MAJOR TAX LAW CHANGES FOR 2025–2026: WHAT THEY MEAN FOR YOUR WALLET

Tax laws change more often than most people realize, from annual inflation adjustments to new legislation, we see changes at least yearly, and even small updates can directly affect how much you owe or receive as a refund. A major federal tax law passed in mid-2025 introduced several temporary tax breaks and adjustments that will impact millions of Americans when filing their returns in 2026 and beyond.

Here are two of the most important changes you should know about, and how they may affect you.

1) New Additional Deduction for Seniors (Age 65+)

One of the biggest new benefits is aimed at retirees.

Beginning with the 2025 tax year (filed in 2026), taxpayers age 65 and older may qualify for a new additional deduction of up to $6,000 per person. This is in addition to the regular standard deduction for seniors.

Who qualifies?

· Individuals age 65 or older

· Married couples may claim up to $12,000 total if both spouses qualify

· Available whether you itemize or take the standard deduction

· Phases out at higher income levels (over $75,000 single / $150,000 married filing jointly)

Why this matters

For many retirees living on Social Security, pensions, or retirement accounts, this deduction could:

· Reduce taxable income significantly

· Lower tax owed on IRA or pension withdrawals

· Increase refunds

· Potentially reduce taxation of Social Security benefits

Combined with the already higher standard deduction for seniors, this change may eliminate federal income tax entirely for some lower-to-moderate-income retirees.

2) Higher Standard Deduction & Expanded Tax Breaks

The standard deduction has increased substantially, meaning more income is shielded from taxation even if you don’t itemize.

For example, for the 2025 tax year:

· Married filing jointly: about $31,500

· Single filers: about $15,750

These amounts increase again for 2026 due to inflation adjustments.

Why this matters

A larger standard deduction means:

· Lower taxable income for most households

· Simplified filing (fewer people need to itemize)

· Potentially bigger refunds

According to policy estimates, the recent changes are expected to produce an average tax reduction for many middle-income households.

Bonus Changes That May Affect Some Taxpayers

While not everyone will qualify, the new law also introduced several temporary deductions (generally through 2028), including:

· Higher Child Tax Credit (up to about $2,200 per child)

· Increased cap on state and local tax (SALT) deductions

· New deductions for certain overtime or tip income

· Deduction for auto loan interest in some cases

Because many of these benefits phase out at higher income levels, personalized tax planning is more important than ever.

What You Should Do Now

Even if your income hasn’t changed, your tax outcome might.

Consider taking these steps:

1. Review retirement withdrawal strategies

2. Check whether you now qualify for new deductions or credits

3. Update withholding or estimated payments if needed

4. Work with a tax professional to avoid surprises

Tax laws can be complex, and many benefits are temporary or income-dependent. However, proactive planning can guide you to a financially sound future.

Final Thoughts

The recent tax changes offer meaningful relief for many Americans, especially retirees and middle-income families. However, the rules are nuanced, and missing a deduction or credit could mean leaving money on the table.

If you’re unsure how these changes affect your situation, professional guidance can help you file accurately and optimize your tax outcome. At Accounting Solutions For You, we are prepared to offer guidance for whatever stage of your tax journey you’re at. Whether you have already filed for 2025 and are planning ahead for 2026, or if you haven’t filed in a few years, scheduling a free discovery session with us now is a great way to get started.