New Tax Laws 2026: No Tax on Tips, No Tax on Overtime, the $6,000 Senior Deduction and Car Loan Interest

Fecha: 10 de octubre de 2026

SD Tax Season 2027

Four new deductions can lower your 2026 tax bill: tips, overtime, a $6,000 senior deduction and car loan interest.

These new tax laws for 2026 came from the 2025 tax law (the One Big Beautiful Bill Act) and run from 2025 through 2028. You can take them even if you don't itemize. Here's who qualifies, the limits, the 2026 standard deduction, and the other 2026 numbers that change your return.

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The Four New Deductions at a Glance

Deduction	Maximum	Starts phasing out above (MAGI)
No tax on tips	$25,000 a year	$150,000 ($300,000 joint)
No tax on overtime	$12,500 ($25,000 joint)	$150,000 ($300,000 joint)
Senior deduction (65+)	$6,000 per person ($12,000 if both spouses qualify)	$75,000 ($150,000 joint)
Car loan interest	$10,000 a year	$100,000 ($200,000 joint)

Good to know

All four apply whether you take the standard deduction or itemize. For tips, overtime and the senior deduction you need a Social Security number on the return, and married couples must file jointly.

No Tax on Tips

If you work in a job where tips were customary before 2025, you can deduct up to $25,000 of qualified tips. That includes cash tips, tips charged to a card, and tip sharing. The tips have to be reported, for example on your W-2, a 1099, or Form 4137. The IRS publishes the list of qualifying occupations, and some service businesses (like health, law and consulting) are excluded. If you're self-employed, the deduction can't be more than your net income from that business.

No Tax on Overtime: The Qualified Overtime Deduction

With the qualified overtime deduction, you can deduct up to $12,500 ($25,000 if married filing jointly) of qualified overtime. It's only the extra part of overtime pay, not the whole check. If you earn time-and-a-half, it's the "half." It has to be overtime required under the Fair Labor Standards Act, reported on your W-2 or similar statement.

The $6,000 Senior Deduction (Enhanced Deduction for Seniors)

If you're 65 or older by the end of the year, you get an extra $6,000 deduction, or $12,000 for a married couple when both qualify. This is on top of the additional standard deduction seniors already get, so it stacks, which is why some people call it the senior bonus deduction. It starts shrinking once modified adjusted gross income passes $75,000 ($150,000 joint).

Car Loan Interest Deduction

The car loan interest tax deduction lets you deduct up to $10,000 a year of interest on a loan for a new personal vehicle, as long as:

The loan started after December 31, 2024
The vehicle is new (used cars don't count) and for personal use
Final assembly happened in the United States
It's a car, minivan, van, SUV, pickup or motorcycle under 14,000 lbs
You include the vehicle's VIN on your return

Leases don't qualify. Interest on a refinanced loan that originally qualified generally still does.

2026 Standard Deduction and Other New Tax Laws for 2026

Item	Tax year 2026
Standard deduction, single	$16,100
Standard deduction, married filing jointly	$32,200
Standard deduction, head of household	$24,150
Charitable deduction if you don't itemize (new for 2026)	Up to $1,000 ($2,000 joint), cash gifts only
Form 1099-K reporting threshold	$20,000 and 200 transactions
1099 threshold 2026 (Form 1099-NEC / 1099-MISC)	$2,000 (was $600)
Nanny tax threshold (Schedule H)	$3,000 in cash wages

How to Claim These on Your 2026 Return

You'll claim these when you file in early 2027. Tax software walks you through it: it asks about tips, overtime, your age and any new car loan, then fills in the right forms. Have your W-2s, 1099s and your car loan's year-end interest statement handy.

Download software like TurboTax or H&R Block is usually the cheapest way to do this yourself. One purchase covers up to five federal e-filed returns, so one copy can do your return and family members' too. Not sure which edition you need? See TurboTax Deluxe vs Premier or H&R Block vs TurboTax 2026.

See TurboTax 2026 editions →

Frequently Asked Questions

Is there really no tax on tips and overtime in 2026?

Yes, as deductions. For 2025 through 2028 you can deduct up to $25,000 of qualified tips and up to $12,500 ($25,000 joint) of qualified overtime premium pay, with phase-outs starting at $150,000 of modified AGI ($300,000 joint).

Do I have to itemize to get the new deductions?

No. The tips, overtime, senior and car loan interest deductions are available whether you itemize or take the standard deduction.

Who gets the $6,000 senior deduction?

Anyone 65 or older by the end of the tax year with a valid SSN. It's $6,000 per qualifying person and phases out above $75,000 of modified AGI ($150,000 joint). Married couples must file jointly.

Does the car loan interest deduction apply to used cars or leases?

No. It applies only to loans taken out after December 31, 2024 for new personal-use vehicles with final assembly in the US. Leases and used vehicles don't qualify.

What is the standard deduction for 2026?

$16,100 for single filers, $32,200 for married filing jointly, and $24,150 for head of household.

What is the 1099 threshold for 2026?

For payments made in 2026, businesses send Form 1099-NEC or 1099-MISC when they pay you $2,000 or more, up from $600. For Form 1099-K from payment apps and online marketplaces, the threshold is $20,000 and 200 transactions.