2025–2026 Tax Law Changes

December 13, 2025

Standard Deduction and New Senior Deduction

For 2026, the standard deduction is $32,200 for married filing jointly, $16,100 for single filers, and $24,150 for heads of household. Seniors age 65 or older can claim an additional income deduction of $6,000 per individual or $12,000 per couple, meaning a jointly filing couple will not pay income tax on up to $44,200 of income.

Filing Status	2025	2026
Single	$15,750	$16,100
Married Filing Jointly	$31,500	$32,200
Head of Household	$23,625	$24,150

Charitable Deduction for Standard-Deduction Filers

Starting in 2026, standard-deduction filers can claim charitable deductions of up to $1,000 ($2,000 for joint filers). Itemizers may deduct donations only to the extent they exceed 0.5% of AGI. For example, a taxpayer with AGI of $100,000 and a $400 donation could previously deduct the $400 when itemizing, but the AGI floor prevents that deduction in 2026. Choosing the standard deduction instead allows an additional $400 deduction.

Auto Loan Interest Deduction

Buyers of vehicles finally assembled in the U.S. may deduct up to $10,000 of auto loan interest annually. The deduction is available in addition to the standard deduction and is limited to vehicles purchased for personal use from 2025 through 2028.

Gambling Loss Limitation

Beginning in 2026, deductible gambling losses are limited to 90% of losses incurred during the year and cannot exceed gambling winnings for that year. For example, with $10,000 in winnings and $10,000 in losses, the full $10,000 loss was deductible through 2025, but only $9,000 can be deducted beginning in 2026.

Remittance Excise Tax

Starting in 2026, cash remittances sent abroad from the U.S. are subject to a 1% remittance tax. Transfers through bank accounts or credit cards, or through financial institutions regulated under the federal BSA, are exempt regardless of immigration status.

Newborn Support: Trump Accounts

For a baby born in 2026, the government deposits $1,000 into a designated Trump Account, and parents may save up to $5,000 annually. Tax is deferred, as with a Roth IRA, when the account is used for education or a home purchase.

Tax Benefits for Tips and Overtime

Starting in 2025, workers in occupations traditionally receiving tips, such as restaurants and beauty services, can exclude up to $25,000 of tip income annually from federal income tax, whether single or filing jointly. Overtime is also exempt up to $12,500 per year ($25,000 for joint filers). Social Security taxes (FICA) still apply. Benefits phase out for taxpayers with annual income above $150,000 ($300,000 for joint filers) and apply temporarily for four years beginning in 2025.

Employers must separately identify tips and overtime on employees’ Forms W-2, 1099-NEC, or 1099-MISC. Self-employed individuals may also claim the tip deduction, but tips must be reported on Form 1099-NEC, 1099-MISC, or 1099-K, and the individual must not work in a specified service trade or business (SSTB), such as law or medicine.

Higher State and Local Tax (SALT) Deduction Limit

Individual taxpayers itemizing state and local taxes can deduct up to $40,000. The former $10,000 cap disadvantaged taxpayers in high-tax areas such as California and New York. This deduction is temporarily allowed from 2025 through 20299.

Expanded Estate and Gift Tax Exemption

Beginning in 2026, the lifetime estate and gift tax exemption is permanently increased to $15 million with automatic annual inflation adjustments. This substantially reduces the number of people subject to estate tax and can benefit wealth transfer strategies for high-net-worth individuals.

Digital Asset Transaction Reporting: Form 1099-DA

Digital asset brokers, including cryptocurrency exchanges, will provide the IRS and taxpayers with Form 1099-DA reporting transactions in cryptocurrency, NFTs, and other digital assets occurring on or after January 1, 2025. Be aware that IRS scrutiny is increasing when a taxpayer answers “No” to the digital asset question but is suspected of holding digital assets.

Social Security Number Requirements

The OBBBA requires taxpayers to use Social Security numbers for most tax benefits. Taxpayers using an ITIN because they lack an SSN face restrictions on most benefits. Benefits requiring an SSN include the student loan cancellation-of-debt exclusion, tip and overtime exclusions, the child tax credit, American Opportunity and Lifetime Learning education credits, and Trump Accounts for newborns.