Americans will see their paychecks grow in 2026 thanks to expanded tax deductions and inflation adjustments that could leave more money in workers’ pockets. The changes come as part of President Donald Trump’s “One, Big, Beautiful Bill” (OBBB), which introduces several taxpayer-friendly provisions starting with the 2025 tax year.
The IRS has announced that the 2026 tax filing season will officially begin on Monday, January 26, when taxpayers can start submitting their 2025 returns. But the real news is what those returns will look like — and how different they’ll be from previous years.
New Deductions That Could Boost Your Refund
Perhaps the most notable changes? Several categories of income will become tax-free. The OBBB establishes temporary deductions for tips, overtime pay, and vehicle loan interest — a trio of tax breaks aimed at working and middle-class Americans. The IRS confirms these provisions could significantly reduce tax bills or increase refunds for eligible taxpayers.
To claim these new benefits, taxpayers will need to use the newly created Schedule 1-A form, as the agency indicates in its guidance for the upcoming filing season.
But wait — there’s more. The standard deduction, which most Americans take instead of itemizing, will increase to $16,100 for single filers and $32,200 for married couples filing jointly, according to tax authorities cited in recent reports.
What’s particularly unusual about this increase? Beyond the typical inflation adjustment the IRS makes annually, the OBBB added an extra 5% boost to the standard deduction, as financial experts note in their analysis of the coming changes.
Senior Citizens Get Special Treatment
Older Americans stand to benefit even more. Those aged 65 and older will be eligible for an additional $6,000 deduction on top of the already-increased standard deduction for seniors. This provision will remain in effect from 2025 through 2028, the IRS states in its overview of the legislation.
For a senior couple filing jointly, these combined increases could mean thousands more in tax-free income compared to previous years.
Families See Enhanced Benefits Too
Families with children aren’t left out of the tax reform package. The legislation also includes a higher child tax credit, though specific dollar amounts weren’t detailed in the information provided by tax preparation services.
How long will these favorable tax provisions last? That’s the catch. Many of these benefits are temporary, scheduled to expire after a few years unless Congress takes action to extend them.
The IRS adjusts tax brackets and standard deductions annually for inflation, which typically results in lower withholdings and potentially higher paychecks for most workers. But the additional provisions in the OBBB represent a more substantial change to the tax code than the usual annual adjustments.
Taxpayers looking to maximize their benefits under these new rules should begin planning now, even though the official filing season won’t begin until January 26, 2026. With proper preparation, many Americans could find themselves keeping significantly more of their earnings when these changes take effect.
