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As tax season kicks off in 2026, Americans may be able to take advantage of the temporary tax changes recently implemented. This includes higher standard deductions, new senior deductions, as well as changes for tips, overtime and qualified car loans. Take a look!
Tax season has official started in 2026 and the IRS is now accepting and processing 2025 individual income tax returns. For many Americans, this filing period will feel different from prior years—not just because of new forms and digital tools, but because of a significant wave of temporary tax changes that could translate into larger refunds, lower tax bills, and new planning opportunities for investors and working families alike.
The IRS expects to receive about 164 million individual income tax returns for the 2025 tax year, with the vast majority filed electronically. The federal deadline remains Wednesday, April 15, 2026, for most taxpayers to file and pay any tax due (not including any extensions).
Households may see a refund increase as compared with prior years, but that will depend on how much tax is due, compared with what was withheld. Any increases in refunds this year is likely the result of over withholding, due to the temporary tax changes.
Several factors are converging to push refunds higher in 2026:
The result is a classic “refund surge,” with lower tax liability, unchanged withholding, and a larger check back from the IRS when returns are filed.
The OBBBA introduced several temporary deductions that run from 2025 through 2028 and are available to taxpayers who take either the standard deduction or itemized deductions, subject to income limits.
1. $6,000 Senior Deduction
Taxpayers who are age 65 or older by the end of 2025 can claim an additional $6,000 deduction, on top of the regular standard deduction or their itemized deductions. For a married couple where both spouses qualify, that can mean up to $12,000 in extra deductions.
This benefit phases out for single filers with modified adjusted gross income (MAGI) above $75,000 and for joint filers above $150,000, so higher‑income retirees may see a reduced or eliminated benefit.
For retirees and near‑retirees, this deduction can meaningfully reduce taxable income, especially when combined with other tax‑efficient strategies such as Roth conversions, Social Security timing, and tax‑loss harvesting in taxable brokerage accounts.
2. Up to $25,000 for Qualified Tips
Eligible workers can now deduct up to $25,000 of qualified tip income for 2025, subject to income limits and other eligibility rules. The deduction begins to phase out for taxpayers with MAGI above $150,000 ($300,000 for joint filers).
This change effectively reduces the tax burden on a portion of reported tips, which can be especially valuable for waitstaff, bartenders, rideshare drivers, and others whose earnings fluctuate from year to year.
3. Up to $12,500 for Overtime Pay
The law also allows a deduction of up to $12,500 for overtime pay ($25,000 if married filing jointly), again subject to income‑based phase‑outs. For many middle‑income workers, this can translate into a noticeable reduction in taxable income and a higher refund or lower tax bill.
One of the more eye‑catching provisions in the 2025 law is a deduction of up to $10,000 in qualified passenger vehicle loan interest for vehicles with final assembly in the United States and purchased in 2025 (subject to income limits and other qualifications).
For investors and financially savvy households, this deduction reinforces the idea that tax‑efficient spending decisions—such as timing a new vehicle purchase, choosing domestic assembly, and optimizing loan structure—can have a measurable impact on annual tax outcomes.
Importantly, most of these new deductions are temporary, tied to President Donald Trump’s term and currently scheduled to run through the 2028 tax year. After that, absent new legislation, they would expire, potentially leading to higher tax bills for those who have come to rely on them.
Each provision also includes income‑based phase‑outs, so higher‑income taxpayers may receive little or no benefit. This underscores the value of multi‑year tax planning: understanding not just what the law says for 2025, but how it may change in 2026, 2027, and beyond.
Given the complexity of the new rules and the temporary nature of many provisions, consulting a tax professional or financial advisor can help ensure you maximize deductions, avoid surprises, and integrate your tax outcome into a broader investment and retirement plan. As tax season begins, this is an ideal time to gather income and deduction records, review withholdings, and discuss how larger refunds or lower tax bills can be channeled into long‑term financial goals. By treating tax season as part of the overall financial strategy—not just an annual obligation—investors can turn today’s filing deadline into a meaningful step toward greater financial security.
