New Tax Deductions and Higher Refunds Expected This Filing Season

Taxpayers should be aware of changes like no tax on tips, deductions for car loan interest, and higher standard deductions.

Published on Feb. 15, 2026

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Tax season is underway and taxpayers have until April 15 to file their returns. This year, there are several new deductions and changes to existing deductions that could lead to higher tax refunds. Among the changes are no tax on tips, no tax on overtime, deductions for car loan interest, and deductions for people 65 or older. The average refund last year was $3,167, but analysts project it could be $1,000 higher this year thanks to the new tax law changes.

Why it matters

The changes to tax deductions and credits could have a significant impact on many Americans' tax bills and refunds. Taxpayers should be aware of the new rules to ensure they are taking advantage of all the deductions and credits they qualify for.

The details

The standard deduction has increased to $15,750 for single filers and $31,500 for married couples filing jointly. The cap on the state and local tax (SALT) deduction has also increased from $10,000 to $40,000. There is a new deduction for qualified tips, with a maximum annual deduction of $2,500. The deduction phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers). There are also new deductions for car loan interest and for people 65 or older by December 31.

  • Tax season is underway and the deadline to file returns is April 15, 2026.

The players

Tom O'Saben

Director of tax content and government relations at the National Association of Tax Professionals.

Miguel Burgos

Certified public accountant and expert for TurboTax.

Keith Hall

President and CEO of the National Association for the Self-Employed and a certified CPA.

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What they’re saying

“Don't wait until the last minute but also don't rush.”

— Tom O'Saben, Director of tax content and government relations at the National Association of Tax Professionals (Fortune)

“This is a big benefit, especially for states like California, New York, and New Jersey, that have a higher state income tax.”

— Keith Hall, President and CEO of the National Association for the Self-Employed and a certified CPA (Fortune)

“It can be cash, it can be electronic as well. But the main thing is, hey, it has to be voluntary (tips).”

— Miguel Burgos, Certified public accountant and expert for TurboTax (Fortune)

What’s next

The IRS will begin processing tax returns on April 1, 2026. Taxpayers should file their returns as soon as possible to avoid delays in receiving their refunds.

The takeaway

The new tax deductions and higher standard deductions could lead to significantly higher tax refunds for many Americans this filing season. Taxpayers should be sure to take advantage of all the deductions and credits they qualify for to maximize their refund.