New Trump-Era Tax Law Could Mean Larger Refunds for Many Filers

WASHINGTON (Azat TV) – Americans filing their 2026 tax returns this season could see significantly larger refunds and new opportunities for savings, thanks to the “One Big, Beautiful Bill Act” signed into law last year by President Donald Trump. This sweeping legislation, enacted on July 4, 2025, introduced major changes to the U.S. tax code, increasing deductions and tax credits that could considerably reduce what taxpayers owe. The Internal Revenue Service (IRS) began accepting returns on January 26, with the standard filing deadline set for April 15, urging taxpayers to review the updated rules to maximize their benefits.

According to financial analysts, many taxpayers may find their refunds unexpectedly large this year because IRS withholding tables for 2026 were updated after the new law took effect, meaning paychecks throughout the past year likely did not fully reflect the updated tax cuts. This temporary disconnect has led to many individuals over-withholding their taxes, setting the stage for a more substantial refund this filing season before future paychecks adjust to the new rates.

Expanded Deductions Offer New Savings Avenues

The new tax law significantly boosts several key deductions. Standard deductions have increased across all filing statuses for the 2026 filing season. A single filer can now claim $15,750, while heads of household can deduct $23,625, and married couples filing jointly can claim $31,500. Taxpayers aged 65 and older are eligible for even larger deductions, with single seniors (65+) below $75,000 adjusted income receiving an additional $6,000, and married seniors (both 65+) below $150,000 total adjusted income receiving an additional $12,000.

Perhaps one of the most impactful changes for residents in high-tax states is the quadrupling of the State and Local Tax (SALT) deduction cap. For tax years 2025 through 2029, the SALT deduction has risen from $10,000 to $40,000 for incomes under $500,000. This substantial increase could prompt many filers who previously took the standard deduction to switch to itemizing, potentially leading to greater tax savings. Other itemized deductions remain available, including medical and dental expenses exceeding 7.5% of adjusted gross income, interest on mortgage loans up to $750,000 ($375,000 for married filing jointly), and casualty or theft losses in federally declared disaster areas.

Increased Credits and New Benefits for Workers

The Child Tax Credit has also seen an increase, rising from $2,000 to $2,200 per qualifying child. This credit is available to all eligible taxpayers, regardless of whether they itemize deductions or take the standard deduction. To qualify, a child must be under 17 at the end of the tax year, meet specific relationship and residency tests, not provide more than half of their own support, and be claimed as a dependent. The full credit is available for annual incomes up to $200,000 for single filers or $400,000 for joint filers, with partial credits available for higher incomes.

In a move to benefit specific income streams, the new law introduces deductions for qualified tips and overtime. Single filers earning less than $150,000 can deduct up to $25,000 in qualified tips, while married couples filing jointly earning less than $300,000 can also deduct up to $25,000. For overtime, single filers under $150,000 can deduct up to $12,500 of income exceeding their typical rate of pay, with joint filers under $300,000 able to deduct up to $25,000 of such income.

New Rules for Auto Purchases and Digital Assets

A new incentive for domestic manufacturing comes in the form of a tax deduction for interest paid on qualifying auto loans. Taxpayers can deduct up to $10,000 in interest on loans for vehicles assembled in the United States, provided their income is less than $100,000 for single filers or $200,000 for joint filers. This deduction applies to cars, minivans, vans, SUVs, pickup trucks, or motorcycles with a gross vehicle weight rating of less than 14,000 pounds that underwent final assembly in the U.S.

For those involved in the digital economy, reporting requirements for cryptocurrency and other digital assets have been clarified and strengthened. The IRS continues to consider digital assets as property, making any income from transactions involving cryptocurrency or Non-Fungible Tokens (NFTs) taxable. This tax season, brokers are now mandated to file a new form, Form 1099-DA, to help ensure accurate reporting of crypto-related transactions. Similarly, online marketplaces like eBay, Etsy, or Poshmark are now required to issue Form 1099-K only if total payments exceed $20,000 and the seller completed more than 200 transactions on a single platform during the year. However, all taxable income earned on these platforms must still be reported, regardless of whether a 1099-K form is received.

The confluence of these legislative changes and the temporary disconnect in IRS withholding adjustments means that while many Americans may enjoy a larger refund this filing season, future paychecks will likely reflect these tax cuts more directly, signaling a shift towards more immediate, rather than deferred, tax benefits.