Washington
January 13, 2026
The Internal Revenue Service (IRS)
has officially opened the 2026 tax filing season, with electronic filing
beginning on January 26 for 2025 tax returns. This year's season introduces
significant updates from the One Big Beautiful Bill Act (OBBBA), signed into
law in July 2025, which made many provisions of the 2017 Tax Cuts and Jobs Act
permanent while adding new deductions and credits.
These changes aim to provide tax
relief for workers, families, seniors, and certain industries, potentially
leading to larger refunds for many Americans. The filing deadline is April 15,
2026, with extensions available.
Filing Season Starts January 26
The IRS will begin accepting and
processing 2025 federal tax returns on Monday, January 26, 2026. Taxpayers are
encouraged to file electronically for faster refunds, typically within 21 days.
Paper returns may take longer, and the IRS is phasing out paper refund checks
in favor of direct deposit.
Approximately 164 million individual
returns are expected this year. New forms, including Schedule 1-A for claiming
certain deductions, will be required for those qualifying under OBBBA
provisions.
Key Inflation Adjustments for Tax Year 2025/2026
The IRS has adjusted tax brackets,
standard deductions, and other thresholds for inflation. Standard Deduction
includes:
Married filing jointly: $31,500
Single or married filing separately: $15,750
Head of household: $23,625
These amounts reflect boosts from
OBBBA to prevent the expiration of higher deductions. Tax brackets remain the
same rates (10%, 12%, 22%, 24%, 32%, 35%, 37%), with thresholds adjusted upward.
Major New Benefits from the One Big Beautiful Bill Act
The OBBBA introduces several
taxpayer-friendly changes effective for 2025 taxes:
1.
No Tax on Tips:
Tipped workers can deduct up to $25,000 in tip income (temporary through 2028),
phasing out for higher earners.
2.
No Tax on Overtime:
A similar deduction for overtime pay, benefiting many hourly workers.
3.
Car Loan Interest Deduction: Up to $10,000 deductible for interest on loans for
U.S.-assembled vehicles (2025–2028).
4.
Senior Bonus Deduction:
Taxpayers 65+ get an extra $6,000 deduction ($12,000 for joint filers), phasing
out above $75,000/$150,000 income. This helps reduce taxes on Social Security
benefits.
5.
Increased Child Tax Credit: Raised to $2,200 per qualifying child.
6.
Higher SALT Deduction Cap:
Increased to $40,000 for state and local taxes.
Other updates include expanded
adoption credits ($17,670 max) and new "Trump Accounts" for
children's savings with government contributions for certain births.
End of IRS Direct File and Other Notes
The free IRS Direct File program has
been discontinued. Taxpayers can use IRS Free File (for incomes up to $84,000)
or other options. Digital asset reporting continues with new Form 1099-DA.
Refunds will primarily be via direct deposit.
What These Changes Mean for Taxpayers?
Many middle- and lower-income
households could see reduced tax bills or larger refunds due to new deductions
and credits. Seniors, service workers, and families with children stand to
benefit most. However, phase outs apply for higher earners.
Experts recommend reviewing
eligibility for new breaks and updating withholding to maximize take-home pay.
Consult IRS.gov or a tax professional
for personalized advice.
For the latest forms and guidance,
visit the official IRS website. Early filing is advised to secure quicker
refunds amid potential high demand.
