Your 2026 Tax Playbook: Refunds, Deductions, and Hidden Breaks Worth Claiming
President Trump’s One Big, Beautiful Bill Act rolls out for the 2026 tax year, and it comes with several changes worth getting acquainted with. If you’re an Average Joe, your tax return could hold a few surprises — assuming you know where to look.
Windfall season: Treasury Secretary Scott Bessent says households could see refunds of up to $2K come Tax Day thanks to the bill’s changes. The IRS updated withholding late, meaning many Americans overpaid throughout the year and could get a sizeable chunk back. Beyond larger refunds, the OBBBA also creates several new deductions that could meaningfully lower what you owe. In short:
- Seniors (65+) get a new $6K deduction for tax years 2025–2028 if they earn under $75K, with the benefit phasing out up to $175K.
- Tipped workers won’t pay federal income tax on tips starting in 2025, capped at $25K per year, per IRS rules.
- Charitable donors using the standard deduction can deduct up to $1K (single) or $2K (joint) beginning in 2026, expanding a break once limited to itemizers.
- SALT caps rise from $10K to $40K for 2025, then to $40.4K in 2026, offering temporary relief for high-tax states before reverting to $10K in 2030.
- “Trump accounts” launch on Jul. 4, 2026, giving kids born between 2025–2028 a $1K Treasury seed, while older children can open accounts without the government match.
The Catches
The OBBBA also includes changes that could create hardship for millions of taxpayers. Cuts to Medicaid and SNAP, along with stricter work requirements, raise new hurdles for lower-income households. Other changes affect borrowers as well:
- Auto loans (2025–2028): Taxpayers can deduct interest on new car loans up to $10K per year, though Cox Automotive chief economist Jonathan Smoke says most borrowers would save about $500, since the average loan carries roughly $3K in annual interest.
- Student loans: The Department of Education will begin forced wage garnishment for borrowers in default starting the week of Jan. 7, while repayment options shrink from five plans to two.
- Gambling losses: Deductions are now capped at 90% of losses, down from 100%.
- Borrower stress: As of June, 29% of borrowers were delinquent, with 42.7M borrowers owing more than $1.6T, according to TransUnion.
The bottom line: 2026 brings real opportunities for refunds and deductions — but also new financial pressure for millions. Whether you’re claiming the senior deduction, the tip break, or just expecting a bigger-than-usual refund, it pays to know what’s coming before you file.