7 New Tax Deductions Starting in 2026 (Some Are Easy To Qualify For)

Although recent legislation introduced many tax deductions, there aren't as many changes to keep track of for the 2026 tax year. That said, it's still important to learn about changes and enhancements to deductions, so you can keep more of what you earn.

Whether you're struggling with tax debt or just want to be prepared for filing, take a look at the new tax deductions that you can claim to reduce your taxable income for the year.

All of these changes or enhancements are "above-the-line," meaning you don't have to itemize to claim them. That's great news for the majority of taxpayers who take the standard deduction.

The One Big Beautiful Bill Act (OBBBA) introduced a temporary deduction of up to $25,000 in income that's earned in tips. A portion of income from tips will be deductible on your federal income taxes, but only for tax years 2025 through 2028.

The IRS says the deduction applies to those who "customarily and regularly" receive tips, and the Treasury Department issued a preliminary list of qualifying jobs. These currently include jobs in the following services: beverage and food service, entertainment and events, hospitality and guest services, home services, personal services, personal appearance and wellness, recreation and instruction, and transportation and delivery.

While this provision does not completely eliminate taxes on tips, the deduction will likely save workers in the restaurant, hospitality, and service industries hundreds of dollars per year in federal income tax.

The overtime pay deduction is another that was introduced last year, and is only available through 2028. With this deduction, workers who put in extra hours will be able to deduct up to $12,500 of qualified overtime pay ($25,000 for joint filers).

All employees who earn overtime pay qualify, although there is a modified adjusted gross income (MAGI) cap of over $150,000 for single filers and over $300,000 for joint filers, limits that also apply to the new tip deduction. Keep in mind the deduction is only for the "premium" portion of overtime pay (the extra half-time pay) and only for overtime mandated by federal law, not state laws or company policies.

Starting with the 2025 tax year (and continuing through the 2028 tax year), car buyers will be able to deduct up to $10,000 per year on the interest they pay on their auto loans. However, this only applies to loans on new, U.S.-assembled vehicles.

The auto loan deduction is available for personal-use vehicles only. It phases out for single filers with a MAGI over $100,000 and joint filers with a MAGI exceeding $200,000. Most taxpayers who are eligible for this deduction will likely save a few hundred dollars per year, although exact figures depend on how much interest you pay and your tax bracket.

If you were born before January 2, 1961, and have a MAGI of less than $75,000 (single) or $150,000 (joint), you may qualify for what's being called the "senior bonus" deduction.

This is an additional deduction of up to $6,000 for single filers and $12,000 for married couples filing jointly where both spouses are 65 or older. Savings will depend on your tax liability, but the right individual or joint filers could potentially pay thousands less in federal taxes. 

If you make over the limit, you'll still be able to claim the deduction, but at a reduced rate. Again, this enhanced deduction is only available from 2025 through 2028.

The OBBBA increases the cap on the SALT (state and local tax) deduction from $10,000 to a maximum $40,000 per household (based on modified adjusted gross income). This is a win for taxpayers who live in high-tax states and itemize their deductions.

For example, a couple that pays $40,000 in property taxes and state income taxes could now deduct the full amount, potentially saving them thousands on their federal tax bill. Keep in mind, however, this is not a full repeal of the SALT cap some politicians have called for, and it's scheduled to revert to $10,000 in 2029.

In the past, you could only claim charitable gift deductions if you itemized your taxes, rather than took the standard deduction. Beginning with tax year 2026, you can deduct up to $1,000 ($2,000 for joint filers) of your cash contributions. 

Only cash donations to recognized charities qualify, and you will need a written acknowledgement of your gift. Note that gifts to individuals are not deductible.

Although OBBBA doesn't specifically introduce any new deductions related to child care, it does expand three related subsidies that can potentially lower your tax liability.

The Act increases the child and dependent care tax credit for some families, raises the cap on how much employees can set aside tax-free for child care, and enhances a business tax credit that encourages employers to offer child care. While the changes are modest, they all help offset an expense many parents struggle with.

In addition to these temporary tax deductions, keep in mind that you can claim more with the increased standard deduction. The standard deduction for a single filer jumps from $14,600 to $15,750. Married couples filing jointly can claim $31,500 (up from $29,200), and head of households can claim $23,625 (up from $21,900).

Since deductions can change with new legislation, keep an eye on provisions that matter to you, especially ones that help you get ahead financially. Take advantage of the savings now, and let your representatives know which ones you'd like to see made permanent.