Deductions and Credits

Tax credits are subtracted directly from taxes owed, while tax deductions lower your taxable income. OBBBA significantly impacts both for 2026.

The Standard Deduction

The TCJA temporarily doubled the standard deduction. Under OBBBA, the increased standard deduction is permanent. For 2026, you can claim an estimated standard deduction of $32,200 (married filing jointly and surviving spouses), $16,100 (single and married filing separately), and $24,150 (head of household). The additional standard deduction for the aged or blind is $1,650 per person. This amount increases to $2,050 if the individual is unmarried and not a surviving spouse.

Non-Itemizer Deductions

OBBBA also introduced several deductions for 2026 that you can claim in addition to the standard deduction without having to itemize your deductions.

Charitable Contributions. This permanent deduction lets you claim up to $2,000 (married filing jointly) or $1,000 (single) in qualified charitable deductions.

Additional Deduction for Seniors. If you're age 65 or older, you're eligible for an additional deduction of $6,000 (single) or $12,000 (married filing jointly). The deduction phases out for taxpayers with income over $75,000 (single) and $150,000 (married filing jointly).

Qualified Tips. For tax years 2025 through 2028, you can deduct up to $25,000 in tips received. To qualify, these tips must be received in occupations that customarily and regularly receive tips, such as beverage and food service, entertainment and events, hospitality and guest services, personal services, recreation and instruction, and transportation and delivery, among others. The deduction phases out for single taxpayers with income over $150,000 and married couples (filing jointly) with income over $300,000.

Overtime Compensation. Similarly, for 2025 through 2028, you can deduct up to $12,500 (single) or $25,000 (joint filers) of qualified overtime compensation. This compensation is defined as the pay that exceeds your regular rate of pay— such as the "half" portion of "time-and-a-half" compensation—that's required by the Fair Labor Standards Act (FLSA). The deduction phases out for single taxpayers with income over $150,000 and joint filers with income over $300,000.

Student Loan Interest of up to $2,500 remains deductible in 2026, with a phase-out between $170,000 and $200,000 MAGI for joint filers and between $85,000 and $100,000 for single filers. However, starting with the 2026 tax year, forgiven student loan debt generally becomes taxable income again.

Vehicle Loan Interest of up to $10,000 a year can be deducted, effective for 2025 through 2028. You must purchase the vehicle for personal use and meet other eligibility criteria. Used cars and leases don't qualify. The car loan must be taken after December 31, 2024, and require a lien to be placed on the vehicle. The vehicle must be a car, minivan, van, SUV, pick-up truck, or motorcycle, with a gross vehicle weight rating of less than 14,000 pounds that has undergone final assembly in the United States.