The 2026 tax season in the United States is approaching with significant changes in tax laws brought about by the “One Big Beautiful Bill.” Taxpayers need to be aware of several key factors in order to prepare for filing their 2025 federal income taxes.
For individual taxpayers, the deadline for filing 2025 tax returns and paying taxes is April 15, 2026 (Wednesday). As of now, the Internal Revenue Service (IRS) has not announced when they will begin accepting tax filings. Typically, the IRS starts processing tax returns in the last week of January or early February.
Here are some of the tax changes to be aware of for this tax season:
In the 2026 tax season, the IRS will no longer offer the “IRS Direct File” service, and the future start date is yet to be determined. Previously, a few states had already implemented this free electronic tax filing service.
The standard deduction for the 2025 tax year has been increased by an additional 5% based on inflation adjustments. The latest standard deduction is $15,750 for single filers and $31,500 for married couples filing jointly.
Under the new regulations, eligible employees who receive tips and earn an annual income below $150,000 (or $300,000 for married couples filing jointly) can deduct up to a maximum of $25,000 in tips when filing taxes from 2025 to 2028. If income exceeds $150,000, the deduction decreases by $100 for every additional $1,000.
Not all employees in every industry are eligible for the tax-free tip benefits; only those in qualified occupations listed by the Treasury Department are eligible.
In addition to tip exemptions, eligible employees meeting specific criteria can also apply for overtime wage deductions from 2025 to 2028. Single filers with an annual income not exceeding $150,000 can deduct up to $12,000, while married couples filing jointly can deduct up to $25,000.
Similarly, the higher the income, the lower the deduction, and a Social Security number must be provided when filing taxes.
The “One Big Beautiful Bill” may provide taxpayers with more tax deductions, including those who earn income from side jobs through third-party payment applications like PayPal, Venmo, Cash App, Zelle, and Google Pay, which require the use of the 1099-K form.
The 1099-K form applies to individuals engaged in gig work or occasional online sales of goods. This form details the payments individuals receive from selling goods and services.
According to the “One Big Beautiful Bill,” the IRS has reinstated the previous threshold for reporting the 1099-K form. In other words, third-party platforms no longer need to submit the 1099-K form unless the total transactions paid to the payee exceed $20,000 and the number of transactions exceeds 200. However, at the state level, some states may have stricter income reporting thresholds.
As of December 31, 2025, individuals aged 65 or older can receive an additional tax credit of $6,000 if their annual income does not exceed $75,000. The deduction decreases gradually as income increases.
Furthermore, the child tax credit has been increased from $2,000 to $2,200.
From 2025 to 2028, taxpayers purchasing eligible vehicles can enjoy tax-free benefits on loan interest.
The IRS states that taxpayers who purchase qualified vehicles assembled in the United States after December 31, 2024, can deduct up to $10,000 in car loan interest when filing taxes. The deduction decreases as income rises.