Tax Update 2026: 7 New Law Changes That Will Boost Your Refund (And How to Claim Them Before It's Too Late)

January 6, 2026 • Giveaways

New Haven, CT – January 4, 2026 – The One Big Beautiful Bill has introduced significant tax law changes for 2026 that could substantially increase your tax refund. These changes take effect immediately for the 2026 tax year, and understanding them now can help you maximize your tax benefits when filing your 2026 return in early 2027.

Change #1: Enhanced Standard Deduction Increases!

The standard deduction receives substantial increases across all filing statuses for 2026:

Single filers: $16,100 (increased from $15,750)
Married filing jointly: $32,200 (increased from $31,500)
Head of household: $24,150 (increased from $23,625)

Action Required: Review your current withholdings with your employer. These increased deductions may result in lower taxable income, potentially creating larger refunds or requiring withholding adjustments.

Additional Benefit for Seniors: Taxpayers age 65 and older receive an extra standard deduction of $2,050 for single filers or $1,650 per spouse for married filing jointly.

Change #2: New $6,000 Senior Citizen Deduction!

Taxpayers aged 65 and older can now claim an additional $6,000 deduction beyond their standard deduction for tax years 2025 through 2028.

Eligibility Requirements:

Must be 65 or older by December 31, 2026
Phases out for modified adjusted gross income (MAGI) over $75,000 (single) or $150,000 (married filing jointly)
Completely phases out at MAGI of $175,000 (single) or $250,000 (married filing jointly)

Action Required: Calculate your expected 2026 MAGI to determine eligibility. Consider retirement account distribution timing to stay within income limits if you're near the phase-out threshold.

Change #3: Expanded SALT Deduction to $40,000!

The state and local tax (SALT) itemized deduction cap increases dramatically to $40,000 for 2026 through 2029, up from the previous $10,000 limit.

Qualifying SALT Taxes:

State and local income taxes or sales taxes
Real estate taxes on personal property
Qualified personal property taxes

Action Required: Gather documentation for all state and local tax payments made during 2026. Consider prepaying 2027 property taxes in December 2026 if beneficial under the new higher cap.

Change #4: Vehicle Loan Interest Deduction Up to $10,000!

A completely new deduction allows taxpayers to deduct interest payments on certain vehicle loans up to $10,000 annually.

Phase-Out Limitations:

Begins phase-out at MAGI of $100,000 for single filers
Begins phase-out at MAGI of $200,000 for married filing jointly

Action Required: Maintain detailed records of vehicle loan interest payments throughout 2026. Request Form 1098 from your lender if not automatically provided.

Change #5: Charitable Deduction for Standard Deduction Filers!

Starting in 2026, taxpayers claiming the standard deduction can simultaneously claim a charitable deduction for cash contributions:

Single filers: Up to $1,000
Married filing jointly: Up to $2,000

Important Restrictions:

Applies only to cash contributions
Must be made to qualifying charitable organizations
Requires proper documentation

Action Required: Obtain written acknowledgment for all charitable contributions. Keep detailed records of cash donations, including receipts and bank statements.

Change #6: New Trump Savings Accounts for Children!

The legislation creates a new type of IRA specifically for children, known as Trump Savings Accounts.

Key Features:

Available for children under age 18
Special contribution limits and tax advantages
Designed to encourage long-term savings

Action Required: Consult with a tax professional to understand contribution limits and eligibility requirements. The IRS is expected to release detailed guidance on these accounts in early 2026.

Change #7: Increased 1099 Reporting Threshold!

The reporting threshold for Form 1099-NEC increases to $2,000 from the previous $600 threshold.

Impact on Taxpayers:

Fewer 1099 forms received for small amounts
All income must still be reported regardless of form receipt
Simplified record-keeping for small freelance income

Action Required: Maintain comprehensive records of all income sources, even those below $2,000. The absence of a 1099 form does not eliminate tax reporting obligations.

How to Claim These Benefits Before the Deadline!

Immediate Steps for 2026:

Update Your Withholdings: Use the IRS withholding calculator to adjust payroll deductions based on new standard deduction amounts.
Organize Documentation: Create filing systems for vehicle loan interest statements, charitable contribution receipts, and SALT payment records.
Schedule Professional Consultation: Complex changes require expert review to maximize benefits and ensure compliance.
Plan Strategic Payments: Time discretionary payments (property taxes, charitable contributions) to optimize deduction benefits.
Review Retirement Account Distributions: For seniors, carefully plan distribution timing to stay within income phase-out limits.

Critical Deadlines and Next Steps!

December 31, 2026: Final deadline for charitable contributions and discretionary tax payments to count toward 2026 deductions.

January 31, 2027: Deadline for receiving Form 1098 statements for vehicle loan interest.

April 15, 2027: Tax filing deadline for 2026 returns (unless extended).

Professional Guidance Required!

These substantial tax law changes create both opportunities and complexities. Improper application of new deductions can lead to penalties, delayed processing, or missed optimization opportunities.

Warning: Attempting to navigate these changes without professional guidance may result in:

Missed deduction opportunities worth thousands of dollars
Incorrect applications leading to IRS scrutiny
Delayed refund processing due to filing errors

The intersection of multiple new deductions requires careful calculation to determine optimal filing strategies. Individual circumstances significantly impact which changes provide the greatest benefit.

Schedule your tax consultation early to ensure proper planning and documentation for these significant changes. Jose's Tax Service specializes in maximizing refunds under current tax law and can help you navigate these complex new provisions effectively.

Contact Information: Visit Jose's Tax Service to schedule your consultation and ensure you capture every available deduction under the new 2026 tax laws.