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The 2026 changes at a glance
| Change | Who it helps | What it does | Years |
|---|---|---|---|
| No tax on tips | Workers in tipped occupations | Deduct up to $25,000 of tips; phases out above $150,000 ($300,000 joint) | 2025–2028 |
| No tax on overtime | Hourly workers paid FLSA overtime | Deduct the overtime premium, up to $12,500 ($25,000 joint) | 2025–2028 |
| Car loan interest | Buyers of new US-assembled cars | Deduct up to $10,000 of interest; phases out above $100,000 ($200,000 joint) | 2025–2028 |
| Senior deduction | People 65 and older | Extra $6,000 per person; phases out above $75,000 ($150,000 joint) | 2025–2028 |
| Child tax credit | Parents of children under 17 | $2,200 per child (was $2,000), indexed to inflation | Permanent |
| SALT cap | Itemizers in high-tax states | State and local tax deduction up to $40,400 (was $10,000), reduced above $505,000 of income | 2025–2029 |
Sources: IRS Rev. Proc. 2025-32 (tax year 2026 inflation adjustments) · IRS Schedule 1-A (tips, overtime, car loan interest, seniors) · IRS Instructions for Schedule A (SALT limitation worksheet).
Assumptions
- 2026 rules. Each change is valued by turning it off and re-running your federal tax; they can overlap slightly, so the total is computed separately.
- 'Old rules' means the same year without these 2025-law provisions (the standard deduction and brackets stay at this year's amounts).
- Tips, overtime, car loan and senior deductions run 2025–2028; the SALT cap increase runs through 2029; the $2,200 child credit is permanent and indexed.
Frequently asked questions
What changed in the 2025 tax law?+
The law signed in July 2025 (often called the One Big Beautiful Bill Act) made the 2017 tax rates permanent and added new deductions for tips, overtime, car loan interest and seniors, raised the child tax credit to $2,200 and lifted the cap on state and local tax deductions. The table on this page lists each change with its limits.
Do I need to itemize to get the tips, overtime, car or senior deductions?+
No. They're claimed on Schedule 1-A and work together with the standard deduction. Only the higher SALT cap requires itemizing.
How is my saving calculated?+
We compute your 2026 federal tax with all the new provisions, then turn each one off and re-run the math. The difference is what that change is worth to you. The total compares your tax with and without all of them.
Do these changes lower my state taxes too?+
Usually not. These are federal deductions and credits; states decide separately whether to follow them, and many don't.
Related calculators
Uses 2026 rules and limits. Last reviewed October 15, 2026. Calculator version 1.0.0. Sources: IRS Rev. Proc. 2025-32 (tax year 2026 inflation adjustments) · IRS Schedule 1-A (tips, overtime, car loan interest, seniors) · IRS — OBBBA deductions for working Americans and seniors · Journal of Accountancy — Social Security wage base and COLA for 2026 · IRS Instructions for Schedule A (SALT limitation worksheet). Results are estimates for educational purposes, not financial, tax or lending advice. How we check our numbers.