What You Need to Know to File Taxes in 2026

January 22, 2026
Two people smile as they discuss tax law changes.

By Raquel Ordaz, 2025-2026 Get it Back Campaign

The tax filing deadline is Wednesday, April 15, 2026! This year there are several tax filing changes to be aware of before you file your return. This guide highlights what you need to know to get the most out of the tax season this year.

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What new tax deductions are available?

Deductions help reduce the amount of tax you owe. New deductions for tax years 2025-2028 may benefit some workers with overtime pay or tip income, seniors, and individuals with new car loans. These deductions are available whether you itemize deductions or take the standard deduction and you can claim them alongside valuable tax credits such as the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC).

While the tax deductions phase out for higher-income filers, many households with low and moderate incomes may qualify. To take these deductions you will file Schedule 1-A, Additional Deductions with your 2025 tax return.

Below is an overview of the new deductions and how they work.

Overtime pay deduction

If you earn overtime pay, you may be able to deduct a portion of that income from your taxable earnings. This deduction is designed to provide tax relief to workers who put in long hours and rely on overtime income to make ends meet.

For the 2025 tax year, individuals with a valid Social Security number can deduct up to $12,500 in qualified overtime compensation while married couples filing jointly can deduct up to $25,000. This deduction is for federally mandated overtime and only applies to the extra half-time portion of overtime wages, not the regular hourly pay.

For example, Lisa’s final 2025 paystub shows that she earned a total of $6,000 in overtime pay for the year. This amount includes her regular wages plus the additional half-time overtime pay. To determine the amount eligible for the deduction she divides the total by 3: $6,000 ÷ 3 = $2,000 qualified overtime pay.

Employers are expected to calculate the qualified overtime amount for you. However, during this transitional year, some employers may not. If you need to determine the amount yourself, the IRS provides examples of how to calculate eligible overtime pay for this deduction if you are paid another rate for overtime.

Tip income deduction

You may qualify to for the tax deduction for tip income if you work in a recognized industry that earns tips. Like the overtime deduction, this provision helps reduce the tax burden on workers whose income can vary widely from week to week.

Single filers with a valid Social Security number can deduct up to $25,000 in tip income when filing their 2025 tax return, while those who are married filing jointly can deduct up to $50,000.

To claim the tip income deduction, you will need records of your tip income. This may include Form 1099-NEC, Form 1099-MISC, Form 1099-K and/or a personal log of tip income.

Car loan interest deduction

People who purchase a new vehicle may be eligible for a deduction for car loan interest. This deduction is intended to help offset the rising cost of vehicle ownership while encouraging the purchase of vehicles assembled in the U.S.

Individuals who took out a loan after December 31, 2024, to purchase a new car assembled in the United States can deduct up to $10,000 in interest paid on that loan. The car must be a personal vehicle, not for business or commercial use.

When you file your taxes, you will need your car loan lender interest statement and your Vehicle Identification Number (VIN) to take this deduction.

Senior bonus deduction

Some older adults may benefit from a new senior bonus deduction. Tax fliers who are 65 or older on December 31, 2025, and who have a valid Social Security number, can deduct up to $6,000 from their taxable income. Married couples filing jointly may deduct up to $12,000 if both spouses qualify.

This bonus deduction is in addition to the extra standard deduction already available to seniors. Currently, seniors can take an additional $2,000 deduction if filing individually or $3,200 if filing jointly. When combined, the additional standard deduction and the new bonus deduction can significantly lower taxable income for older adults, particularly those living on fixed incomes.

Direct deposit for tax refunds

The IRS now requires most people to receive tax refunds through direct deposit to reduce theft. If you do not include account details on your tax return, the IRS will send a letter requesting this information. Your refund may be delayed for up to 6 weeks.

The IRS plans to issue guidance explaining who might qualify to continue receiving paper checks and what options are available for people who can’t receive direct deposit.

Resources are available to open a bank account to receive direct deposit:

  • BankOn partners with financial institutions in every state to connect people to safe, affordable bank accounts.
  • The National Credit Union Administration has a credit union locator tool.
  • The Federal Deposit Insurance Corporation (FDIC) has resources to help people find a bank to open an account in person or online. Also, this checklist can help people select the right account for their needs.
  • Some prepaid debit cards, digital wallets, or mobile apps that have routing and account numbers associated with personal accounts may also be able to receive direct deposit. Check with the company to confirm which numbers to use.

