What Changes for Tax Year 2026

News · Tax Filing IRS announced 9 October 2025 · IR-2025-103 Written up by SV Associates on 2 September 2026

Tax year 2026 — the returns filed in early 2027 — brings a set of changes worth knowing about now rather than in March. Several come from recent legislation and are genuinely new, not just the usual inflation adjustments.

Standard deduction

For tax year 2026 the standard deduction is:

• $32,200 for married couples filing jointly;

• $16,100 for single filers and married individuals filing separately;

• $24,150 for heads of household.

A note that matters to many of our clients: non-resident aliens filing Form 1040-NR generally cannot claim the standard deduction at all. If you are not sure which return you file, our guide on Form 1040 versus 1040-NR covers the test.

New deductions, and a new schedule

Recent legislation introduced several new deductions, claimed on a new Schedule 1-A:

• Qualified tips — up to $25,000 deductible for tipped workers.

• Qualified overtime — up to $12,500, or $25,000 for joint filers.

• Passenger vehicle loan interest — up to $10,000 of qualifying interest.

• An additional deduction for those aged 65 and over — $6,000.

Each carries its own eligibility conditions and income limits, and "qualified" is doing real work in every one of those phrases. Treat the figures above as the ceiling, not the entitlement.

What this means if you are outside the US

Most of these provisions are aimed at US-based wage earners, so if you are a non-resident with US rental or investment income, they will not change much for you. Two things still matter:

• A new schedule means new opportunities to file incorrectly. Returns claiming something on an unfamiliar form attract scrutiny in the first year it exists.

• Your residency status determines almost everything above. A US citizen living in India is affected by all of it. A non-resident with the same income is affected by very little of it.