Overview
- Charitable write-offs tighten in 2026 with a 0.5% of AGI floor and an effective 35% cap on itemized benefits, prompting advisers to suggest accelerating gifts in 2025 or using donor-advised funds and qualified charitable distributions.
- The standard deduction is larger for 2025 and a new senior deduction of up to $6,000 per eligible taxpayer ($12,000 for couples) applies, with phaseouts based on modified AGI.
- The SALT deduction cap rises to $40,000 for 2025 filings ($20,000 if married filing separately) but phases out for very high earners, starting at $500,000 of modified AGI ($250,000 MFS).
- Targeted deductions debut for 2025, including up to $10,000 of auto-loan interest on U.S.-assembled vehicles and limited deductions for qualified tips (up to $25,000) and overtime (generally up to $12,500, or $25,000 for joint filers), which require the new Schedule 1-A and careful documentation.
- Compliance changes add complexity as centralized crypto sales trigger 1099-DA reporting for 2025, clean-vehicle credits are unavailable for cars acquired after September 30, 2025, and the federal estate tax exemption increases to $15 million per person in 2026, reshaping gifting strategies.