Quick answer
The 2025 tax law added four deductions for 2025 through 2028: up to $25,000 of qualified tips, up to $12,500 of overtime premium pay ($25,000 married filing jointly), up to $10,000 of interest on a loan for a new U.S.-assembled vehicle, and $6,000 for each person 65 or older. You can take them whether or not you itemize, but each one shrinks at higher incomes.
It also raised the child tax credit to $2,200 per child (up to $1,700 of it refundable), and the 2026 standard deduction is $16,100 for single filers, $32,200 for married couples filing jointly and $24,150 for heads of household.
At a glance: 2025 and 2026 amounts
| 2025 | 2026 | |
|---|---|---|
| Standard deduction, single or married filing separately | $15,750 | $16,100 |
| Standard deduction, married filing jointly | $31,500 | $32,200 |
| Standard deduction, head of household | $23,625 | $24,150 |
| Child tax credit, per child under 17 | $2,200 | $2,200 |
| Refundable part (additional child tax credit), per child | $1,700 | $1,700 |
| Credit for other dependents | $500 | $500 |
| Tips deduction, maximum | $25,000 | $25,000 |
| Overtime deduction, maximum (married filing jointly) | $12,500 ($25,000) | $12,500 ($25,000) |
| Car loan interest deduction, maximum | $10,000 | $10,000 |
| Senior deduction, per person 65 or older | $6,000 | $6,000 |
| Cash gifts to charity without itemizing (married filing jointly) | None | $1,000 ($2,000) |
| State and local tax deduction limit, if you itemize | $40,000 | $40,400 |
For 2026, people 65 or older or blind also add $1,650 each to the standard deduction if married, or $2,050 if unmarried, on top of the new $6,000 senior deduction.
No tax on tips
- What counts: tips customers give voluntarily, in cash or on a card, check, gift card or payment app, including tips shared through a tip pool. A mandatory service charge only counts if the customer can change it.
- Your job must be on the IRS's list of more than 70 occupations where people customarily get tips, such as servers, bartenders, hair stylists, delivery drivers and many others. Check IRS.gov/TippedOccupations.
- Limit: up to $25,000 per return. It shrinks by $100 for each full $1,000 of income above $150,000 ($300,000 married filing jointly).
- Rules: you need a Social Security number valid for work, and married couples must file jointly. If you're self-employed, the deduction can't be more than that business's net profit.
- It lowers federal income tax only. Social Security and Medicare taxes still apply to tips.
Records you need
- 2025: tips on your W-2 (box 7, social security tips), the tips you reported to your employer, Form 4137 for unreported tips, or for the self-employed, daily tip records.
- 2026: new reporting starts. Your W-2 shows tips with code TP in box 12 and your occupation code in box 14b. Forms 1099-NEC, 1099-MISC and 1099-K have new boxes for tips.
No tax on overtime
- What counts: only the extra "half" of time-and-a-half that federal law (the Fair Labor Standards Act) requires. Overtime paid only because of a state law or a union contract doesn't count.
- Limit: up to $12,500, or $25,000 married filing jointly. It shrinks by $100 for each full $1,000 of income above $150,000 ($300,000 married filing jointly).
- Rules: a Social Security number valid for work, and married couples must file jointly.
Records you need
- 2025: if your pay stubs show the overtime premium, use that. If they only show total overtime pay, divide your time-and-a-half pay by 3 (or double-time pay by 4) to get the premium.
- 2026: your W-2 shows qualified overtime with code TT in box 12. If your overtime is reported on a 1099 instead of a W-2, it's in Form 1099-NEC box 1d or Form 1099-MISC box 14.
Car loan interest deduction
- The loan must be taken out after December 31, 2024 to buy a new vehicle for personal use, secured by the vehicle. Used cars and leases don't qualify; refinancing a qualifying loan generally does.
- The vehicle: a car, minivan, van, SUV, pickup or motorcycle with a gross vehicle weight rating under 14,000 pounds, with final assembly in the United States. The window sticker or a VIN lookup shows where it was assembled.
- Limit: up to $10,000 of interest a year. It shrinks by $200 for each $1,000 (or part of $1,000) of income above $100,000 ($200,000 married filing jointly).
- Records: your lender's statement of interest paid, and the vehicle's VIN, which goes on your return every year you claim it.
The $6,000 senior deduction
- Who: anyone 65 or older by the end of the year. For 2025, that means born before January 2, 1961. A married couple who are both 65 or older gets $12,000.
- Limit: it shrinks by 6% of income above $75,000 ($150,000 married filing jointly).
- Rules: a valid Social Security number for each person who qualifies, and married couples must file jointly.
- It's extra. It comes on top of the regular additional standard deduction for people 65 and older, and you get it whether or not you itemize.
Child tax credit, EITC and other family changes
Child tax credit: new Social Security number rules
- $2,200 per child under 17 for 2025 and 2026, with up to $1,700 refundable. The refundable part is 15% of earned income over $2,500.
- The child needs a Social Security number valid for work, issued by the return's due date. A child without one doesn't qualify, but may qualify for the $500 credit for other dependents.
