The Internal Revenue Service officially kicks off the 2026 tax filing season on January 26.
All individual taxpayers must submit their returns and pay any taxes owed by April 15, 2026, to avoid penalties and interest.
The IRS anticipates receiving approximately 164 million individual income tax returns during this filing season, with the majority filed electronically. For taxpayers seeking additional time, an automatic extension is available that pushes the filing deadline to October 15, though any taxes owed must still be paid by the April 15 deadline.
Several provisions from the One Big Beautiful Bill Act retroactively affect the 2025 tax year, requiring taxpayers to claim new deductions and credits on their returns.
Among the most impactful changes are new deductions for certain workers and consumers:
- No Tax on Tips ($25,000 max): Specific occupation requirements, phaseouts beginning at $150,000 MAGI (single) / $300,000 (joint)
- No Tax on Overtime ($12,500 max single, $25,000 joint): W-2 employee only, similar phaseout thresholds, with complete phase-out at $275,000/$550,000 MAGI
- Car Loan Interest Deduction ($10,000 max): Vehicle must be new, U.S.-assembled; steepest phaseout at $100,000/$200,000 MAGI with $200 reduction per $1,000 over threshold
- Senior Deduction ($6,000 age 65+): Most accessible with gradual 6% phaseout starting at $75,000/$150,000 MAGI
- Child Tax Credit: Increased from $2,000 to $2,200 per child (permanent), Income phaseout thresholds ($200,000 single / $400,000 joint)
- Trump Accounts: Contribution limits ($5,000 individual, $2,500 employer), Federal $1,000 pilot program starting July 4, 2026
- Employer-Provided Child Care Credit: Doubled from 25% to 40% (50% for small businesses), Maximum credit increased from $150,000 to $500,000 ($600,000 for small businesses)
- 529 Education Savings Plan Enhancements: K-12 limit doubled from $10,000 to $20,000 per year, Expanded qualified expenses (curriculum, tutoring, test fees, dual enrollment, special education)
Additionally, the legislation increased the state and local tax (SALT) deduction cap from $10,000 to $40,000, substantially benefiting taxpayers in high-tax states. The $40,000 cap applies for 2025-2029, increases by 1% annually through 2029, then reverts to $10,000 in 2030.
Standard Deductions and Credits Increase
The IRS has adjusted standard deductions for tax year 2025 and released projections for 2026:
- Married filing jointly: $32,200 (2026) and $31,500 (2025)
- Single filers: $16,100 (2026) and $15,750 (2025)
- Heads of household: $24,150 (2026) and $23,625 (2025)
The estate tax exclusion has also increased to $15 million for 2026, up from $13,990,000 in 2025.
The IRS introduced a new Schedule 1-A for taxpayers to claim the recently enacted deductions. The agency continues to encourage electronic filing and direct deposit for faster refund processing. Taxpayers who file electronically typically receive refunds in less than 21 days, with some refunds potentially arriving by mid-February for those filing early.
The IRS workforce has been reduced by approximately 25-26% due to planned layoffs and buyouts. Staffing losses and complex new tax law provisions could potentially slow processing times and increase the difficulty of reaching the agency for assistance during the filing season.
IRS Free File is set to begin accepting returns on Friday, January 9, for qualified taxpayers, with Free File Fillable Forms available starting January 26. Taxpayers should visit IRS.gov to explore available tools and resources, including the IRS Individual Online Account for checking balances, payments, and tax records.
The agency also reminded taxpayers to watch for tax scams and fraud, and to review guidance if they receive Form 1099-K or Form 1099-DA, the latter applying to cryptocurrency and digital asset sales.
