A charitable deduction without itemizing.
Starting with 2026 returns, IRS Publication 6196 says eligible taxpayers who take the standard deduction can deduct up to $1,000 of qualifying cash contributions, or $2,000 for married couples filing jointly. Gifts to donor-advised funds generally do not qualify. Keep receipts, canceled checks, or bank records for each gift.
Higher standard deductions.
For 2026, the IRS standard deduction is $16,100 for single filers and married people filing separately, $32,200 for married couples filing jointly, and $24,150 for heads of household. For 2025, the same amounts were $15,750, $31,500, and $23,625.
The state and local tax cap rises to $40,400.
If you itemize, IRS Publication 6079 lists the 2026 limit on the combined deduction for state and local taxes as $40,400, or $20,200 if married filing separately. The limit is reduced at higher incomes but not below $10,000. For many Wake County homeowners, that makes it worth comparing itemized deductions against the standard deduction again.
Year two for the tips and overtime deductions.
The deductions created in 2025 run through 2028, according to IRS Fact Sheet 2025-03. Qualified tips are deductible up to $25,000. Qualified overtime, meaning the premium portion of overtime pay, is deductible up to $12,500, or $25,000 on a joint return. Both phase out above $150,000 of modified adjusted gross income, or $300,000 jointly, and both require a Social Security number on the return and a joint return if you are married.
What is new for 2026 is the paperwork. The 2026 W-2 instructions add box 12 code TP for cash tips and code TT for qualified overtime, so the amounts should appear on your W-2 rather than in a separate estimate.
Seniors and car loan interest.
Taxpayers 65 or older can claim an additional $6,000 each, or $12,000 for a married couple who both qualify, with a phaseout above $75,000 of modified adjusted gross income, or $150,000 jointly. Interest on a loan for a new, personal-use vehicle with final assembly in the United States is deductible up to $10,000 a year if the loan began after December 31, 2024, with a phaseout above $100,000, or $200,000 jointly. The vehicle's VIN goes on the return each year you claim it.
North Carolina does not allow these deductions or the tips and overtime deductions on the state return. Our article on North Carolina and the tips and overtime deductions explains why.
New 1099 thresholds.
For payments made in 2026, a business issues Form 1099-NEC when nonemployee compensation reaches $2,000, according to the IRS 1099-NEC instructions. Payment apps and marketplaces file Form 1099-K only when payments exceed $20,000 and the number of transactions exceeds 200, the threshold the IRS confirmed after the 2025 law. Income is reportable whether or not you receive either form.
COMMON QUESTIONS
Questions you may have.
Can I deduct charitable gifts if I do not itemize?
For 2026 returns, yes. Eligible taxpayers can deduct up to $1,000 of qualifying cash contributions, or $2,000 jointly, according to IRS Publication 6196. Gifts to donor-advised funds generally do not qualify.
What is the 2026 standard deduction?
$16,100 for single filers, $32,200 for married couples filing jointly, and $24,150 for heads of household, according to the IRS.
Do the tips and overtime deductions continue for 2026?
Yes. They apply for 2025 through 2028. For 2026, employers report cash tips with W-2 box 12 code TP and qualified overtime with code TT.