The biggest 2026 tax changes for most Phoenix families are a bigger standard deduction, new deductions for tips, overtime, car loan interest and seniors, a higher SALT cap, and a new charity deduction for people who don’t itemize. Most started in 2025 under the One Big Beautiful Bill Act and carry over to the return you file in early 2027.
On IRS.gov, you may also see this law called the Working Families Tax Cuts. Below, we explain each change in plain English: who qualifies, how much it’s worth, and where it shows up on your return.
Last updated October 8, 2026. All amounts are for tax year 2026 unless noted.
2026 tax numbers at a glance
| Everyone | |
|---|---|
| Standard deduction, single | $16,100 |
| Standard deduction, married filing jointly | $32,200 |
| Standard deduction, head of household | $24,150 |
| SALT deduction cap, if you itemize | $40,400 |
| Charity deduction without itemizing | $1,000$2,000 joint |
| Workers and seniors | |
| Tips deduction, up to | $25,000 |
| Overtime deduction, up to | $12,500$25,000 joint |
| Car loan interest deduction, up to | $10,000 |
| Senior deduction, age 65 or older, per person | $6,000 |
| Families | |
| Child Tax Credit, per child | $2,200up to $1,700 refundable |
| Dependent care FSA limit | $7,500 |
| Adoption credit, up to | $17,670 |
| Business owners | |
| 1099-NEC and 1099-MISC filing threshold | $2,000 |
| 1099-K threshold | $20,000and 200 transactions |
| Section 179 expensing limit | $2,560,000 |
| Bonus depreciation | 100% |
What is the 2026 standard deduction?
For tax year 2026, the standard deduction is $16,100 for single filers, $32,200 for married couples filing jointly, and $24,150 for heads of household. That’s up from $15,750, $31,500, and $23,625 for 2025.
The law also made the bigger standard deduction permanent. Most people take the standard deduction instead of itemizing. If your mortgage interest, state and local taxes, and charity gifts add up to more than these amounts, itemizing may save you more. A tax pro can run the numbers both ways for you.
Who gets the new $6,000 senior deduction?
If you are 65 or older by the end of the year, you can deduct an extra $6,000. If you’re married and both of you are 65 or older, that’s $12,000. This is on top of the extra standard deduction seniors already get.
You qualify if:
- You turn 65 on or before the last day of the tax year
- Your modified adjusted gross income (MAGI) is under $75,000, or $150,000 if married filing jointly. MAGI is your total income after certain adjustments. The deduction shrinks above those amounts.
- You include your Social Security number on the return, and file jointly if you’re married
- It’s available for tax years 2025 through 2028
On your return: Schedule 1-A (Form 1040). You can take it whether you itemize or not.
How does the no tax on tips deduction work?
If you earn tips, you can deduct up to $25,000 of qualified tips each year from 2025 through 2028. You still report your tips. The deduction lowers the income you pay federal income tax on.
You qualify if:
- Your tips are voluntary cash or card tips from customers
- You work in a job the IRS lists as one that customarily received tips as of December 31, 2024
- Your MAGI is under $150,000 ($300,000 if married filing jointly). The deduction shrinks above that.
- You include your Social Security number, and file jointly if you’re married
Good to know: If you’re self-employed, the deduction can’t be more than your net income from the work where you earned the tips. Some service businesses don’t qualify.
On your return: Schedule 1-A (Form 1040). You can take it whether you itemize or not.
How does no tax on overtime work?
You can deduct the extra part of your overtime pay, up to $12,500 a year, or $25,000 if married filing jointly. This is the “half” in time-and-a-half that federal law requires. It applies to tax years 2025 through 2028.
Example: If you earn $20 an hour and get $30 for each overtime hour, only the extra $10 per overtime hour counts toward the deduction.
You qualify if:
- Your overtime is required under the Fair Labor Standards Act and shows on your W-2, 1099, or another statement
- Your MAGI is under $150,000 ($300,000 if married filing jointly). The deduction shrinks above that.
- You include your Social Security number, and file jointly if you’re married
On your return: Schedule 1-A (Form 1040). Keep your last pay stub of the year.
Can I deduct car loan interest in 2026?
Yes, if you bought a qualifying new vehicle with a loan. You can deduct up to $10,000 of interest a year for tax years 2025 through 2028, whether you itemize or not.
You qualify if:
- The loan started after December 31, 2024, and is secured by the vehicle
- You’re the first owner. Used vehicles don’t qualify.
- It’s a car, minivan, van, SUV, pickup truck, or motorcycle under 14,000 pounds gross vehicle weight
- Final assembly happened in the United States. Check the label on the vehicle or use the NHTSA VIN Decoder.
- It’s for personal use, not business
- Your MAGI is under $100,000 ($200,000 if married filing jointly). The deduction shrinks above that.
Good to know: Lease payments don’t count. Interest on a refinanced loan that qualified generally still counts. You’ll need to enter the vehicle’s VIN on your return.
On your return: Schedule 1-A (Form 1040), with your vehicle’s VIN.
What changed with the SALT deduction?
If you itemize, you can now deduct up to $40,400 in state and local taxes (SALT) for 2026. For Arizona homeowners, that usually means your state income tax and property taxes. Before 2025, the limit was $10,000.
