When you file your tax returns this year, you may see larger refunds than usual due to the One Big Beautiful Bill Act, which reduced individual income taxes for 2025 by an estimated $129 billion, according to the Tax Foundation. Read More: I’m an Accountant — 6 ‘Big Beautiful Bill’ Tax Changes That Will Benefit the Middle Class Check Out: 5 Low-Effort Ways To Make Passive Income (You Can Start This Week) So here are three tax changes taking effect this year and what they mean for your tax refund. Higher ...

Group 1 - The 2026 tax season is underway with significant tax law changes that could impact financial situations, including potential for larger refunds and tax savings [1][2] - The standard deduction has increased for the 2026 filing season, allowing more income to be shielded from tax, which may reduce tax liability and increase refunds [3] - Federal income tax brackets have been indexed for inflation, potentially allowing taxpayers to remain in lower brackets unless their income grows significantly, thus owing less tax [4] Group 2 - The Child Tax Credit for qualifying children will increase, directly lowering tax owed and potentially boosting refunds for eligible taxpayers [4] - Other family-related credits, such as the Earned Income Tax Credit and adoption credit, have higher limits for 2026, which may lead to increased refund amounts based on income and family situation [5] - The deduction cap for state and local taxes (SALT) has been raised significantly, benefiting homeowners in high-tax states who itemize, potentially lowering taxable income and increasing refunds [6] Group 3 - New deductions will be available on 2025 tax returns filed in 2026, including deductions for overtime pay, qualified tips, and certain car loan interest [7] - A special additional deduction for taxpayers aged 65 and older will apply through 2028, providing older filers with an extra means to reduce taxable income and potentially increase refunds [7]

According to Ruth White, former IRS auditor co-founder of White Sands Tax Services, around 90% of taxpayers used the standard deduction in 2024. White expects that to change significantly for 2025 filings, thanks in part to a revision in the tax code. “While preparing 2025 filings, I’ve seen that my middle-class clients earned a minimum of $10,000 to $20,000 more in 2025 but owed less income tax due to this State and Local Tax (SALT) revision in the tax code,” White said. The SALT deduction cap rose fro ...

Core Insights - The "One Big Beautiful Bill" Act introduces significant changes to tax rules, including permanent extensions of provisions from the 2017 Tax Cuts and Jobs Act (TCJA) [1] Group 1: Standard Deductions - The standard deduction for 2025 is set at $15,750 for single filers and married couples filing separately, $31,500 for married couples filing jointly, and $23,625 for heads of households, with annual inflation adjustments codified into law [2] - The IRS has already announced the standard deductions for 2026: $16,100 for single filers and married couples filing separately, $32,200 for married couples filing jointly, and $24,150 for heads of households [3] Group 2: Senior Deductions - Taxpayers aged 65 and older can claim an additional $6,000 deduction per person, allowing married couples to deduct up to $12,000 annually, with phase-out thresholds starting at $150,000 for married couples and $75,000 for single filers [4] - This new deduction creates planning opportunities for seniors, particularly regarding Roth conversions, as exceeding the income thresholds could increase tax liabilities [5] Group 3: SALT Cap Changes - The SALT deduction cap is temporarily increased from $10,000 to $40,000 for 2025, with a phase-out for high earners making $500,000 annually, and the cap will revert to $10,000 in 2030 [5] - The increase in the SALT cap has been characterized as a benefit primarily for higher-income individuals in high-cost states [6]

What do you need to know about tax planning in 2026? On this episode of Money Unscripted, learn about the new SALT cap increase, why you might want to consider itemizing over taking the standard deduction, a boosted child tax credit, and other opportunities to save on your taxes. Join host Ally Donnelly and Ajay Sarkaria, Fidelity Regional Vice President of Private Wealth Management, as they walk through the tax strategies that could help you keep more of what you earn. Watch now. 00:00 Welcome to Money Uns ...

Core Insights - The SALT deduction cap has increased from $10,000 to $40,000 for tax years 2025 through 2029, providing new relief for taxpayers [1] - Charitable contributions are highlighted as an effective method to reduce tax liability, with new limitations on deductions set to take effect in 2026 [2][3] - Financial advisors emphasize the importance of year-end tax management strategies, particularly in light of new tax laws introduced by the One Big Beautiful Bill Act [5][6] Tax Deductions and Contributions - Charitable deductions will be capped at a 35% rate starting next year, prompting many clients to accelerate their charitable contributions into 2025 [3] - The full $40,000 SALT deduction begins phasing out at modified adjusted gross incomes of $500,000 for joint filers, reverting to $10,000 at $600,000 [6] - New tax deductions include up to $12,500 for qualified overtime pay and up to $10,000 for interest on auto loans for qualified vehicles purchased in 2025 [7] Tax-Loss Harvesting and Investment Strategies - Tax-loss harvesting is recommended as a strategy to offset ordinary income, not just capital gains, and should be revisited at year-end [8] - Investors are advised to consider their taxable brokerage accounts to manage taxes on interest, dividends, and capital gains effectively [8] - The crypto market presents unique tax management opportunities, allowing for the capture of losses without the wash-sale rule [10] Roth Conversions - Advisors suggest considering Roth conversions as a strategy to lock in future tax-free growth, especially in light of potential tax-bracket shifts [10][11] - Roth conversions are seen as beneficial for individuals in their 70s to prepay taxes at lower rates and manage required minimum distributions [11]

Core Points - The new federal law increases the SALT deduction limit to $40,000 per household from the previous $10,000, reverting back to the lower limit in 2030 [1] - Single filers and married couples filing jointly can claim the full $40,000 deduction, while married couples filing separately have a maximum deduction of $20,000 [2] - A modified gross income below $500,000 is required to claim the SALT deduction, with a phase-down starting at $500,000 compared to the previous $600,000 cap [2] Tax Strategies - Itemizing deductions is recommended, especially for those in high-tax states, with categories including medical expenses, home mortgage interest, charitable contributions, and disaster-related losses [4] - Contributions to retirement accounts can help reduce modified adjusted gross income, keeping taxpayers below the phaseout threshold [5] - Timing income strategically can maximize SALT deductions, such as deferring large deposits or prepaying property taxes and charitable contributions [7]