Hailey
Filing taxes in the United States is about to feel very different. Starting with the 2026 tax season, the IRS is rolling out several important updates that will affect almost every taxpayer.
Whether you are a student with a part-time job, a working professional, or a senior citizen, these changes can impact how much tax you pay—or how much refund you receive.
Many Americans rely on tax refunds to cover daily needs like rent, groceries, and bills, so understanding these updates early can help you plan better and avoid last-minute stress. Below, we break down the five biggest IRS rule changes for 2026 in a simple and clear way.
Higher Standard Deduction for Most Taxpayers
One of the biggest and most helpful changes is the increase in the standard deduction. Since over 90% of Americans use the standard deduction, this update matters to almost everyone.
Updated Standard Deduction Amounts
| Filing Status | 2024 Amount | 2026 Amount |
|---|---|---|
| Single Filers | $14,600 | $15,750 |
| Married Filing Jointly | $29,200 | $31,500 |
A higher standard deduction means less of your income is taxed. This can lead to a lower tax bill or a bigger refund, especially for middle-income families.
Extra Tax Relief for Seniors Aged 65 and Above
If you are 65 years or older, the IRS is offering additional relief starting in tax year 2025 and running through 2028.
Key Senior Deduction Rules
- Seniors can deduct an extra $6,000 from taxable income
- Applies only if adjusted gross income is under $75,000
- Some states and Washington DC have opted out
States that opted out say the funds will instead support programs like the Child Tax Credit. So, seniors should always check their state tax rules.
“No Tax on Tips” and “No Tax on Overtime” Explained
This is one of the most talked-about IRS updates. The federal government is introducing new tax breaks for workers who earn tips or overtime pay.
What This Means for Workers
- Up to $25,000 in tips may be deducted from taxable income
- Part of overtime pay may also be tax-free
- Rules apply through 2028
- Some states and cities may opt out
The IRS and Treasury are still finalizing details, so not all workers will qualify. Still, this is a big win for service workers, hospitality staff, and hourly employees.
How Americans Are Using Their Tax Refunds
A recent survey of 2,000 U.S. taxpayers shows how important tax refunds have become for daily life.
Refund Spending Trends
| Expense | Percentage of People |
|---|---|
| Rent | 58% |
| Groceries | 48% |
| Credit Card Debt | 29% |
| Home Repairs | 13% |
The average refund was over $2,300, much higher than earlier estimates. Around 60% of people say refunds are very important for their 2025 budget.
New $1,700 Tax Credit (Coming in 2027)
A new $1,700 IRS tax credit is coming, but not immediately.
Key Details
- Starts January 1, 2027
- For people who donate cash to scholarship organizations
- Helps low- and middle-income families
- Credit is nonrefundable
- Has strict eligibility rules
All states and Washington DC can participate, but taxpayers should read the rules carefully before planning around this credit.
“Trump Accounts” for Children: A Long-Term Benefit
Another major update is the creation of Trump Accounts, designed to help children build long-term savings.
How Trump Accounts Work
- Children born between Jan 1, 2025 – Jan 1, 2029 get $1,000
- 25 million children up to age 10 get an extra $250
- Funded partly by a $6 billion donation
- With full contributions, a child born in 2026 could have over $300,000 by age 18
This program aims to support education, savings, and financial stability.
Prepare Early to Avoid Stress
The IRS strongly advises taxpayers to prepare early. Collect documents like W-2s, 1099s, bank records, and digital asset details by December. Using online IRS accounts and tax professionals can help reduce errors and lower audit risk.
The 2026 IRS tax changes bring both opportunities and challenges. From a higher standard deduction to new rules on tips, overtime, and child savings accounts, these updates can significantly impact your finances.
Planning ahead, understanding eligibility rules, and checking both federal and state policies will help you make the most of these changes. With proper preparation, you can reduce stress, avoid mistakes, and possibly keep more money in your pocket during tax season.
FAQs
What are the biggest IRS tax changes for 2026?
The biggest updates include a higher standard deduction, senior tax relief, possible tax-free tips and overtime, and new child savings accounts.
Will everyone qualify for the new IRS tax benefits?
No. Many benefits depend on income, age, job type, and whether your state follows the federal rules.
When should I start preparing for the 2026 tax season?
You should start preparing in December by gathering income documents and checking your IRS online account.