So, it's 2026, and the tax landscape basically looks nothing like it did a few years ago. If you’ve been scrolling through the news, you’ve probably heard a dozen different names for the same thing—the "Trump Megabill," the "One Big Beautiful Bill Act" (OBBBA), or just the Trump new tax cuts. Honestly, it's a lot to keep track of. But here’s the kicker: while everyone is talking about "tax cuts," some people are actually going to see their bills go up, while others are looking at a windfall they didn't see coming.
The bill, officially signed into law on July 4, 2025, wasn't just a simple extension of the old 2017 rules. It was a massive overhaul. It made a lot of those temporary individual tax brackets permanent, sure, but it also threw in some wildcards—like no tax on tips and overtime—that have everyone from bartenders to construction workers checking their W-2s twice.
What’s Actually Happening with the Brackets in 2026?
Let’s get into the weeds for a second. Most of us take the standard deduction and call it a day. For the 2026 tax year, that number has jumped again. If you're filing single, your standard deduction is now $16,100. For married couples filing jointly? You're looking at $32,200.
Basically, the IRS adjusted everything for inflation, but they did it in a weird way. The bottom two brackets (10% and 12%) got a 4% boost, while the higher brackets only moved up by 2.3%. This was a deliberate move to keep more money in the pockets of people making "normal" wages.
Here is how the 2026 marginal rates shake out:
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- 10% on income up to $12,400 (Single) or $24,800 (Joint).
- 12% for income over that, up to $50,400 (Single) or $100,800 (Joint).
- 22% kicks in after that.
- 37% is still the top rate, but it doesn't hit until you're clearing $640,600 as a single filer or $768,700 for married couples.
If you’re a senior, there is a massive change you need to know about. There is a new "Senior Bonus" deduction. If you are 65 or older, you can claim an extra **$6,000** deduction ($12,000 for couples). This was basically Trump’s way of fulfilling the "no tax on Social Security" promise without actually touching the Social Security program itself. It phases out if you’re making over $75,000 (single) or $150,000 (joint), but for a huge chunk of retirees, it basically wipes out the federal tax they were paying on their benefits.
The No Tax on Tips and Overtime Wildcard
This is where things get kinda complicated. The "No Tax on Tips" and "No Tax on Overtime" rules are in full swing for 2026.
For tipped workers, you can now deduct up to $25,000 of your tip income. But the IRS is being really picky about who counts. They released a list of 68 job categories—think waiters, barbers, and valets. If you're a lawyer trying to call your "bonus" a "tip," you're out of luck. The Treasury Department has been very clear: it has to be a "customary and regular" tipped position.
Overtime is similar but has its own set of math problems. You can deduct the "extra" part of your overtime pay—the "half" in "time-and-a-half."
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Example: If you normally make $20 an hour and your overtime rate is $30, you can only deduct that extra $10 per hour.
This deduction is capped at $12,500 for individuals and $25,000 for joint filers. And just like the tips, it phases out if you’re a high earner (over $150,000).
The Business Side: Bonus Depreciation is Back
Businesses are probably the happiest group under the OBBBA. Remember how "bonus depreciation" was slowly dying out? The new law brought back 100% bonus depreciation. This means if a business buys a huge piece of machinery or a fleet of trucks, they can write off the entire cost in year one instead of spreading it out over a decade.
There is also a significant change for lenders. A new section of the tax code, 139L, lets certain lenders exclude 25% of interest income from their taxes. The goal was to lower interest rates for consumers, though the jury is still out on whether banks are actually passing those savings along to you.
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Why Some People are Actually Paying More
Here is the part the brochures don't always mention. To pay for some of these cuts, the bill killed off a bunch of "green" credits. The Energy Efficient Home Improvement Credit (25C) and the Residential Clean Energy Credit (25D) are gone for any property placed in service after December 31, 2025. If you were planning on putting solar panels on your roof this year, you missed the federal tax credit boat.
Also, the bill let the enhanced health care tax credits from the Biden era expire. For families that rely on ACA (Obamacare) subsidies, premiums are jumping. The Center for American Progress and other analysts have pointed out that for the bottom 20% of earners, the loss of these health credits might actually cost them more than they save from the new tax brackets.
And then there's the 1% excise tax on cash remittances. If you're sending money abroad using cash, money orders, or cashier's checks, the government is taking a 1% cut starting this year. It's a small percentage, but for people sending money home to family, it adds up.
Actionable Next Steps for Your 2026 Taxes
You shouldn't just wait until next April to figure this out. The OBBBA changed the withholding tables, so your paycheck should already look different.
- Check your W-4: Especially if you work overtime or get tips. You might be overpaying into the system now that these deductions exist.
- Document your "Extra" Overtime: Don't just track your total OT pay; track the premium (the extra $10 or $15 per hour). Your employer is supposed to report this on your W-2, but you’ll want your own records to double-check their math.
- Seniors: Re-evaluate your RMDs: With the new $6,000 senior deduction, you might be able to take more out of your IRA without hitting a higher tax bracket.
- Business Owners: If you’ve been holding off on big equipment purchases, 2026 is the year of the 100% write-off. Talk to your CPA about "Section 179" vs. "Bonus Depreciation" to see which one saves you more.
- Vehicle Interest: If you bought a car for personal use (not a lease), you can now deduct up to $10,000 in interest, provided your income isn't too high. Keep those loan statements.
The reality of the Trump new tax cuts is that they are a massive shift toward "above-the-line" deductions. It's no longer just about the brackets; it's about what you do for a living and how old you are. Making sure you're in the right "category" is basically the only way to make sure you aren't leaving money on the table.
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