The Internal Revenue Service is officially processing returns for the 2026 tax season following the opening of the filing window on January. This year is particularly special because it marks the 40th anniversary of electronic filing and the 250th anniversary of our nation. Because of the new One Big Beautiful Bill Act, many families will see a significant increase in their refund total. Experts predict that the average payment could jump by as much as $1,000 for those who qualify for new credits. This legislative update has introduced massive deductions for seniors, workers, and even car owners that were never available before.
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Direct Deposit Now Required for Most Payments
A major shift in how the government handles money is taking effect during this filing season. Under a recent executive order, the treasury is phasing out the use of paper checks to deliver money to taxpayers. The government has stated that paper checks are over 16 times more likely to be lost, stolen, or altered compared to digital transfers. To avoid a potential six week delay in getting your money, you must provide your bank account and routing numbers when you file. If the IRS does not have your direct deposit information, they may freeze your payment until you update your details through an online account.
New Tax Breaks for Overtime and Tip Income
For the first time ever, certain workers can keep a much larger portion of their hard earned money. The new law allows tipped employees in specific occupations to deduct up to $25,000 of their cash tips from their taxable income. There is also a brand new deduction for people who work overtime, allowing a claim of up to $12,500 for single filers. These changes are designed to reward the American workforce by reducing the tax burden on those who go above and beyond their regular hours. If you worked extra shifts in 2025, these deductions could drastically lower your tax bill this spring.
Enhanced Support for Seniors and Families
Older Americans and families with children are seeing some of the most generous updates in the 2026 tax season. Seniors who are 65 or older can now claim an enhanced deduction of $6,000, which can double to $12,000 for married couples who both meet the age requirement. Additionally, the Child Tax Credit has been permanently increased to $2,200 per child and will now be adjusted for inflation every year. These measures are specifically aimed at helping households deal with the rising costs of healthcare, groceries, and daily essentials.
Tax Deduction and Credit Comparison Table
The following table highlights how the new 2026 rules compare to previous years for various types of taxpayers.
| Tax Category | Previous Limit | New 2026 Benefit |
| Standard Deduction (Joint) | $30,000 | $31,500 |
| Standard Deduction (Single) | $15,000 | $15,750 |
| Child Tax Credit | $2,000 | $2,200 |
| Senior Bonus Deduction | $1,600 | $6,000 |
| Tip Income Deduction | $0 | $25,000 |
| Overtime Pay Deduction | $0 | $12,500 |
| Car Loan Interest | $0 | $10,000 |
