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Major 2026 Tax Changes
1. No Tax on Tips Deduction: Eligible workers can deduct up to $25,000 of qualified tips from taxable income, applicable through 2028. This applies to occupations that customarily receive tips, such as servers, bartenders, and valets, but excludes certain professional service trades like healthcare, law, and finance. Tips must be voluntary or from tip pools, not mandatory service charges..
2. Charitable Contributions for Non-Itemizers: Non-itemizers can now deduct $1,000 (single) or $2,000 (married filing jointly) for charitable donations, making it easier to reduce taxable income without itemizing Senior Deduction: A new $6,000 deduction is available for seniors age 65 and older, providing additional tax relief .
4. SALT Deduction Cap Increase: The state and local tax (SALT) deduction cap rises to $40,400 in 2026, with income phaseouts starting at $505,000 and capping at $606,000. This benefits homeowners in high-tax states .
5. Retirement Account Updates: IRA contribution limits increase to $7,500 for under 50 and $8,600 for age 50+. SECURE 2.0 provisions allow rolling unused 529 funds into a Roth IRA, enhancing retirement planning flexibility .
6. Child Tax Credit: The maximum child tax credit rises to $2,200 per qualifying child, with a refundable portion up to $1,700. Phase-out thresholds begin at $200,000 for single filers and $400,000 for joint filers
7. Capital Gains and Investment Planning: Long-term capital gains rates remain at 0%, 15%, and 20%, with income brackets indexed for inflation. Taxpayers may strategically realize gains or losses to optimize tax outcomes .
8. Vehicle Interest Deduction: Interest on new U.S.-manufactured vehicles purchased in 2025 or later can be deducted up to $10,000, available whether or not you itemize, with phaseouts for higher incomes .
Do you all have any tax related questions or comments? Stop by or contact us at 254-699-5600 (JimE ) (CAA & Notary ) or 699-4209 (TomR) (EA, OIC Expert).
