The IRS opened the 2026 tax filing season on January 26, accepting returns for the 2025 tax year and this year is packed with updates thanks to the One Big Beautiful Bill Act (often called the Working Families Tax Cut), signed into law last summer. Many provisions are retroactive to 2025 or kick in fully for 2026, meaning bigger potential refunds, new deductions, and some adjustments to watch.
As Houston locals, we’re seeing how these changes play out for energy workers, small business owners, families, tipped employees, and our diverse community. Here’s a quick rundown of the most relevant updates and tips to maximize your return.
1. Higher Standard Deductions and Inflation Adjustments
The IRS boosted standard deductions for 2025 returns (filed now):
- Married filing jointly: Up to $32,200 (from previous levels)
- Single or married filing separately: $16,100
- Head of household: $24,150
These inflation tweaks, combined with permanent lower tax rates (10%–37%) from the Bill, help prevent “bracket creep” and could mean more money in your pocket especially if you don’t itemize.
For 2026 income (next year’s filing), brackets shift slightly, with bigger boosts to the lower ones (around 4% for 10% and 12% brackets), potentially increasing take-home pay via updated withholding.
2. New Deductions That Could Boost Refunds Big Time
Several headline-grabbing breaks from the One Big Beautiful Bill apply to 2025 returns:
- No tax on tips – Qualified tips (up to certain limits) are deductible for service workers like servers, bartenders, rideshare drivers, and salon staff.
- No tax on overtime – Over time pay gets special treatment for hourly employees.
- No tax on car loan interest – A fresh deduction for auto loan interest.
- Enhanced senior deduction – Extra breaks for those 65+.
These could lead to significantly larger refunds this season some estimates suggest average refunds rising by $1,000 or more for eligible families. If you’re in hospitality, gig work, or overtime-heavy industries common in Houston, don’t miss these!
3. Trump Accounts: New Savings for Kids
Parents and guardians can now open Trump Accounts (a new child-focused retirement/savings vehicle) for eligible kids under 18. A one-time $1,000 federal contribution is available for qualifying children born 2025–2028, with additional annual limits. This starts rolling out—great for long-term family planning in our growing city.
4. Other Noteworthy Updates
- HSA eligibility expands – Certain direct primary care plans now qualify, making health savings more flexible.
- New Schedule 1-A – Use this to claim the fresh deductions above.
- Potential challenges ahead – With IRS staffing changes and complex new rules, some filers may face longer wait times for help making professional guidance even more valuable.
Why Houston Taxpayers Should Act Early
In a city like ours with energy sector bonuses, small businesses booming, international families needing ITIN support, and plenty of tipped/overtime workers these changes hit home. Retroactive breaks mean acting now could uncover hidden savings or resolve any IRS notices quickly.
At ThiinkSmart Tax Solutions, we’re already helping clients navigate these updates. Our team stays on top of federal changes, Texas-specific rules (no state income tax means we focus on maximizing federal savings), and local nuances like property tax deadlines (bills arriving soon, due January 31, 2027 for many).
Don’t let new forms or rules slow you down get ahead with a free consultation. We’ll review your situation, claim every credit/deduction you’re entitled to, and handle e-filing for a smooth, stress-free experience.
Ready to make 2026 your smartest tax year yet?
Contact ThiinkSmart Tax Solutions in Houston today call us, schedule online, or drop by. Let’s turn these changes into real money back in your pocket!
