The tax deductions for 2026 look very different from just a few years ago. The One Big Beautiful Bill Act (OBBBA), signed on July 4, 2025, raised the SALT cap and brought back the mortgage insurance deduction. It also created new write-offs for tips, overtime, car loan interest, and seniors. At the same time, it tightened the rules on gambling losses and charitable gifts. Many of these commonly overlooked tax deductions can lower your bill by hundreds or even thousands of dollars.
This guide covers the deductions and credits you should not miss on your 2026 return, which you will file in 2027. Some apply only if you itemize. Others work even if you take the standard deduction. The team at Nexus United Inc. explains each one in plain language so you can plan now and keep more of your money.
Standard Deduction vs Itemizing in 2026
Before you look at any single deduction, you need to know which path you will take. You can claim the standard deduction or itemize on Schedule A. You pick whichever gives you the bigger write-off.
| Filing Status | 2026 Standard Deduction |
|---|---|
| Single or married filing separately | $16,100 |
| Married filing jointly | $32,200 |
| Head of household | $24,150 |
| Extra deduction for seniors (new, 2025 to 2028) | Up to $6,000 per person |
The higher SALT cap means more people may now benefit from itemizing. If your mortgage interest, state and local taxes, and charitable gifts add up to more than your standard deduction, itemizing could save you money.
2026 Tax Deductions Overview
| Deduction or Credit | 2026 Limit or Rule | Must You Itemize? |
|---|---|---|
| Medical expenses | Amount above 7.5% of AGI | Yes |
| Mortgage interest and PMI | Interest on up to $750,000 of debt | Yes |
| State and local taxes (SALT) | Up to $40,400 | Yes |
| Charitable gifts (itemizers) | Amount above 0.5% of AGI | Yes |
| Charitable cash gifts (non-itemizers) | Up to $1,000 or $2,000 joint | No |
| Disaster losses | Declared disaster areas only | Usually yes |
| Gambling losses | 90% of losses, up to winnings | Yes |
| Child and dependent care credit | 20% to 50% of up to $3,000 or $6,000 | No |
| Business and gig expenses | Ordinary and necessary costs | No |
| QBI deduction | 20% of qualified business income | No |
| Education credits | Up to $2,500 or $2,000 per year | No |
| Student loan interest | Up to $2,500 | No |
| Rental expenses | Costs tied to the rental | No |
| Qualified tips | Up to $25,000 | No |
| Qualified overtime | Up to $12,500 or $25,000 joint | No |
| Car loan interest | Up to $10,000 | No |
| Senior deduction | Up to $6,000 per person | No |
1. Medical and Dental Expenses
You can deduct out of pocket medical costs that go above 7.5% of your adjusted gross income (AGI). For example, if your AGI is $60,000, only costs above $4,500 count.
Qualifying costs include:
- Doctor, hospital, and lab fees
- Prescription drugs and insulin
- Dental and vision care, including glasses and contacts
- Health insurance premiums paid with after tax dollars
- Long term care premiums, within age based limits
- Hearing aids, crutches, and other medical devices
- Home changes for a medical need, such as ramps or grab bars
- Travel to medical care, at 20.5 cents per mile through June 2026 and 23.5 cents per mile from July 1
Tip: A Health Savings Account (HSA) gives you a tax break without the 7.5% floor. For 2026, you can put in up to $4,400 for self only coverage or $8,750 for family coverage, as long as you have a qualifying high deductible health plan.
2. Home Mortgage Interest and Mortgage Insurance
Mortgage interest is still one of the biggest deductions for homeowners. You can deduct interest on up to $750,000 of home loan debt. If your loan started before December 16, 2017, the limit is $1 million. The new law made the $750,000 cap permanent.
Interest on a home equity loan or line of credit counts only if you used the money to buy, build, or substantially improve the home that secures the loan. Using it to pay off credit cards does not qualify.
New for 2026: Private mortgage insurance (PMI) premiums are deductible again. The OBBBA treats them as mortgage interest starting with the 2026 tax year. If you put less than 20% down on your home, save your Form 1098 and track these payments.
3. State and Local Taxes (SALT)
The SALT deduction got a major boost. For 2026, you can deduct up to $40,400 in state and local taxes. Married couples filing separately get up to $20,200. Under the old law, the cap was only $10,000.
The SALT deduction can include:
- Property taxes on your home
- State and local income taxes, or state and local sales taxes instead
- Certain personal property taxes, such as value based vehicle fees
High income limit: The $40,400 cap shrinks once your modified AGI goes above $505,000. It drops by 30 cents for every dollar over that line, but it never falls below $10,000.
