The 2026 tax filing season has introduced some of the most significant changes to the federal tax code in decades. Following the passage of recent legislation, including the One Big Beautiful Bill Act, the Internal Revenue Service (IRS) has updated Form 1040 and its accompanying schedules to include new deductions and expanded credits. These updates are designed to lower taxable income for millions of Americans and potentially increase the size of tax refunds.
Key Deadlines and Filing Status for 2026
The IRS officially opened the 2026 tax filing season on January 26, 2026. Taxpayers have until Wednesday, April 15, 2026, to file their 2025 tax returns or request a six-month extension. For those expecting a refund, the IRS continues to emphasize that electronic filing with direct deposit remains the fastest and most secure method to receive funds, typically within 21 days.
Major Increases in the Standard Deduction
To keep pace with inflation and legislative updates, the standard deduction has seen a notable increase for the 2026 filing season. This fixed amount reduces the portion of your income subject to tax without requiring you to itemize individual expenses like mortgage interest or charitable gifts.
- Married Filing Jointly: $31,500
- Single or Married Filing Separately: $15,750
- Head of Household: $23,625
For taxpayers aged 65 or older or those who are legally blind, an additional standard deduction of up to $2,000 is available, further lowering the total tax liability.
New Deductions on Schedule 1-A
A major addition to the 2026 tax landscape is the introduction of Schedule 1-A. This new form allows taxpayers to claim several “above-the-line” deductions that were previously unavailable.
No Tax on Tips and Overtime
Service industry workers and hourly employees may benefit from two landmark provisions. Eligible taxpayers can now deduct up to $25,000 in cash tips and up to $12,500 in qualified overtime pay. These deductions are designed to provide direct relief to middle-income earners and are subject to income phase-outs starting at $150,000 for single filers.
Enhanced Senior Deduction
Taxpayers aged 65 and older may qualify for a new, separate deduction of up to $6,000 per individual ($12,000 for married couples both over 65). This benefit is available regardless of whether the taxpayer chooses to itemize or take the standard deduction, provided their modified adjusted gross income stays below $75,000 for individuals or $150,000 for joint filers.
Auto Loan Interest Deduction
In an effort to support domestic manufacturing, interest paid on loans for new vehicles assembled in the United States is now deductible. Taxpayers can claim up to $10,000 in interest payments for vehicles purchased after 2024 that meet specific weight and assembly requirements.
Expanded Credits for Families and Individuals
Tax credits are particularly valuable because they reduce your tax bill dollar-for-dollar. For 2026, several key credits have been expanded or made more accessible.
- Child Tax Credit (CTC): The maximum credit has increased to $2,200 per qualifying child. The refundable portion, known as the Additional Child Tax Credit, is now capped at $1,700, allowing families with low tax liabilities to receive more of the credit as a refund.
- Adoption Tax Credit: The maximum credit for qualified adoption expenses has risen to $17,280. Notably, a portion of this credit (up to $5,000) is now refundable, a significant shift from previous years where it was entirely non-refundable.
- Earned Income Tax Credit (EITC): The maximum credit for low-to-moderate income workers with three or more children has increased to $8,046 for the current filing cycle.
Modernized Refund Processes and “Trump Accounts”
The IRS is transitioning toward a digital-first approach for all federal disbursements. Under a new executive order, the agency is phasing out paper refund checks. Taxpayers who do not provide valid bank account information may have their refunds temporarily frozen. In such cases, the IRS will issue a Notice CP53E, requiring the taxpayer to update their direct deposit details through their IRS Online Account.
Additionally, a new retirement vehicle called Trump Accounts has been launched for children under 18. This program includes a pilot contribution of $1,000 for eligible U.S. citizens born between 2025 and 2028, aimed at fostering long-term savings from an early age.
Frequently Asked Questions
What is the new Schedule 1-A used for on my 2026 tax return?
Schedule 1-A is used to claim the new deductions for tips, overtime compensation, auto loan interest, and the enhanced senior deduction.
How much is the Child Tax Credit for the 2026 filing season?
The maximum Child Tax Credit is $2,200 per child, with up to $1,700 of that amount being refundable as the Additional Child Tax Credit.
Will I still receive a paper check for my tax refund in 2026?
The IRS is phasing out paper checks; if you do not use direct deposit, your refund may be delayed or frozen until you provide banking information or request a specific waiver.
A former Wall Street analyst turned independent advisor, Mike specializes in retirement planning, 401(k) strategies, Social Security optimization, and late-career financial moves for everyday Americans.