What Changed for 2026 Taxes? Here’s What New Haven Families and Small Businesses Need to Know Right Now

February 18, 2026 • Giveaways

New Haven, CT – February 17, 2026 – The One Big Beautiful Bill Act, signed into law in July 2025, has introduced substantial tax changes that directly affect Connecticut taxpayers filing 2026 returns. These provisions impact standard deductions, specialized credits, and business income calculations for millions of filers across the country: including New Haven families and local small businesses.

Understanding these changes now can help you maximize tax refund opportunities and avoid leaving money on the table when you file.

Major Changes for New Haven Families!

Higher Standard Deductions Are Here

The standard deduction has increased significantly for the 2026 tax year. Single filers can now claim $16,100, while married couples filing jointly can claim $32,200.

Taxpayers aged 65 or older qualify for an additional standard deduction:

$2,050 for single taxpayers
$1,650 for married taxpayers

These increases will reduce your tax liability by $75 to $278 for single filers and $150 to $555 for married filers, depending on your tax bracket. For most taxpayers, this means you may no longer need to itemize deductions to benefit from tax savings.

New Senior Deduction Provides Additional Relief

A new $6,000 deduction is now available for taxpayers age 65 and older. This deduction begins to phase out at specific modified adjusted gross income (MAGI) thresholds:

$75,000 MAGI for single filers
$150,000 MAGI for joint filers

The deduction becomes completely unavailable once MAGI reaches $175,000 for single filers or $250,000 for joint filers. An estimated 24 million taxpayers nationwide will benefit from this provision, with average tax reductions of approximately $1,000.

If you are approaching retirement age or currently receiving Social Security benefits, consult with a concierge tax pro to determine your eligibility and calculate the exact benefit you can claim.

Work-Related Deductions: Tips and Overtime

Two new deductions target workers with specific types of income:

Tips Deduction: A $25,000 deduction is available for eligible workers who receive tips as part of their income. This deduction phases out for taxpayers with MAGI exceeding $150,000 ($300,000 for married couples filing jointly).

Overtime Deduction: Workers who earn overtime pay can claim a deduction of up to $12,500. Approximately 17 million taxpayers are expected to receive an average tax cut of $1,400 from this provision.

For New Haven service industry workers, restaurant employees, and hospitality professionals, these deductions represent significant savings opportunities.

SALT Cap Increase Benefits Connecticut Taxpayers

The state and local tax (SALT) deduction cap has increased from $10,000 to $40,000. This change is particularly beneficial for Connecticut taxpayers who pay substantial state income taxes and local property taxes.

New Haven homeowners who itemize their deductions should review their total SALT payments to determine whether the higher cap allows them to claim additional deductions. Property tax bills, state income tax withholding, and local tax assessments should all be documented and included when calculating this deduction.

Auto Loan Interest Deduction for New Vehicles

Taxpayers who purchased new vehicles can now deduct up to $10,000 in interest paid on auto loans, provided the vehicle was assembled in the United States. This deduction applies to loans taken out for qualifying vehicles purchased during the 2026 tax year.

To claim this deduction, you must:

Obtain documentation from the lender showing total interest paid
Verify that the vehicle meets U.S. assembly requirements
Enter the deduction on Schedule A if itemizing

Expanded Child Tax Credit

The Child Tax Credit has increased, providing up to $200 more per child for eligible taxpayers. Families with qualifying children should review income thresholds and phase-out rules to determine their exact credit amount.

This credit is refundable in part, meaning some taxpayers may receive a refund even if they owe no tax.

Key Changes for New Haven Small Businesses!

Qualified Business Income Deduction Made Permanent

The 20 percent deduction for qualified business income (QBI) has been made permanent under the new law. Additionally, phase-in thresholds have increased:

From $50,000 to $75,000 for individual filers
From $100,000 to $150,000 for joint returns

This change benefits sole proprietors, partnerships, S corporations, and certain trusts and estates. If you operate a pass-through business in New Haven, you can continue to claim this deduction indefinitely, reducing your effective tax rate on business income.

Expanded Small Business Stock Exclusion

The federal income tax exclusion for gains on qualified small business stock (QSBS) has been significantly expanded:

Maximum eligible gain increased from $10 million to $15 million per taxpayer (or 10 times the aggregate adjusted basis of stock sold, whichever is greater)
Gross asset threshold for qualifying as a "small business" raised from $50 million to $75 million

For New Haven entrepreneurs and investors holding QSBS, this expansion provides substantial tax savings when selling qualified shares. Verify that your stock meets all QSBS requirements, including the five-year holding period and active business tests.

100% Bonus Depreciation Restored

Businesses can now claim 100% bonus depreciation on qualifying property placed in service during the 2026 tax year. This provision allows immediate expensing of the full cost of eligible equipment and assets, rather than depreciating them over multiple years.

Eligible property includes:

Machinery and equipment
Computer systems and software
Certain vehicles used for business purposes
Furniture and fixtures

Small businesses planning capital investments should coordinate purchases with their tax preparation New Haven professionals to maximize depreciation benefits.

Action Steps to Maximize Your 2026 Tax Refund

Gather documentation early. Collect W-2 forms, 1099 forms, receipts for deductible expenses, and records of estimated tax payments.
Review your withholding. If you received a large refund or owed a significant amount in previous years, adjust your W-4 to optimize withholding for 2026.
Identify applicable new deductions. Determine which of the new provisions apply to your specific situation: senior status, tips income, overtime pay, SALT payments, or business income.
Consider itemizing. With the increased SALT cap and new auto loan interest deduction, itemizing may now provide greater tax benefits than the standard deduction for some taxpayers.
Consult with a tax professional. The complexity of these changes makes professional guidance valuable. A concierge tax pro can identify opportunities you may overlook and ensure accurate compliance.

Schedule Your Tax Preparation Consultation Today

The 2026 tax changes create both opportunities and complexities for New Haven families and small businesses. Missing a deduction or miscalculating a credit can cost you hundreds or thousands of dollars.

At Jose's Tax Service, we specialize in helping Connecticut taxpayers navigate complex tax situations and maximize their refunds. Our team stays current on all federal and state tax law changes affecting New Haven residents.

Contact us today to schedule your tax preparation consultation. Visit https://josestaxservice.com or call our office to speak with an experienced tax professional who can help you take full advantage of the 2026 tax changes.

Don't leave money on the table: let us help you file with confidence and maximize your tax refund this year.