- You also need a work-valid SSN issued by the return's due date. On a joint return, only one spouse needs one; the other can have an SSN or an ITIN.
- The credit starts to shrink above $200,000 of income ($400,000 married filing jointly).
Earned income tax credit
| Qualifying children | Maximum 2025 | Maximum 2026 | 2026 income limit, other filers (married filing jointly) |
|---|---|---|---|
| None | $649 | $664 | $19,540 ($26,820) |
| 1 | $4,328 | $4,427 | $51,593 ($58,863) |
| 2 | $7,152 | $7,316 | $58,629 ($65,899) |
| 3 or more | $8,046 | $8,231 | $62,974 ($70,244) |
Investment income must be $12,200 or less for 2026 ($11,950 for 2025). You, your spouse and your children need SSNs valid for work; ITIN filers can't claim the EITC. Refunds with the EITC or the additional child tax credit can't be released before mid-February (see when your refund arrives).
Trump accounts for children
Children who are U.S. citizens born from 2025 through 2028 and meet the other requirements can get a $1,000 contribution from the government into a new Trump account. You choose it with Form 4547, filed with your return or through your IRS online account. Starting July 4, 2026, employers can add up to $2,500 a year.
Other changes worth knowing
- Payment apps (Form 1099-K): apps and online marketplaces send a 1099-K only when you got over $20,000 and more than 200 payments in a year. Income is still taxable even without a form.
- Contract work (Forms 1099-NEC and 1099-MISC): the reporting threshold rises from $600 to $2,000 for payments made in 2026 and later.
- Gifts to charity without itemizing (new for 2026): even if you take the standard deduction, you can deduct up to $1,000 of cash gifts to qualified charities, or $2,000 married filing jointly. Gifts to individuals, such as personal fundraising pages, don't count. Keep a bank record or a receipt from the charity for every gift, and the charity's written acknowledgment for any gift of $250 or more.
- State and local taxes (for people who itemize): the deduction limit rose to $40,000 for 2025 and $40,400 for 2026. It's reduced when modified AGI is over $500,000 for 2025 or $505,000 for 2026, but not below $10,000.
- Marketplace insurance: starting with 2026, extra advance premium tax credit is paid back in full. See our Form 1095-A guide.
Deadlines
| October 15, 2026 | Last day to file a 2025 return if you got an extension |
|---|---|
| April 15, 2027 | 2026 returns due, and any tax owed |
| October 15, 2027 | Extended 2026 returns due (an extension gives more time to file, not to pay) |
As of October 2026, the IRS hasn't announced when the 2027 filing season opens; the 2026 season opened on January 26. If the IRS postpones deadlines for your county after a hurricane or other disaster, your due date may be later.
Common questions
Are tips and overtime tax-free now?
Not completely. They're deductions that lower the income you pay federal income tax on, with limits ($25,000 for tips; $12,500 or $25,000 for the overtime premium) that shrink at higher incomes. They don't lower Social Security and Medicare taxes.
Do I have to itemize to get the new deductions?
No. The tips, overtime, car loan interest and senior deductions work with the standard deduction too.
Can I deduct gifts to charity if I don't itemize?
Starting with your 2026 return, yes: up to $1,000 of cash gifts to qualified charities, or $2,000 if you're married filing jointly. On 2025 returns, only people who itemize can deduct gifts to charity.
My 2025 W-2 doesn't show my overtime separately. Can I still claim it?
Yes. Use your pay stubs. If they only show total overtime pay, the IRS lets you divide time-and-a-half pay by 3 (or double-time pay by 4) to find the premium.
Does the $6,000 senior deduction replace the extra standard deduction for people 65 and older?
No. It's on top of it.
Can I get the child tax credit if my child has an ITIN?
No. The child needs a Social Security number valid for work, issued by the due date of the return. You may get the $500 credit for other dependents instead.
Do the new deductions lower my AGI?
No. They're subtracted after AGI, so they lower your taxable income but not your adjusted gross income.
When is my 2026 tax return due?
April 15, 2027. With an extension, October 15, 2027, but any tax owed is still due April 15.
Official sources
We checked this guide against these official pages:
- IRS releases tax inflation adjustments for tax year 2026 (IR-2025-103) irs.gov
- Rev. Proc. 2025-32 (2026 amounts) irs.gov
- One Big Beautiful Bill provisions: individuals and workers irs.gov
- Tax deductions for working Americans and seniors (FS-2025-03) irs.gov
- Guidance for tips and overtime received in 2025 (IR-2025-114) irs.gov
- Final regulations listing tipped occupations (IR-2026-49) irs.gov
- Instructions for Schedule 8812 (child tax credit) irs.gov
- Earned income tax credit income limits and maximum amounts irs.gov
- Form 1099-K threshold FAQs (IR-2025-107) irs.gov
- Topic 506, Charitable contributions irs.gov
- Correction to the 2026 state and local tax deduction amounts irs.gov
This guide is general information, not tax advice for your situation. Tax rules change, so check the official sources or ask a tax pro. Nationwide Tax Pro is a private tax preparation company and an authorized IRS e-file provider. We are not affiliated with the IRS, HealthCare.gov or any government agency.