The IRS Has New Rules — Here’s How They Affect You

Tax season is underway, and some of the latest tax changes could significantly impact you. New tax rules and deductions could lower your tax bill or even boost your tax refund. In fact, the average tax refund for this tax season is $3,742, up nearly 11% from 2025, according to the IRS. And according to TaxRise, every cent counts — report anything you made in the year.

The new deductions mainly benefit seniors, business owners, and tipped employees. Continue reading to learn about some of the biggest new tax rules and how they may impact you.

Key Takeaways

• Tax refunds are about $400 higher this year than in 2025.
• The standard deduction is higher for all tax filers, regardless of tax rates.
• New deductions are available for car interest, small business purchases, and charitable contributions.

Big changes for the 2026 tax season

There are several major changes for the 2026 tax filing season, but these are seven of the most significant:

1. The standard deduction is higher

What this means for you: The new standard deduction reduces your taxable income, potentially leading to a lower tax bill.

For all taxpayers, there is a new, higher standard deduction, which reduces your taxable income even if you don't itemize your deductions. The higher limit helps offset the impact of inflation and rising costs.

 

 

2. If you're over 65, you may qualify for a new deduction

What this means for you: Those 65 or older may claim an additional $6,000 deduction (up to $12,000 for married couples who both qualify).

If you were 65 or older before the last day of the tax year, you could claim an additional tax deduction above and beyond the standard deduction amount. This deduction is available through 2028.

The tax deduction is phased out for taxpayers with modified adjusted gross incomes (MAGIs) over $75,000 for single filers ($150,000 for joint filers).

3. If you bought a new car, you may deduct the interest

What this means for you: If you bought an American-made vehicle in 2025 and took out a car loan, you can deduct up to $10,000 in interest paid.

To qualify, the vehicle must have been purchased for personal use, and the loan must have originated after December 31, 2024.

The deduction is phased out for taxpayers with MAGIs over $100,000 ($200,000 for joint filers).

4. Those 60 to 63 can make extra contributions to retirement plans

What this means for you: If you're between 60 and 63, you can qualify for extra catch-up contributions to qualifying retirement plans.

Taxpayers can contribute up to $24,500. But those between the ages of 60 and 63 can contribute up to $35,750 per year.

5. You can qualify for a deduction for charitable contributions without itemizing

What this means for you: Even if you don't itemize your deductions, you can still deduct up to $1,000 in charitable contributions ($2,000 if you're married filing jointly).

Previously, you could only deduct charitable contributions if you itemized deductions on your taxes. But in 2026, non-itemizers can now deduct a certain amount of charitable contributions.

6. Small business owners can take advantage of additional deductions

What this means for you: Small business owners can deduct 100% of the cost of qualifying business property purchases.

The deduction includes the following purchases:

• New equipment
• Machinery
• Certain plants
• Other qualifying business property

7. Tipped workers get a tax break

What this means for you: Tippers workers can now deduct up to $25,000 of tips from their taxable income.

If you work in a field where tipping is common, such as restaurant servers or bartenders, you can deduct a portion of your tips. However, high-earners aren't eligible; the deduction phases out for taxpayers whose income reaches $150,000.

Filing your federal income taxes

With more deductions and higher deduction limits, filing your income taxes this year could lead to a smaller tax bill or a larger tax refund in your bank account. To maximize your tax refund, keep detailed records of income, tips, and expenses, and keep receipts for major purchases and charitable contributions.

Consider using tax software or working with a tax professional if your situation is more complex or if you want personalized help making sense of the latest tax information. You can find credentialed tax preparers through the IRS.gov database.

FAQs

Will I pay more in taxes in 2026?

Not necessarily. Many of the changes, such as the higher standard deduction, could lead to a smaller tax bill. How much you have to pay in taxes depends on your income, filing status, and your eligibility for deductions.

Did the standard deduction increase?

Yes, the standard deduction increases for all taxpayers, regardless of tax brackets. For 2026, the standard deduction is $32,200 for those who are married filing jointly.

Do these changes affect my 2025 tax return?

Yes, many of these changes went into effect on January 1, 2026, and will apply to your 2025 tax return.