IRS - Outreach Connection FY26-01
December 18, 2025
In this edition
The IRS is providing implementation guidance on the One, Big, Beautiful Bill. Below are the expansions and changes to deductions affecting taxpayers as they prepare for the filing season.
- Car loan interest
- Standard deduction increase
- Deduction for seniors
- No tax on overtime
- No tax on tips
Car loan interest
Key takeaways about this deduction:
- Effective 2025 through 2028
- Up to $10,000 per year for interest on qualified new vehicle loans
- Phase-out begins at modified adjusted gross income of:
- $100,000 for single filers
- $200,000 for joint filers
Related resources
Standard deduction increase
The standard deduction increases for tax year 2026, to:
- $32,200 for married couples filing jointly
- $16,100 for single filers and married individuals filing separately
- $24,150 for heads of household
Related resources
Deduction for seniors
Key takeaways about this deduction:
- Additional $6,000 per taxpayer aged 65 or older
- $12,000 if both spouses qualify
- Phase-out begins at modified adjusted gross income of:
- $75,000 for single filers
- $150,000 for joint filers
Related resources
No tax on overtime
Key takeaways about this deduction:
- It applies only to the overtime premium portion of wages
- Modified adjusted gross income caps annually at:
- $12,500 for single filers
- $25,000 for joint filers
Related resources
- Individuals who received tips or overtime during tax year 2025
- Guidance for individuals who received overtime in 2025
- Penalty relief for 2025 tip and overtime reporting
No tax on tips
Key takeaways on tips deduction for tax year 2026:
- Up to $25,000 of qualified tip income is deductible
- Phase-out begins at modified adjusted gross income of:
- $150,000 for single filers
- $300,000 for joint filers
Related resources
- Individuals who received tips or overtime during tax year 2025
- Penalty relief for 2025 tip and overtime reporting
- Guidance for individuals who received overtime in 2025
More information
