Tax season 2026: Key changes and filing details

The SALT deduction cap increased from $10,000 to $40,000 under the Working Families Tax Cut enacted in July 2025, and several new deductions will be reported on IRS Schedule 1-A, including a qualified tips deduction capped at $2,500.

Tax season is underway as lawmakers and the IRS roll out several changes that affect 2025 returns. The Working Families Tax Cut, enacted in July 2025, raised the federal cap on state and local tax deductions. New deductions from the recent tax and spending bill are collected on a new IRS form called Schedule 1-A. The IRS has also updated some filing and refund practices for this season. Key points: - The SALT deduction cap rose from $10,000 (the limit since 2018) to $40,000 under the Working Families Tax Cut enacted in July 2025. - Schedule 1-A is a new IRS form for four deductions created by the recent law, including the updated SALT deduction, a qualified tips deduction, car loan and senior deductions. - The qualified tips deduction is limited to $2,500 annually, phases out for modified adjusted gross income over $150,000 ($300,000 for joint filers), and applies only in certain tipping industries such as bartenders, food servers, musicians and housekeeping cleaners. - IRS Direct File will not be offered this year; IRS Free File remains available for taxpayers with income of $89,000 or less through selected partners such as TaxAct and FreeTaxUSA. The IRS also lists paid preparers and funds VITA and TCE clinics (VITA eligibility includes roughly $69,000 or less income, disabilities, or limited English; TCE is for those 60 and older). - Common filing errors noted include mismatched names or Social Security numbers, missing online tax statements, and unreported income from additional jobs; keeping return records for five to seven years is recommended in case of later review. - The child tax credit amount cited is $2,200 per qualifying child with $1,700 refundable as the Additional Child Tax Credit; eligibility for the full credit was reported for incomes up to $200,000 ($400,000 joint). The IRS has been phasing out paper refund checks and encourages direct deposit for refunds. Summary: The recent law increases several deductions and introduces Schedule 1-A to report them, and the IRS has adjusted some filing services and refund processes for this season. Undetermined at this time.