Tax season looks a little different in 2026. With President Trump signing the One Big Beautiful Bill Act into law, the 2017 tax cuts are now permanent, and several new breaks have been added on top. Whether you’re a senior, a homeowner, or a parent, there’s a good chance at least one of these changes affects your bottom line. Here’s what you need to know before filing.
President Trump signed the One Big Beautiful Bill Act (OBBBA). The OBBBA is a budget bill that makes the 2017 tax cuts permanent, Let’s start with what’s new and then move on to other year-end considerations. Within this context the term AGI stands for “Adjusted Gross Income,” which is your total income minus a handful of key deductions
New Tax Breaks
- The limit on the state and local tax deduction has been increased from $10,000 to $40,000.
- Deduction for Seniors. The OBBBA added a new $6,000 per person deduction for all individuals who have reached age 65 before the end of the tax year.
- Charitable Contribution Deduction for Non-Itemizers. This one isn’t available until 2026. The maximum deduction is $1,000 ($2,000 for joint returns). Eligible contributions must be made in cash (checks and credit/debit cards are also fine) to a public charity.
Deductions and Exclusions from Income
Taking the Standard Deduction versus Itemizing. The Tax Cuts and Jobs Act (TCJA) substantially increased the standard deduction amounts, thus making itemized deductions less attractive for many individuals. The OBBBA makes this change permanent. For 2026, the standard deduction amounts are: $15,750 (single), $23,625 (head of household), and $31,500 (married filing jointly).
Mortgage Interest Deduction. If the mortgage on your principal residence has a balance of $750,000 or less
Sale of a Home. If you sold your home this year and it was your principal residence for at least two of the five years before the sale, you can exclude from income up to $250,000 of your gain on the sale ($500,000 if you’re married filing jointly and meet a few conditions). Your taxable gain is also reduced by any amounts that you spent on improvements and additions that add to the value of a residence, prolong its useful life, or adapt it to new uses. If you think your gain might exceed the $250,000/$500,000 exclusion, you’ll want to put together records of any improvements you made to the home, which we can use to reduce your gain
Note that if you rented out your home or used part of it for business purposes, your exclusion may be reduced. A loss on the sale of a principal residence is generally not deductible.
Tax Credits
Tax credits are more favorable than deductions because a tax credit reduces the amount of income tax you may have to pay. Unlike a deduction, which reduces the amount of income subject to tax, a credit directly reduces the tax itself.
- Child Tax Credit. For 2026, you can claim a tax credit of $2,200 (up to $1,700 is refundable) for each dependent
- American Opportunity Tax Credit. If you have one or more postsecondary students in the family, you may qualify for an American opportunity tax credit of up to $2,500 per year for each eligible student.
If you were married or divorced during the year and changed your name, you need to notify the Social Security Administration (SSA). A mismatch between the name shown on the tax return and the SSA records can cause problems in the processing your tax return and may even delay tax refunds.
Summary:
The 2026 tax year brings real opportunities to reduce what you owe, but only if you plan ahead. The expanded SALT deduction, the new senior deduction, an enhanced Child Tax Credit, and the home sale exclusion are among the most impactful changes this year.
