Below is a list of the key changes for the average family doing their taxes in 2026.
• Child Tax Credit increased by $200: Families can now claim up to $2,200 per qualifying child for the 2025 tax year.
• Standard deduction increased: The standard deduction went up again due to inflation, reducing taxable income for most filers.
• Additional standard deduction for age 65+: Taxpayers age 65 and older receive a higher standard deduction amount.
• New temporary senior “bonus” deduction: Eligible taxpayers age 65+ can claim an extra $6,000 deduction ($12,000 for qualifying married couples) for tax years 2025–2028.
• Tax bracket thresholds adjusted: Income ranges for each tax bracket increased slightly, helping prevent “bracket creep.”
• Retirement contribution limits increased: Retirement contribution limits increased, allowing workers to contribute $500 more to 401(k) plans and IRAs for the 2025 tax year.
• Expanded catch-up contributions (ages 60–63): Beginning in 2025, taxpayers ages 60–63 may make a higher catch-up contribution of up to $11,250 to 401(k), 403(b), and similar plans (instead of the standard catch-up amount).
• HSA contribution limits increased: Health Savings Account contribution limits rose for both individual at $4,300 self-only (up from $4,150) and family $8,550 (up from $8,300).
• Gift tax annual exclusion increased: You can now gift $18,000 per person per year without filing a gift tax return (up from $17,000), allowing families to transfer more wealth tax-free.
Estate Tax Exclusion: The amount excluded from estate tax increased to $15 million
Earned Income Tax Credit: This has increased for all families, including single workers without children.
• Overtime, Tips & Car Loans: For the first time, tips and overtime will not be taxed! Additionally, there is no tax on car loan interest so you an deduct interest paid on a car loan after December 31, 2024 and assembled in the United States. Deduction is available for itemizing and non-itemizing taxpayers.