2026 Tax Law Changes: Five Things to Check Before Year-End

The biggest mistake you can make with the new tax law? Assuming a rule that applied in 2025 works exactly the same way in 2026. Some provisions started last year. Others didn’t begin until this year. And for tax preparers, that difference changes the questions we need to ask before December 31.

You don’t need to memorize every section of the law. Start with these five checks.

1. Separate the 2025 rules from the 2026 rules

The deductions for qualified tips, qualified overtime, certain car loan interest and eligible seniors apply for tax years 2025 through 2028. But 2026 brings additional changes, including a deduction for certain cash charitable contributions by taxpayers who don’t itemize and a new floor on charitable deductions for those who do.

Keep a simple year-by-year cheat sheet beside your planning work. A perfectly calculated deduction on the wrong tax year’s rules is still wrong.

Here’s a practical way to keep the years straight. Put the tax year at the top of every planning workpaper. Then add a second column for when the client actually paid the expense or received the income. A charitable donation made in December 2026 and a return filed in April 2027 are part of the same planning conversation; a payment made the following January generally isn’t. The point is to stop mixing the filing season with the year being reported.

2. Ask about income before promising a deduction

The headline amounts are maximums, not guarantees. Tips can qualify for a deduction of up to $25,000 per return. Qualified overtime has a $12,500 limit, or $25,000 for married couples filing jointly. Both deductions begin to phase out when modified adjusted gross income exceeds $150,000, or $300,000 for joint filers.

Car loan interest and the additional senior deduction have their own income limits. Before giving a client an estimate, check eligibility, filing status and the phase-out. Then run the numbers.

For an easy example, imagine a client says, “I earned $30,000 in overtime, so my tax bill should drop by $30,000.” That’s the moment to explain that overtime pay includes regular wages plus a premium, and the deduction applies only to qualifying premium pay. Even that smaller amount is subject to the cap and income phase-out. A five-minute eligibility check saves a much longer conversation after the return is finished.

For car buyers, ask for the loan paperwork and vehicle identification number before running projections. For older clients, confirm age, filing status and income rather than assuming everyone over 65 gets the full additional deduction. These details belong in intake, not in a frantic follow-up once a return reaches review.

3. Revisit charitable giving

Beginning in 2026, non-itemizers may deduct up to $1,000 of qualifying cash contributions, or $2,000 for joint filers. Itemizers face a new 0.5%-of-AGI floor on charitable deductions. That makes timing and recordkeeping especially important.

Ask clients what they’ve already given, what they plan to give and whether those gifts are deductible. Don’t assume a higher SALT cap automatically makes itemizing the winner, either.

For example, a couple who gives $2,500 in qualifying cash contributions and takes the standard deduction may be able to claim the $2,000 non-itemizer deduction. Another couple with substantial mortgage interest and state taxes may get a better result by itemizing, but the new charitable floor affects that calculation. Two taxpayers making the same gift can get different results.

Don’t make a recommendation based on the gift alone. Run the standard-versus-itemized comparison first, then look at whether a change in the timing of additional gifts makes sense for the client.

4. Check dependent-care choices before open enrollment closes

The dependent-care credit rules and the dependent-care flexible spending account limit changed for 2026. If an employer offers an FSA, compare the tax savings from the FSA with the available credit instead of automatically recommending one.

This conversation belongs in the fall, while clients may still have benefit elections to make—not in March, when the decision is already locked in.

The dependent-care decision is a good example of why “bigger deduction” isn’t always the same as “better option.” An employer’s dependent-care FSA reduces taxable wages, while the credit is calculated under a different set of rules. Using the FSA can also reduce the expenses available for the credit. Ask how much care is expected to cost, whether both spouses work and what the employer’s enrollment deadline is.

This is advice the client can actually act on now. A March explanation of a missed November benefit election might be accurate, but it isn’t especially helpful.

5. Put Marketplace and withholding clients on your radar

The repayment cap for excess advance premium tax credits is gone for 2026. A client whose income increased may face a larger repayment than expected. Encourage them to update Marketplace income estimates now.

And if tips, overtime or other deductions have changed a client’s expected tax, review their Form W-4 or estimated payments. A tax benefit doesn’t automatically change the amount withheld from each paycheck.

One more client worth calling before year-end is the person receiving Marketplace premium assistance whose income has changed since enrollment. A raise, bonus or profitable side business may create an unexpected repayment when the annual credit is reconciled. Ask whether the household has updated its Marketplace estimate; don’t wait until Form 1095-A lands in the portal.

The best planning question is often simply, “What changed this year?” A new job, different benefits, a vehicle purchase or a higher income can point you toward the provision that matters. Your job is to connect the fact to the correct tax year and then test the calculation.

The takeaway: Better year-end planning begins with better client questions. Build those questions into your intake using our Client Organizer Template, a customizable digital form for tax practices. For deeper return examples and tax-year comparisons, see the 1040 Tax Prep Guide 2026.

Official source: IRS — Working Families Tax Cuts, individuals and workers.

For general education for tax professionals; reviewed October 23, 2026. Confirm current forms and guidance before relying on tax-law details.