The cap starts to shrink once your MAGI goes over $505,000. It drops by 30% of the amount over that line, but it never goes below $10,000. The higher cap is scheduled to last through 2029. Starting in 2030, it goes back to $10,000.
On your return: Schedule A (Form 1040), only if you itemize.
What 2026 tax changes help families with kids?
- Child Tax Credit: up to $2,200 per qualifying child for 2026, with up to $1,700 refundable. You and your child need valid Social Security numbers.
- Child and dependent care credit: starting in 2026, the top credit rate goes from 35% to 50%. The expense limits stay at $3,000 for one person and $6,000 for two or more.
- Dependent care FSA: if your job offers one, you can set aside up to $7,500 a year starting in 2026, up from $5,000 ($3,750 if married filing separately).
- Trump Accounts: a new savings account for children. The Treasury makes a one-time $1,000 deposit for each eligible child. Individuals and employers can contribute up to $5,000 a year. No contributions were allowed before July 4, 2026.
- Adoption credit: up to $17,670 for 2026, and up to $5,120 of it is refundable.
Refundable means you can get that part back as a refund even if you owe no tax.
Can I deduct charity gifts if I don’t itemize?
Yes, starting in 2026. If you take the standard deduction, you can also deduct up to $1,000 in cash gifts to eligible charities, or $2,000 if married filing jointly.
Gifts to donor-advised funds and non-cash gifts, like clothes or furniture, don’t count for this deduction. Keep your receipts.
What 2026 tax changes affect small business owners?
- 1099-NEC and 1099-MISC: you only need to file these for payments of $2,000 or more made in 2026, up from $600. The amount may adjust for inflation starting in 2027.
- 1099-K: payment apps and online marketplaces only send a 1099-K when you receive more than $20,000 across more than 200 transactions in a year.
- Bonus depreciation: 100% bonus depreciation is now permanent for qualifying property acquired after January 19, 2025. That means you can deduct the full cost in the first year.
- Section 179: you can expense up to $2,560,000 of qualifying equipment in 2026. The limit starts to phase out when your total purchases go over $4,090,000.
- Employer childcare credit: the maximum credit rises to $500,000, or $600,000 for eligible small businesses.
Also, most U.S. businesses no longer need to file a BOI report. Read our BOI reporting update.
Which tax breaks ended?
- Clean vehicle credits for new, used, and commercial EVs ended for vehicles acquired after September 30, 2025.
- Energy Efficient Home Improvement Credit (like new windows, doors, and heat pumps) ended for property placed in service after December 31, 2025.
- Residential Clean Energy Credit (like rooftop solar) ended for expenditures made after December 31, 2025.
If you bought an EV or finished an energy project before those dates, you may still be able to claim the credit. Bring your paperwork to your tax appointment.
What other 2026 tax changes should I watch for?
- Marketplace health insurance: starting in 2026, there’s no longer a cap on paying back extra premium tax credit. If your income goes up, update your Marketplace account right away so you don’t owe a large amount at tax time.
- HSAs: starting January 1, 2026, bronze and catastrophic Marketplace plans can be paired with a Health Savings Account.
- Sending money abroad: a 1% federal tax applies to certain cash-based money transfers sent on or after January 1, 2026.
- Your withholding: with the new deductions, your refund or balance due may look different. Review your W-4 before the year ends.
2026 tax changes FAQ
They apply to tax year 2026, which is the return you file in early 2027. Many of these changes started in 2025 and continue in 2026.
No. You can take all four whether you itemize or take the standard deduction. They are claimed on Schedule 1-A of Form 1040.
No. The vehicle’s original use has to start with you, so used vehicles don’t qualify. Leases don’t qualify either.
No. The tips, overtime, car loan interest, and senior deductions are set for tax years 2025 through 2028. The bigger standard deduction is permanent. The higher SALT cap is scheduled to last through 2029.
Keep your W-2s and last pay stubs showing tips and overtime, your car loan statements and the vehicle’s VIN, charity receipts, and Form 1095-A if you have Marketplace health insurance.
About the author
Get help with your 2026 tax return
Moon Valley Accounting & Tax Services helps Phoenix individuals, families, and small business owners put these changes to work. Book a free consultation and we’ll go over which new deductions fit you. You can also see all of our tax and bookkeeping services.
2726 W Thomas Road, Phoenix, AZ 85017. Open Monday to Friday, 9 AM to 5 PM Arizona time.
Sources
- IRS: Tax inflation adjustments for tax year 2026
- IRS: Rev. Proc. 2025-32
- IRS: Tax deductions for working Americans and seniors
- IRS: One Big Beautiful Bill provisions
- IRS: Instructions for Forms 1099-MISC and 1099-NEC
- IRS: Form 1099-K FAQs
- IRS: Bonus depreciation guidance (Notice 2026-11)
- 26 U.S.C. § 164 (SALT limit)
- 26 U.S.C. § 129 (dependent care assistance)
- IRS: Schedule 1-A (Form 1040), Additional Deductions
This article is general information, not tax advice for your situation. Tax rules can change, so talk with a tax professional before you file.
