Changes Coming for Upcoming Tax Season
PORTSMOUTH, Va. – This year, it seems we should brace ourselves for some significant shifts during the upcoming tax season. A lot of this is linked to the passing of what some are calling the “One, Big, Beautiful Bill,” which is set to take effect in early 2026.
One notable change is that the IRS Direct File system, a free option for online tax returns, will no longer be available starting in 2026.
There could be other modifications that might impact your 2025 tax return. These include the removal of taxes on tips and overtime pay and an increase in the child tax credit, as reported by TurboTax.
Bob McNabb, head of economics at ODU, mentioned, “We’ve also seen some clarification around the non-taxation of overtime pay and tips, which is capped based on income. There are also limits to how much can be tax-free.”
Another potential benefit: individuals who purchase American-made cars might be eligible to write off up to $10,000 in interest on their auto loans.
Interestingly, the standard deduction amount is set to rise, with a slightly reduced bonus of $6,000 for qualifying seniors.
McNabb elaborated, saying, “What we’re observing with the tax reforms for the next year is an increase in the standard deduction for all filers. Around 85 to 86 percent of taxpayers are opting for this standard deduction, meaning they’ll likely find a little extra in their pockets.” He also noted a trend where fewer people are itemizing their returns as the basic deduction grows.
And on the topic of timing, McNabb suggests applying early might be wise.
“Many folks tend to use the tax system as a kind of savings method,” he pointed out. “So, they do excess withholding and wait for their refund. But it’s important to recognize they’re essentially giving the government a 0% interest loan. Filing quickly and accurately usually means that refund will get to you sooner.”
Beyond the changes to returns, there are also adjustments to tax brackets. The IRS makes annual inflation adjustments, which means a slight increase in income may not push someone into a higher tax bracket, helping to avoid increased taxes.
The deadline for filing your tax return remains April 15, 2026.
