Your 2026 Tax Return Will Look Different — 5 IRS Changes You Should Know Now

Introduction

As Americans head toward the 2026 tax year, several quiet but meaningful IRS rule changes are already taking shape and they’ll affect far more people than most headlines suggest.

From larger deductions to new income exclusions and future-dated credits, the next filing season will require a little more awareness and a lot less last-minute scrambling.

Here’s a clear breakdown of the five biggest updates and what they may mean for your household.

1. The Standard Deduction Is Going Up (Again)

The Internal Revenue Service is increasing the standard deduction for the 2026 filing season a change that impacts the vast majority of taxpayers.

For 2026:

• Single filers can deduct $15,750

• Married couples filing jointly can deduct $31,500

Because more than 90% of Americans use the standard deduction rather than itemizing, this increase alone will lower taxable income for most households even if nothing else about your finances changes.

2. Seniors Get an Extra Deduction (With Limits)

Taxpayers age 65 and older will be eligible for an additional $6,000 deduction for tax years 2025 through 2028.

However, there are important caveats:

• The benefit begins to phase out once adjusted gross income exceeds $75,000

• Some states and local jurisdictions including Washington, DC have opted out of this provision at the state level

That means eligible seniors may still see a federal tax benefit, but not necessarily a state one, depending on where they live.

3. “No Tax on Tips” and “No Tax on Overtime” Are Becoming Real

One of the most talked-about changes coming out of recent legislation is the partial exclusion of certain types of earned income.

Under the new rules (still being finalized):

• Workers may be able to exclude up to $25,000 in qualifying tips from taxable income

• Portions of overtime pay may also be excluded

• Some states and cities may opt out, meaning eligibility will vary

These provisions are expected to remain in effect through 2028, but the IRS and Treasury are still ironing out enforcement and reporting details.

For tipped and hourly workers, this could materially reduce taxable income but only if implemented correctly.

4. A New $1,700 Tax Credit Is Coming (But Not Yet)

A new tax credit tied to charitable contributions for education is on the way but it won’t affect your 2026 return just yet.

What we know so far:

• The credit is worth up to $1,700

• It applies to cash donations made to approved scholarship-granting organizations

• It becomes available January 1, 2027

• It is nonrefundable and subject to strict eligibility rules

All states and Washington, DC are eligible to participate, but taxpayers won’t be able to claim this credit until a future filing year.

5. “Trump Accounts” Introduce a New Child Savings Structure

Another long-term change comes from the creation of so-called Trump Accounts under the One Big Beautiful Bill.

Here’s how they work:

• Children born between January 1, 2025 and January 1, 2029 receive a $1,000 federal deposit

• An additional $250 deposit is being distributed to millions of children under age 10

• A $6 billion private contribution reportedly from Michael Dell is helping fund the program

With consistent contributions over time, projections suggest a child born in 2026 could accumulate a substantial balance by adulthood though results will depend on participation and funding behavior.

Why This Matters for K2DF Clients

These changes may look disconnected, but they share one theme: tax planning is becoming more timing-sensitive.

At Key2DebtFree, we’re seeing more situations where:

• Income timing affects eligibility

• Federal and state rules don’t match

• Benefits exist but only if claimed correctly

• Planning one year ahead can save thousands later

Waiting until filing season to “see what happens” is no longer the safest move.

The Bottom Line

The 2026 tax year brings higher deductions, new income exclusions, future-dated credits, and long-term savings tools but none of them work automatically. Understanding how these changes interact with your income, location, and financial goals is the key to actually benefiting from them instead of missing out.