IRS & Tax Updates for 2026: What Taxpayers and Small Businesses Need to Know

1. Standard Deduction Increases for Tax Year 2026

The IRS announced significant inflation adjustments for 2026:

  • Single / Married Filing Separately: $16,100
  • Married Filing Jointly: $32,200
  • Head of Household: $24,150

These increases reduce taxable income for millions of taxpayers and should be considered when planning 2026 estimated taxes.

2. Higher Contribution Limits for Retirement Accounts (401(k) & IRA)

Starting in 2026:

  • 401(k) contribution limit increases to $24,500 (up from $23,500 in 2025).
  • IRA contribution limits also rise due to inflation adjustments.

These changes create additional opportunities for tax-deferred savings, especially for business owners and high-income earners.

3. New Tax Provisions Under the “One Big Beautiful Bill Act” (OBBBA)

The OBBBA, passed in July 2025, introduces several changes affecting 2025–2026 tax years, including:

  • Adjusted tax brackets
  • Expanded child and dependent benefits
  • Increased adoption credit
  • Employer incentives for childcare
  • Updated transportation deductions
  • Updated AMT exemptions

Business owners should review these changes to ensure proper planning for 2025 and 2026 returns.

4. New IRS Guidance on Tips & Overtime Deductions

The IRS released new rules that benefit workers in service and hospitality industries:

  • A portion of tip income may now qualify for a deduction.
  • Certain overtime payments can also be eligible for a tax deduction under the new federal guidelines.

This is especially relevant for restaurants, service workers, and employers who manage tipped employees.

5. IRS to Phase Out Paper Refund Checks

The IRS announced that it will begin phasing out paper refund checks, encouraging taxpayers to use direct deposit.

This change aims to:

  • Speed up refunds
  • Reduce fraud
  • Increase accuracy and efficiency

Taxpayers who still rely on paper checks should update their banking information before filing.

How These Changes Affect You — And How We Can Help

These IRS updates directly impact your financial and tax planning, especially in the areas of:

• Estimated tax payments
• Withholding adjustments
• Payroll planning and compliance
• Corporate & S-Corp tax strategies
• Retirement planning and contribution limits
• New IRS reporting and documentation requirements

As these rules go into effect, it is essential to review your business and personal tax situation to stay compliant and avoid penalties.

At EFILE TST we are here to guide you through every change and help you plan strategically so you can protect your business, reduce your tax liability, and stay fully compliant with federal and state requirements.

If you have questions or need a personalized review, we’re ready to assist you.