Tax Day is almost here. For millions of Americans, April 15 is the kind of deadline that tends to sneak up — and this year, it arrives with more moving parts than usual. The 2026 filing season is unlike anything most taxpayers have experienced in recent memory: a sweeping new tax law with genuinely significant deductions, a thinner IRS operating on a dramatically reduced workforce, and a set of disappearing tax credits that could catch some filers off guard.
Whether you’re rushing to finish your return or calmly double-checking the numbers, here’s what you need to know before the clock runs out.
This Is No Ordinary Tax Year
Let’s start with the most important context: this is the first filing season reflecting changes from the One Big Beautiful Bill Act (OBBBA), signed into law by President Donald Trump on July 4, 2025. For many Americans — especially tipped workers, overtime earners, seniors, and families — that legislation has created real, meaningful new deductions that could translate into significantly larger refunds.
The IRS expects roughly 164 million individual income tax returns this year, and the early data is encouraging. The average refund as of mid-season stands at $3,742 — up more than 10% compared to the same period last year. But there’s a catch: getting that refund on time is not guaranteed, and the odds of delay are higher in 2026 than they’ve been in years.
The New Deductions You Don’t Want to Miss
The OBBBA introduced a cluster of new temporary tax benefits, available through the 2028 tax year. To claim them, taxpayers will need to use the new Schedule 1-A form. Here’s what’s available:
No Tax on Tips. Tipped workers can now deduct up to $12,500 in tip income from their federal taxable income. This is one of the most widely discussed provisions, and it applies regardless of whether you itemize or take the standard deduction. There are income limits — the deduction phases out for higher earners — and married filers must file jointly to qualify.
No Tax on Overtime. Workers who earned overtime pay in 2025 can deduct up to $12,500 in overtime compensation from their taxable income ($25,000 for joint filers). Like the tips deduction, this one begins to phase out when modified adjusted gross income exceeds $150,000 ($300,000 for joint filers) and disappears entirely at $275,000 ($550,000 joint). If you clocked serious overtime last year, this could be one of the most valuable deductions on your return.
No Tax on Car Loan Interest. Taxpayers who purchased a new, American-manufactured vehicle in 2025 or 2026 can deduct up to $10,000 in annual auto loan interest. There are caveats: the vehicle must have been assembled in the United States, must weigh under 14,000 pounds, and must be used for personal travel rather than business purposes. The deduction applies to single filers with adjusted gross income up to $100,000 ($200,000 for joint filers).
Enhanced Senior Deduction. Taxpayers aged 65 and older can claim an additional $6,000 deduction per filer — $12,000 for a married couple — on top of the standard deduction already available for seniors. Crucially, this applies regardless of whether you are collecting Social Security.
Bigger Standard Deduction. The OBBBA added an extra 5% increase to the already inflation-adjusted standard deduction for 2025. For the current filing year, that means roughly $14,600 for single filers and $29,200 for married couples filing jointly. That’s a meaningful jump from recent years.
Retirement Savings Boost. Contribution limits for 401(k), 403(b), and 457 plans have also increased. The basic limit for 2025 is $23,500, with a catch-up contribution of $7,500 for workers aged 50 and older. Workers aged 60 to 63, however, can make a “supersized” catch-up contribution of up to $11,250, for a total of $34,750.
Tax Breaks That Are Gone
Not everything in this filing season is a windfall. Several popular tax benefits have quietly expired under the OBBBA, and catching this late could mean an unpleasant surprise.
The federal Electric Vehicle (EV) tax credit — worth up to $7,500 — expired on September 30, 2025. If you bought an EV after that date expecting the credit, you won’t find it on your 2025 return. Similarly, the Trump tax legislation eliminated several residential clean energy credits that had previously been extended through the Inflation Reduction Act — benefits that many homeowners were counting on for solar panels and energy-efficient upgrades.
The personal exemption, moving expense deductions, and miscellaneous itemized deductions also remain gone, effectively carried forward from the original Tax Cuts and Jobs Act framework.
The IRS Elephant in the Room
Here’s the uncomfortable reality sitting behind all of these new deductions: the agency tasked with processing your return is operating at historic lows in terms of staffing.
The IRS started 2025 with roughly 102,000 employees and finished the year with approximately 74,000 — a reduction of about 27% — after a wave of firings, buyouts, and resignations driven by Elon Musk’s Department of Government Efficiency (DOGE). Key divisions hit hardest include the ones you’d most want fully staffed during filing season: submission processing and accounts management.
The Treasury Inspector General for Tax Administration (TIGTA) issued a stark warning ahead of this season. The number of paper tax returns waiting to be processed stood at 294,052 in December 2025 — compared to just 52,293 the prior December. Unresolved taxpayer cases have climbed to roughly two million, more than double pre-pandemic levels. “Things are definitely taking longer because just straight up, we have less staff,” said Matt Kirk, an IRS union chapter president in West Virginia. “The institutional knowledge that was lost is for real.”
National Taxpayer Advocate Erin Collins put it plainly in her annual report to Congress: the IRS is simultaneously confronting a reduction of 27% of its workforce, leadership turnover, and the implementation of complex new tax law changes. “Entering 2026, the landscape is markedly different,” she wrote.
The IRS has lowered its phone service target to 70%, down from 85% last season. To keep operations running, the agency has been reassigning workers from HR and IT — some with no direct tax experience — to answer phones and assist with processing. Meanwhile, the free Direct File program that served lower-income taxpayers was dismantled under DOGE, and IRS Free File is now only available to those with adjusted gross income of $89,000 or less.
For the average filer, the staffing crunch is most likely to show up in delayed refunds for paper returns, longer waits if something goes wrong, and slower responses to correspondence. The IRS says it is issuing 90% of refunds within 21 days for e-filed returns — but that still leaves a significant number of taxpayers potentially waiting much longer.
What You Should Do Right Now
With Tax Day three days away, the best moves are straightforward. File electronically if at all possible — paper returns face the longest processing delays given the staffing situation. Choose direct deposit over a mailed check. Use the IRS “Where’s My Refund?” tool to track your return status rather than calling the agency, where hold times can be significant.
If you’re claiming any of the new OBBBA deductions — tips, overtime, car loan interest, or the senior deduction — make sure you’re using Schedule 1-A. These deductions require specific documentation, so gather your lender’s auto loan interest statement (which your lender was required to provide by January 31, 2026) and any employer records showing overtime or tip income.
And if April 15 feels impossible, filing for an extension is always an option. Just remember: an extension to file is not an extension to pay. Any taxes owed are still due by April 15, even if you have until October to submit your return.
This is a tax season full of genuine opportunity — but navigating it requires knowing what’s new, what’s gone, and what to realistically expect from an agency doing more with considerably less.
Written by Shalin Soni, CMA specializing in financial analysis, global markets, and corporate strategy, with hands-on experience in financial planning and analytical decision-making.
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Source: Based on Forbes and publicly available information.