New Tax Deductions in 2026: The Complete List of What You Can Now Write Off

The OBBBA created several new deductions starting in 2026, and the best part is that you can take them whether you itemize or use the standard deduction. That makes them available to the roughly 90% of filers who do not itemize. Here is the list of what is new in 2026, who qualifies, and how much each is worth. Because the IRS is still finalizing some rules, confirm anything that affects you with a tax professional.

Key Takeaways

• New deductions for tips, overtime, seniors, and U.S.-made auto loan interest are available without itemizing.
• Most have income phase-outs and several sunset after 2028.
• The QBI deduction stayed at 20% (the proposed 23% was dropped) and is now permanent.
• Keep documentation, like a tip diary or interest statements, to claim these.

How These Deductions Work

Itemized deductions only help if your total exceeds the standard deduction (about $16,100 single and $32,200 married for 2026), which is why only about 10% of people itemize. The new OBBBA deductions are different: you can claim them even if you take the standard deduction, so they reach the 90% of filers who do not itemize. Each has its own income limits, so check whether you qualify.

New Deduction 1: Cash Tips (Up to $25,000)

Workers in traditionally tipped jobs can deduct qualifying cash tips up to $25,000 a year, phasing out above $150,000 AGI ($300,000 married). At the 22% bracket, that is up to about $5,500 in savings. See our full guide on no tax on tips.

New Deduction 2: Overtime Premium (Up to $12,500 Single / $25,000 Married)

Non-exempt employees can deduct the overtime premium (the extra half-time portion of time-and-a-half pay), up to $12,500 single or $25,000 married, phasing out above $150,000 AGI. At 22%, that is up to about $2,750 single or $5,500 married. See our guide on no tax on overtime.

New Deduction 3: Senior Bonus Deduction ($6,000)

Taxpayers 65 or older get an additional $6,000 deduction ($12,000 for a married couple both 65+), on top of the regular age-based standard deduction. It phases out above $75,000 AGI single and $150,000 married, and expires after 2028 unless extended. At 22%, that is up to about $1,320 per qualifying senior.

New Deduction 4: Auto Loan Interest for U.S.-Made Vehicles

There is a new deduction for interest on loans for new vehicles with final assembly in the United States, capped at $10,000 of interest a year and phasing out at higher incomes. You can take it without itemizing. For someone paying $3,000 a year in interest on a qualifying loan, that is about $660 in savings at the 22% bracket.

A Note on Social Security

The $6,000 senior deduction effectively lowers taxable income for many older households, which can reduce tax on Social Security benefits for some. The underlying rules for taxing Social Security still apply, so check how your combined income affects your benefits.

Deductions Made Permanent

• QBI deduction (20%): self-employed and pass-through owners can deduct 20% of qualifying business income, now permanent. The proposed increase to 23% was dropped from the final law.
• Student loan interest: up to $2,500 a year remains deductible without itemizing.
• Educator expenses: K-12 teachers can still deduct classroom expenses (around $300, indexed for inflation, so verify the current figure).

What Did Not Change

• Capital gains rates (still 0%, 15%, 20%).
• Traditional IRA contribution limit (about $7,500 for 2026).
• 401(k) employee limit (about $24,500 for 2026).
• Home office deduction (still unavailable to W-2 employees, only the self-employed).
• Personal credit card interest (still not deductible).

How to Maximize Your 2026 Deductions

• If you receive tips: keep a daily tip diary all year, since you need documentation to claim the deduction.
• If you work overtime: save your pay stubs and track your overtime premium.
• If you are 65+: watch your AGI against the $75,000 single / $150,000 married phase-out to keep the full senior deduction.
• If you are self-employed: confirm your 20% QBI calculation with a tax pro, since the qualifying-income rules have nuances. See our freelancer tax guide.
• If you have a qualifying auto loan: save the annual interest statement from your lender.

FAQ

Do I need to itemize to claim these new deductions?

No. The new tips, overtime, senior, and auto loan interest deductions are available even if you take the standard deduction.

Did the QBI deduction go up to 23%?

No. It stayed at 20% and was made permanent. The proposed 23% was dropped from the final law.

How long do the new deductions last?

Several, including tips, overtime, and the senior deduction, currently sunset after 2028 unless Congress extends them.

What documentation do I need?

A tip diary for tips, pay stubs for overtime, and your lender’s interest statement for an auto loan. Good records make claiming these much easier.

How to Claim This on Your 2026 Return

Now that you know the rules, here is how to actually claim it when you file. The step-by-step guides below cover which boxes to check on your W-2, where the deduction appears on Form 1040, and how the major tax software platforms handle it:

• How to File Your 2026 Taxes (2027 Season): Complete Guide to Claiming the New OBBBA Deductions
• How to Claim the No-Tax-on-Tips Deduction
• How to Claim the No-Tax-on-Overtime Deduction
• How to Claim the Car Loan Interest Deduction

Bottom Line

The OBBBA’s new deductions for tips, overtime, seniors, and U.S.-made auto loans are available even if you take the standard deduction, but most phase out at higher incomes and end after 2028. Keep good records, watch the income limits, and remember the QBI deduction is 20%, not 23%. For the bigger picture, see our overview of OBBBA tax changes, and confirm your specifics with a CPA.

This article is for educational and informational purposes only and is not tax advice. Some provisions are still pending final IRS rules, and figures change. Consult a qualified tax professional, and verify current details at irs.gov.