Tax Season Starts Now: What's New on Your 2026 Return — and What to Gather Before January

The return you'll file in early 2027 covers tax year 2026 — and this is not a copy-paste year. A major tax law (the One, Big, Beautiful Bill Act) plus the IRS's annual inflation adjustments changed numbers and added deductions that didn't exist before. Here's what Louisville families need to know, and the folder you should start filling today.

The standard deduction went up

For tax year 2026, the standard deduction is:

  • $32,200 — married filing jointly


  • $24,150 — head of household

  • $16,100 — single or married filing separately

The seven tax rates (10% through 37%) stayed the same, and they're now permanent — but the income thresholds moved up with inflation, so a bit more of your pay is taxed at the lower rates. Taxpayers 65 and older or blind get an extra amount on top ($2,050 per person if single or head of household; $1,650 per spouse on a joint return).

Four new deductions — claimed on a new form, Schedule 1-A

For tax years 2025 through 2028, you can claim these whether or not you itemize:

  • Tips — up to $25,000. If you work in an occupation the IRS lists as customarily tipped, your qualified tips are deductible. Keep your tip records and watch your W-2 — 2026 forms report tip income so it can be claimed properly.

  • Overtime — up to $12,500 ($25,000 on a joint return). Only the premium half of time-and-a-half counts — the extra "half," not your whole overtime pay. Keep your final pay stubs.

  • Car loan interest — up to $10,000. Applies to loans taken out after December 31, 2024, on a new vehicle with final assembly in the United States, bought for personal use. You'll need the lender's interest statement and the vehicle's VIN on the return.

  • Seniors — an extra $6,000 per person age 65+ ($12,000 for a couple both 65+), on top of the standard deduction amounts above.

Each of these phases out at higher incomes, and each has paperwork that proves it. The time to organize that paperwork is now, not the week you file. Also worth knowing: the cap on deducting state and local taxes (SALT) for itemizers is $40,400 for 2026 — up from the old $10,000 — and the Child Tax Credit is $2,200 per child under 17.

Kentucky changed too

Kentucky's flat individual income tax rate drops to 3.5% for tax year 2026 (from 4%), and the Kentucky standard deduction rises to $3,360. Social Security benefits remain fully exempt from Kentucky tax. Kentucky's deadline matches the federal one: April 15, 2027.

Your gather-it-now checklist

Start a folder — paper or phone photos — with:

  • W-2s from every job, and every 1099 (side gigs, bank interest, unemployment, retirement)

  • Tip logs and overtime pay stubs if you'll claim the new deductions

  • Your vehicle loan interest statement and VIN, if you bought a new U.S.-assembled car with a loan

  • Mortgage interest statement (Form 1098) and property tax records

  • Childcare provider's name, address, and tax ID — no provider info, no dependent care credit

  • Form 1095-A if you bought health insurance through the marketplace (kynect here in Kentucky)

  • Education forms (1098-T), student loan interest (1098-E), HSA paperwork

  • Records of charitable donations, and last year's return

One timing note: by law, the IRS holds refunds claiming the Earned Income Tax Credit or Additional Child Tax Credit until at least February 15 — filing early still helps, but plan your February around that date, not around a promise.

We do this year-round

Do The Math Tax Pros has been preparing returns in Louisville since 2019 — personal returns, business returns, and back taxes for folks who've fallen behind, going back ten years and more. We're open all year, not just tax season. If your 2026 has a new wrinkle — a new job, a new baby, a new car loan, a first year of tips or overtime — call (502) 835-8535 before January and let's make sure you walk into filing season with the right folder.

This post is general information about tax year 2026, not tax advice for your specific situation. Figures are from IRS Revenue Procedure 2025-32 and Kentucky Department of Revenue guidance for tax year 2026.