Here are several important tax law changes worth knowing about before filing your 2026 return:
Even if you take the standard deduction, you can now deduct up to $1,000 in qualifying cash donations, or $2,000 for married couples filing jointly. If you itemize, charitable deductions are generally limited to contributions exceeding 0.5% of your adjusted gross income (AGI). Taxpayers in the highest bracket also face a 35% cap on the tax benefit of itemized deductions.
Families can now withdraw up to $20,000 annually per beneficiary for qualifying K–12 education expenses, twice the previous $10,000 limit. Additional educational expenses also qualify for tax-free withdrawals.
Eligible children born from 2025 and 2028 can receive a one-time $1,000 federal contribution to a new tax-advantaged savings account. Families and other eligible contributors can generally add up to $5,000 annually.
If your employer offers dependent care benefits, you can now set aside up to $7,500 tax-free for qualifying expenses, up from $5,000. The Child and Dependent Care Credit also becomes more generous, with the maximum credit rate increasing from 35% to 50%, depending on income.
Certain bronze and catastrophic health insurance plans now qualify for Health Savings Account (HSA) purposes. Qualifying direct primary care arrangements are also permitted without jeopardizing HSA eligibility.
Taxpayers can deduct only 90% of otherwise eligible gambling losses, up to the amount of their winnings. That means you could owe taxes even if your gambling winnings and losses break even.
Eligible teachers and other educators who itemize can now deduct qualifying unreimbursed classroom expenses without the $300 limit that applies to the separate educator expense deduction. The same expenses cannot be deducted twice.
If you’re age 50 or older and earned more than $150,000 from your employer in the previous year, catch-up contributions to your employer-sponsored retirement plan generally must be made on a Roth (after-tax) basis. This change comes from the SECURE 2.0 Act.
Cryptocurrency brokers must now report cost basis for certain covered digital asset transactions on Form 1099-DA, making it easier for taxpayers and the IRS to track gains and losses. The reporting requirements stem from legislation passed in 2021.
The federal estate and gift tax exemption increases to $15 million per person, or $30 million for married couples through proper planning, giving families more flexibility to transfer wealth without triggering federal estate or gift taxes.
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