Understanding the 2026 Tax Season: Key Changes and How They Affect You

In-Depth Analysis

### Background The 2026 tax season arrives with a backdrop of a restructured IRS and new tax legislation. These changes aim to provide tax relief and incentivize savings but also introduce complexities that taxpayers need to navigate.

### SALT Deduction For the last seven years, the tax code capped the amount taxpayers may write off for state and local taxes at $10,000. The new tax law quadruples this cap to $40,000. This primarily benefits the well-off who own expensive homes in places like Boston’s western suburbs and pay local property tax bills in excess of $25,000.

**How to Prepare:** Determine if itemizing deductions, including the higher SALT deduction, is more beneficial than taking the standard deduction. Gather all relevant documentation for state and local taxes paid.

### Trump Accounts These are newly created tax-advantaged savings and investment accounts for children. After-tax contributions of up to $5,000 a year can be made by parents and others until the beneficiary reaches age 18. The government will contribute $1,000 to accounts for US citizens born between Jan. 1, 2025, and Dec. 31. 2028.

**How to Prepare:** If eligible, apply for a Trump account using IRS Form 4547 with your 2025 tax return. Consider contributing to maximize the tax-advantaged savings.

### Standard Deduction and Other Changes The standard deduction has increased, benefiting most taxpayers. Additionally, there are new rules for tips and overtime pay deductions, as well as an increase in the Child Tax Credit.

**How to Prepare:** Review your income and potential deductions to determine the most beneficial filing strategy. Take advantage of the increased Child Tax Credit if eligible.

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FAQ

Who benefits most from the higher SALT deduction?

Primarily, the well-off who own expensive homes in areas with high state and local taxes.

What is a Trump account?

A new tax-advantaged savings and investment account for children with potential government seed money.

How much is the standard deduction for single and joint filers?

$15,750 for single filers and $31,500 for joint filers.

Is there still a free filing service?

No, the Direct File service has been canceled.

Takeaways

Stay informed about the changes to the SALT deduction and how it may impact your tax liability.
Explore the benefits of opening a Trump account for eligible children to maximize tax-advantaged savings.
Understand the increased standard deduction and other changes to optimize your tax filing strategy.
Be vigilant against tax scams and protect your personal information.

Discussion

Do you think these tax changes will benefit you? Let us know!

Share this article with others who need to stay ahead of this trend!

Sources

It’s tax prep time. Here’s what you need to know about filing this year. Filing your taxes? Here’s what’s different for Californians this year Why federal tax refunds may be bigger than usual

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