2026 Tax Season: New Deductions, New IRS Tools, and Opportunities to Increase Your Refund

The 2026 tax season is about to begin, and millions of taxpayers are looking to learn about the significant changes to 2025 taxes , what's new from the IRS, and how to maximize their refund. To date, some key issues have emerged. At Professional Taxes LLC, we explain how these changes can benefit you and why it's important to prepare now.

Deduction for qualified tips

For fiscal year 2025, a new deduction takes effect that allows tipped workers in certain occupations to deduct up to $25,000 in qualifying tips.

This applies to taxpayers with adjusted gross income (AGI) up to certain limits (approximately $150,000) before the deduction is phased out. IRS guidance indicates that for tax year 2025, the reporting forms (W-2, 1099) remain unchanged for reporting tips/overtime under the One Big Beautiful Bill Act (OBBBA).

Deduction for qualified overtime

Also under OBBBA, workers who receive qualified overtime pay can deduct up to $12,500 (or $25,000 if married filing jointly) in this category for 2025. Again, the extra pay is required to be the “premium” portion (e.g., an additional half over the normal rate) mandated by federal labor law.

Increase in the standard deduction

For the 2025 tax year, the amount of the standard deduction will increase:

. Single: $15,750

. Head of household $23,625

. Married declaring jointly: $31,500

This improves the pre-tax exclusion for many taxpayers.

Permanent classification of individual income tax rates

The OBBBA law permanently maintains the tax brackets of 10%, 12%, 22%, 24%, 32%, 35%, and 37% for individuals. It also updates the income thresholds for each bracket through inflation adjustments.

Change in the deduction for state and local taxes (SALT)

Under the new law, the limit on the SALT (state and local taxes) deduction will be temporarily increased for certain taxpayers starting in 2025. This may affect taxpayers in states with high state taxes or high property values.

Adjustments for inflation and other relevant amounts

The IRS published inflation adjustments for tax year 2026 that will apply to the 2027 filing, but many of these also indicate trends for 2025-2026. For example: income limits for EITCs, exclusion of foreign-earned income, and deductions for medical expense accounts/savings.

Information report with no immediate changes for 2025

The IRS specified that for fiscal year 2025, reporting forms (W-2, 1099, etc.) and federal withholding tables will not yet be modified to implement the OBBBA changes — providing a “breather” for adaptation.

IRS Digital Tools The IRS is modernizing the tax process and will introduce new tools by 2025:

. Adjustments in the Direct File 2025 program.

. IRS Online Account: Now the IRS allows you to view transcripts, balances, payments, refund history, and fraud alerts more efficiently.

. IP PIN. This is a highly recommended option, and it involves generating a personal key to prevent identity fraud.

Improved mobile accessibility . Allowing users to access more options from their mobile phones.

For many taxpayers this is new, and although it seems simple, most need guidance to use these tools correctly, which is why at PROFESSIONAL TAXES LLC, we are ready to help you.

How can you prepare yourself to avoid stress and mistakes?

Here are some key tips to get you ready for January 27, the official start of tax season:

1. Organize your documents

. W-2

. 1099 (NEC, MISC, G, R, SA, etc.)

. Invoices for deductible expenses

. Mileage logs or tips

. Business receipts if you are self-employed

. If you have dependents, request medical or school records with the updated address that matches your address.

. If you have dependents in school or university, request the corresponding forms.

. If you need to reconstruct your business expenses, request bank statements in advance.

. If you are divorced and eligible to claim your dependent(s) this year, verify that it is your right to do so and bring the completed information on the day of your appointment.

Sources consulted:

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