Outreach Connection FY26-01
The IRS is providing implementation guidance on the One, Big, Beautiful Bill. Below are the expansions and changes to deductions affecting taxpayers as they prepare for the filing season. Car loan interest Standard deduction increase Deduction for seniors No tax on overtime No tax on tips
Key takeaways about this deduction:
Effective 2025 through 2028
Up to $10,000 per year for interest on qualified new vehicle loans
Phase-out begins at modified adjusted gross income of:
$100,000 for single filers
$200,000 for joint filers
Standard deduction increase
The standard deduction increases for tax year 2026, to:
$32,200 for married couples filing jointly
$16,100 for single filers and married individuals filing separately
$24,150 for heads of household
Deduction for seniors
Key takeaways about this deduction:
Additional $6,000 per taxpayer aged 65 or older
$12,000 if both spouses qualify
Phase-out begins at modified adjusted gross income of:
$75,000 for single filers
$150,000 for joint filers
No tax on overtime
Key takeaways about this deduction:
It applies only to the overtime premium portion of wages
Modified adjusted gross income caps annually at:
$12,500 for single filers
$25,000 for joint filers
No tax on tips
Key takeaways on tips deduction for tax year 2026:
Up to $25,000 of qualified tip income is deductible
Phase-out begins at modified adjusted gross income of:
$150,000 for single filers
$300,000 for joint filers