your New Haven home because you put down less than 20%, those payments may now be deductible.

This deduction was available in previous years, expired, and has now been restored. Many homeowners forget about this deduction entirely.

Who benefits:

• First-time homebuyers with less than 20% down
• Homeowners who refinanced with less than 20% equity
• Anyone currently paying PMI on their mortgage

Bring your mortgage statements showing PMI payments to your tax preparation appointment.

How to Claim These Deductions: What You Need to Do Now

These deductions don't happen automatically. You need proper documentation and accurate filing to maximize your tax refund.

Action steps:

1. Gather all documentation: W-2s, 1099s, loan statements, charitable receipts, mortgage statements
2. Don't estimate tip income or overtime: use exact figures from your pay stubs
3. Save all receipts for car loan payments and charitable donations
4. Schedule your tax preparation appointment early

Why Working with a Concierge Tax Pro Matters

The new deductions for 2026 create complexity. One calculation error or missing form can cost you hundreds or thousands in unclaimed refunds.

A concierge tax pro specializing in tax preparation in New Haven understands Connecticut-specific regulations and stays updated on federal changes. They'll review your complete financial situation, identify every deduction you qualify for, and optimize your return for maximum refund.

Jose's Tax Service offers:

• Virtual and in-person appointments to fit your schedule
• $0 upfront payment options
• Maximum refund optimization strategies
• Expert knowledge of new 2026 tax laws
• Professional review of all documentation

Don't leave money on the table. These deductions exist to help working families, seniors, and New Haven residents keep more of what they earn.

File Early, File Accurately, Maximize Your Refund

The April 15 deadline will arrive faster than you think. Schedule your appointment now to ensure you have time to gather documentation and claim every deduction available.

The difference between a DIY tax return and professional tax preparation often amounts to hundreds or thousands of dollars in additional refunds: especially in a year with this many new deductions.

Ready to maximize your 2026 tax refund? Visit Jose's Tax Service to schedule your virtual or in-person appointment today. Our New Haven team is ready to help you navigate these new deductions and optimize your return.