2026 Tax Changes: 7 Rules That Could Affect Your Wallet

Several federal tax rules changed for 2026, and some could directly affect how much you keep, save or owe. The important point is that many of the new provisions are deductions with eligibility rules—not blanket tax-free income.

Here are seven changes worth knowing now.

1. The standard deduction is higher

For tax year 2026, the standard deduction is $16,100 for single filers, $32,200 for married couples filing jointly and $24,150 for heads of household, according to the IRS.

A larger standard deduction reduces taxable income for people who do not itemize, but it does not mean everyone receives the same dollar-for-dollar tax savings.

2. Qualified tip income may qualify for a new deduction

Eligible workers may be able to deduct up to $25,000 of qualified tips, subject to income limits and other requirements. The deduction is available to eligible taxpayers whether they itemize or take the standard deduction.

Check the latest IRS guidance before assuming all tip income qualifies.

3. Qualified overtime can also generate a deduction

Eligible workers may deduct up to $12,500 of qualified overtime compensation, or up to $25,000 for joint filers, subject to the law’s eligibility and phaseout rules.

This is a deduction from taxable income—not a rule that makes every overtime dollar completely free of federal tax.

4. Some car-loan interest is now deductible

For 2025 through 2028, qualifying taxpayers may deduct up to $10,000 a year of interest on certain loans used to buy a qualifying personal-use vehicle. The loan generally must have originated after December 31, 2024, the vehicle must be new to the taxpayer, and final assembly must occur in the United States.

The deduction begins phasing out above modified adjusted gross income of $100,000 for single filers and $200,000 for joint filers. Leases do not qualify. See the IRS eligibility rules before counting on the deduction when shopping for a vehicle.

5. Seniors may qualify for an additional deduction

People age 65 and older may qualify for an additional $6,000 deduction, subject to income limits and eligibility requirements. This is separate from the regular additional standard deduction available to older taxpayers.

6. Retirement contribution limits increased

The 2026 employee contribution limit for most 401(k), 403(b) and governmental 457 plans is $24,500. The IRA contribution limit is $7,500. Most workers age 50 and older may have additional catch-up room, while workers ages 60 through 63 can have a higher catch-up limit in eligible plans.

The IRS also says that beginning in 2026, certain higher-paid workers making catch-up contributions to plans with Roth features must make those catch-up contributions on a Roth basis. See the IRS catch-up contribution guidance.

7. HSA contribution limits are higher

For 2026, the Health Savings Account contribution limit is $4,400 for self-only coverage and $8,750 for family coverage, provided you are eligible to contribute to an HSA. The official limits are in IRS Revenue Procedure 2025-19.

What to do now

Do not wait until filing season to discover which changes apply to you. Review your withholding, retirement contributions, HSA contributions and major purchases while there is still time to make informed decisions for 2026.

For complicated situations—especially business income, large deductions or multiple income sources—consider checking your plan with a qualified tax professional.

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Educational content only; not tax, legal or financial advice. Tax rules can change and individual eligibility varies.