1. New Deductions Created by the One `Big Beautiful Bill Act (OBBBA)                                         

Tip Income Deduction

Workers may deduct up to $25,000 in tip income. Income limit: $150,000 single / $300,000 joint. Applies to 2025–2028. Sources:

Overtime Income Deduction

Workers may deduct up to $12,500 (single) or $25,000 (joint). Same income limits as above. Applies to 2025–2028. Sources:

Car Loan Interest Deduction

Deduction of up to $10,000 of interest on a loan used to purchase a U.S.-assembled vehicle. Applies to 2025–2028. Sources:

Senior Deduction

Taxpayers 65 or older with income below $75,000 single / $150,000 joint may deduct an additional $6,000. Phases out completely at $175,000 single / $250,000 joint. Applies 2025–2028. Sources:

2. Child Tax Credit Increase

The Child Tax Credit increases from $2,000 to $2,200 beginning in 2025. Sources:

3. Extension of 2017 Tax Cuts (TCJA Provisions)

The 2017 individual tax cuts were set to expire after 2025 but are extended. This keeps:

• Top rate at 37% instead of reverting to 39.6%.

• 12% bracket instead of reverting to 15%. Sources:

4. IRS Direct File Program Discontinued

The IRS will not offer Direct File in 2026. Sources:

5. New Schedule 1‑A Required

A new two‑page Schedule 1‑A must be filed to claim:

• Tip deduction

• Overtime deduction

• Car loan interest deduction

• Senior deduction Sources:

6. Filing Season Timing

7. Increased Paperwork Requirements

Taxpayers must maintain documentation for:

• Tip logs

• Overtime records

• Car loan interest statements

• Senior income verification Sources:

8. IRS Operational Constraints

Due to staffing cuts and leadership turnover, the IRS is expected to have:

• Slower processing

• More automated notices Sources:

9. Trump Savings Accounts

Babies born Jan 1, 2025 – Dec 31, 2028 receive a $1,000 government contribution. Parents may contribute up to $5,000 annually beginning July 5, 2026. Sources:

10. Inflation Adjustments for 2026 (Planning for 2026 Income, Filed in 2027)

These do not affect 2025 returns filed in 2026, but they are part of the law changes and widely reported.

• $32,200 married filing jointly

• $16,100 single / married filing separately

• $24,150 head of household Sources:

Top 37% bracket begins at:

• $640,600 single

• $768,700 joint Sources:

12% bracket begins at:

• $12,400 single

• $24,800 joint Sources:

AMT Exemption (2026)

• $90,100 single

• $140,200 joint Sources:

Estate Tax Exclusion (2026)

• $15,000,000 Sources:

Adoption Credit (2026)

• $17,670 Sources:

Roth IRA Contribution Limit (2026)

• $7,500 Sources:

11. Clean Energy Credit Expirations

Key expiration dates:

• December 31, 2025

• June 30, 2026 Sources:

12. Additional Notes on 2026 Filing Season

• Many new deductions apply even if the taxpayer takes the standard deduction. Sources:

• W‑2 deadline remains January 31. Sources: