Cash Assistance & Tax Credits › Guide

New Tax Breaks Without Itemizing: $6,000 for Seniors, Tips, Overtime

By CalculateBenefits Editorial Team · Mark Phaneuf, Publisher
AI-assisted source check: September 29, 2026. What these dates mean.

New federal tax rules add a few deductions you can take even if you do not itemize. People 65 or older may get an extra $6,000 deduction each. Some workers may also deduct tips and part of their overtime pay. Some people may deduct interest on a new car loan.

The senior, tip, overtime, and car-loan deductions run for tax years 2025 through 2028. Starting with tax year 2026, people who do not itemize may also deduct some cash gifts to charity. You file your 2026 taxes in early 2027.

We can't tell you what your tax result will be. IRS rules decide.

What is the new senior deduction?

It is an extra deduction of up to $6,000 for each person age 65 or older who meets the rules. It applies for tax years 2025 through 2028. A deduction lowers the income you pay tax on. It is not a check.

It comes on top of the standard deduction. It also adds to the extra amount people 65 and up already get. You can take it even if you do not itemize. Here are the 2026 amounts from the IRS:

• Standard deduction: $16,100 for a single filer. It is $32,200 for a married couple filing jointly.
• Extra amount for age 65 or blind: $2,050 if you are unmarried. It is $1,650 if you are married or a surviving spouse.
• New senior deduction: $6,000 per person. It is $12,000 if both spouses are 65 or older.

Here is an example. Say a single person is 65 in 2026, with income of $75,000 or less. If they meet the other rules, they could deduct $24,150 in all. That is $16,100 plus $2,050 plus $6,000.

Who qualifies for the $6,000 senior deduction?

The IRS lists these rules:

• You must be 65 on or before the last day of the tax year.
• Each person who claims it needs a valid Social Security number on the return.
• If you are married, you must file a joint return.

The deduction gets smaller as income goes up. It starts to shrink when your modified adjusted gross income is over $75,000. For joint filers, that point is $150,000. This income number comes from your tax return.

You do not need to sign up. The IRS says there is no enrollment and no fee. You claim it when you file. A call or text that asks you to "enroll" or pay is a red flag. Learn how to spot a fake program.

Is Social Security still taxed?

Yes, for some people. The senior deduction does not make benefits tax-free. It can lower the income that is taxed.

Part of your benefits may be taxed if your combined income is over $25,000 a year. For a joint return, the line is $32,000. Combined income is half your benefits plus your other income.

Above that line, up to 50% of your benefits can be taxed. If the total is over $34,000, or $44,000 on a joint return, up to 85% can be taxed. If Social Security is your only income, your benefits may not be taxed at all.

You can ask Social Security to hold back tax from each payment. You can pick 7%, 10%, 12%, or 22%.

How does no tax on tips work?

Some workers may deduct up to $25,000 in tips a year. The limit is per tax return, even for a married couple. Key rules:

• Your job must be on the IRS list of tipped jobs. It has more than 70 jobs, such as bartenders.
• The customer must choose to give the tip. Cash, card, and tip pool shares can count.
• A set service charge that the customer can't change does not count.
• Tips must show on a W-2, a 1099, or Form 4137.
• You need a Social Security number that is valid for work.
• Married people must file jointly.

The deduction starts to shrink when modified adjusted gross income is over $150,000. For joint filers, it is $300,000. If you are self-employed, you can't deduct more than you net from that work. People in some service fields can't use it.

How does the overtime deduction work?

Only the extra part of your overtime pay can count. For time-and-a-half, that is the "half." Say your normal pay is $20 an hour. Time-and-a-half is $30. The extra $10 an hour is the part that may count.

• The overtime must be the kind the Fair Labor Standards Act requires.
• It must be on a W-2, a 1099, or other statement. You can also report it yourself.
• The limit is $12,500 a year. On a joint return, it is $25,000.
• It starts to shrink when modified adjusted gross income is over $150,000. For joint filers, it is $300,000.
• You need a Social Security number that is valid for work.
• Married people must file jointly.

Can you deduct interest on a car loan?

Some people may deduct up to $10,000 a year in interest on a loan for a new vehicle. The loan and vehicle must meet these rules:

• The loan started after December 31, 2024.
• The vehicle is new, not used. Leases do not count.
• It is for your own use, not for business.
• The loan is backed by a lien on the vehicle.
• Final assembly took place in the United States.
• It is a car, minivan, van, SUV, pickup truck, or motorcycle. It must be rated under 14,000 pounds.

To check where it was put together, look at the dealer label or the VIN. You can also use the free NHTSA VIN Decoder. You must put the VIN on your return. The deduction starts to shrink when modified adjusted gross income is over $100,000. For joint filers, it is $200,000.

Can you deduct gifts to charity without itemizing?

Yes, starting with tax year 2026. If you do not itemize, you may deduct up to $1,000 in cash gifts to certain groups. The limit is $2,000 on a joint return.

Gifts to a person do not count. Keep a bank record or a note from the group. It should show the group's name, the amount, and the date. For a gift of $250 or more, you also need a written note from the group. You can look up a group with the IRS Tax Exempt Organization Search tool.

Should you check your tax withholding now?

The free IRS Tax Withholding Estimator can show if the right amount of tax comes out of your pay. It now counts the tip, overtime, car-loan, and senior deductions. It takes about 25 minutes.

It works if you have a W-2 job or a pension with tax held back. It does not ask for your name, Social Security number, or bank account. It can fill in a new Form W-4 or W-4P for you to hand in.

The IRS says to check each January and after big changes, like a new job. If you change it during the year, you may need to update it again in late December.

What should you do before filing in early 2027?

You file your 2026 return in 2027. For 2025 returns, the IRS used a new form called Schedule 1-A for the four new deductions. Watch IRS.gov for the 2027 forms and start date.

Start a folder now. Keep pay forms that show tips or overtime. Keep your car loan interest statement and the VIN. Keep bank records or notes for cash gifts to charity.

Watch out for tax scams. The IRS warns about preparers who promise big refunds or charge fees to "enroll" you. The IRS does not charge a fee to claim a deduction.

Where can I file my taxes for free?

The IRS lists these free options:

• IRS Free File. For 2025 returns, the guided software was for people with adjusted gross income of $89,000 or less. Each partner sets its own rules. Check IRS.gov/FreeFile for the new limit. Free File Fillable Forms work at any income.
• VITA. IRS-certified volunteers do basic returns for free. They mainly help people with low to moderate income. The IRS has no one income limit. Each site may set its own. They also help people with disabilities and people with limited English.
• TCE. This free help is mainly for people 60 and older. Volunteers know pension and retirement questions. Most TCE sites are run by AARP Foundation Tax-Aide.
• MilTax. This is free for active-duty and reserve military members and some veterans.

To find a VITA or TCE site, use the IRS site locator or call 800-906-9887. IRS Direct File was not on the IRS list of free options in early 2026.

Free help can also catch credits people miss. Read our guides to the Earned Income Tax Credit and the state EITC.

Related programs