530A accounts (Trump Accounts)

Another new opportunity this tax season is the option to open a special savings account for a child. If you are the parents or legal guardians of a child with a valid Social Security number, you can set up an investment savings account for your child when you file your 2025 tax return, or at any point before the calendar year in which the child turns 18.

Children born in the U.S. in 2025-2028 can receive an initial deposit of $1,000 from the federal government after July 4, 2026. You must elect to receive this contribution when you file a tax return or sign up at trumpaccounts.gov. (Children born before 2025 who are under 18 are eligible for an account but not for the $1,000 government deposit.)

Families can contribute up to $5,000 per year to a child’s account starting in mid-2026. Generally, money cannot be withdrawn until the child turns 18. Earnings in the accounts will be taxed when the money is withdrawn.

Child Tax Credit (CTC)

The Child Tax Credit helps families cover the costs of raising children and is worth up to $2,200 per qualifying child. If you don’t owe federal income taxes or if the credit is more than the taxes you owe, you can get up to $1,700 back as a refund through the Additional Child Tax Credit (ACTC). To qualify for the ACTC you must earn at least 2,500 of earned income in 2025.

As in previous years, a child must have a Social Security number (SSN) to be claimed for the credit. A new change this year is that at least one parent must also have an SSN to claim the credit. (Previously, parents could have either an SSN or an Individual Taxpayer Identification Number to claim the credit.)

Earned Income Tax Credit (EITC)

The Earned Income Tax Credit is available for workers with low to moderate incomes. As a refundable tax credit, the EITC may provide you money back as a refund or lower the federal taxes that you owe. To qualify for this credit, you must earn money from a job.

When you file your taxes in 2026, the EITC is based on the earned income you made in 2025. Eligible families can claim a credit worth up to $8,046. Adults who aren’t raising kids at home are eligible for an EITC worth up to $649. Keep in mind that if you don’t have a qualifying child, you must be between 25-64 years old to be eligible for the credit. (There is not an age requirement for workers claiming children.)

Child and Dependent Care Tax Credit (CDCTC)

The Child and Dependent Care Credit helps families pay for child or dependent care expenses so they can work or look for work. This includes care for an incapacitated spouse who is unable to care for themselves or an adult dependent. As a non-refundable tax credit, the CDCTC helps reduce the amount of federal taxes you may owe.

The credit is worth a maximum of $1,050 for one qualifying person and $2,100 for two or more qualifying persons. You can claim eligible expenses up to $3,000 for one qualifying person or up to $6,000 for two or more qualifying persons. To determine your total 2025 care expenses, you can review documentation such as receipts, bank account statements, or provider statements that show how much you paid for care.

Adoption Tax Credit

The Adoption Tax Credit helps offset certain expenses for the adoption of a child. The credit is non-refundable, however starting tax year 2025 (which you file in 2026), part of the tax credit is refundable.

Families who qualify for the Adoption Credit and owe less in federal income taxes than the credit’s full value of $17,280 can now receive up to $5,000 as a refund. Eligible families must have qualified adoption-related expenses such as fees paid to an adoption agency.

Avoiding scams & identity theft

Tax-related scams and identity theft are common during the filing season, especially with new tax benefits available. One way to protect yourself is to sign up for an IRS Identity Protection Personal Identification Number (IP PIN)). An IP PIN is a six-digit number that is known only to you and the IRS. It is used to help prevent someone else from filing a tax return with your information.

Scammers may also pretend to be the IRS and contact you through phone calls, emails, text messages, or social media. It’s important to remember:

  • The IRS will not contact you for the first time by email, text message, or social media.
  • The IRS will generally contact you first by regular mail delivered by the U.S. Postal Service.

If you receive a suspicious message claiming to be from the IRS, you can report it to phishing@irs.gov. You can also review The IRS’ tips to identify and report tax fraud.

Claiming missed tax credits from previous years

If you didn’t claim tax credits you were eligible for in past years, you may still have time. In most cases, you can file a prior-year tax return up to three previous years to claim missed credits. This year you are filing taxes for 2025. This means you can file or correct a federal tax return to claim missed tax credits for 2022, 2023, and 2024.

If you are filing a 2022 tax return, you must file by April 15, 2026. Since this is the last year to file a 2022 tax return, you must mail it to the IRS and cannot file it electronically.

If you weren’t required to file before, there is usually no penalty for filing late if you are due a refund and don’t owe taxes. If you were required to file taxes, and you missed the deadline, filing late (and claiming credits you are eligible for) could decrease any penalty you may owe.

Filing your taxes for free

There are free and trusted tax filing options available:

These programs are designed to help you file an accurate return and claim the credits you are eligible for.