Florida tip: Florida has no state income tax. That means most Florida residents should deduct sales tax instead. You can use the IRS sales tax tables or your actual receipts. Add in your property taxes, and a large purchase like a car or boat could push you past the standard deduction.
The higher cap runs through 2029. It is scheduled to return to $10,000 in 2030 unless Congress acts.
4. Charitable Contributions
Gifts to qualified charities are still deductible, but the rules changed in 2026 in two ways.
If you take the standard deduction: You can now deduct up to $1,000 of cash gifts to qualified charities, or $2,000 if you file jointly. Gifts to donor advised funds do not count.
If you itemize: Your charitable deduction only counts for the amount above 0.5% of your AGI. If your AGI is $100,000, the first $500 of gifts is not deductible. For taxpayers in the top 37% bracket, the tax benefit of each deduction is capped at 35 cents per dollar.
Keep good records for every gift:
- Bank or credit card records for all cash gifts
- A written receipt from the charity for any gift of $250 or more
- A qualified appraisal for most noncash gifts over $5,000
If you get something back, such as event tickets, subtract its value from your deduction. Volunteers can also deduct 14 cents per mile for driving to serve a charity.
Planning idea: If you itemize, “bunching” two years of gifts into one year can help you clear the 0.5% floor.
5. Losses From Natural Disasters
A casualty loss is damage from a sudden event such as a hurricane, flood, or fire. For personal property, you can only deduct these losses if they happen in a declared disaster area. The new law made this limit permanent. It also expanded the rule to cover certain state declared disasters, not just federal ones.
This matters in South Florida, where hurricane damage is a real risk. You can check current declarations on the FEMA disaster declarations page. Keep photos, repair bills, and insurance records. You must subtract any insurance payment you receive. Special rules may let you claim the loss on the prior year’s return to get money back sooner.
6. Gambling Losses
If you gamble, you must report all winnings as income. You can deduct your losses, but only up to the amount you won, and only if you itemize.
New for 2026: You can now deduct only 90% of your gambling losses. Here is how that works.
| Example | Old Rule | 2026 Rule |
|---|---|---|
| Winnings | $10,000 | $10,000 |
| Losses | $10,000 | $10,000 |
| Deductible losses | $10,000 | $9,000 |
| Taxable gambling income | $0 | $1,000 |
This means you could owe tax even in a year when you broke even. Keep a detailed log of dates, places, amounts won and lost, and your receipts or casino statements.
7. Child and Dependent Care Credit
This is a credit, not a deduction, which makes it even more valuable. It lowers your tax bill dollar for dollar. You can claim it if you pay for care so you, and your spouse if married, can work or look for work.
New for 2026: The top credit rate rose from 35% to 50%. You can count up to $3,000 of care costs for one child under 13, or $6,000 for two or more. That means a credit of up to $1,500 or $3,000. The 50% rate goes to lower income families, and it steps down to 20% as income rises. Every income level gets at least 20%.
Qualifying care includes daycare, preschool, before and after school programs, babysitters, and summer day camps. Overnight camps do not count.
If you hire a nanny, you may owe employment taxes. See our guide to household employee payroll tax to stay compliant.
Also new: The limit for a dependent care FSA through your employer rose from $5,000 to $7,500 in 2026. This credit is separate from the Child Tax Credit of $2,200 per qualifying child.
8. Small Business, Freelance, and Gig Work Expenses
If you run a business or earn 1099 income, you can deduct ordinary and necessary business costs on Schedule C. You do not need to itemize. These deductions also lower your self-employment tax, so they are worth tracking closely.
Common write-offs include:
| Expense | 2026 Rule |
|---|---|
| Business mileage | 72.5 cents per mile from January to June, 76 cents per mile from July to December |
| Home office (simplified method) | $5 per square foot, up to 300 square feet ($1,500) |
| Self-employed health insurance | Premiums for you, your spouse, and dependents |
| Equipment and vehicles | 100% bonus depreciation for property acquired after January 19, 2025 |
| Section 179 expensing | Up to $2.56 million |
| Phones, computers, and software | Business use percentage |
| App fees and commissions | Fees paid to rideshare or delivery platforms |
| Retirement contributions | SEP IRA, Solo 401(k), or SIMPLE IRA |
The IRS raised the business mileage rate in the middle of 2026 because fuel costs went up. Keep a mileage log that shows the date of each trip, so you can apply the right rate. You can confirm current rates on the IRS standard mileage rates page.
Good records make these deductions stick. Our bookkeeping service can help you keep receipts and logs in order all year.
9. Qualified Business Income (QBI) Deduction
If you own a sole proprietorship, partnership, LLC, or S corporation, you may deduct up to 20% of your qualified business income. This deduction is separate from your business expenses. You can claim it even if you take the standard deduction.
What changed for 2026:
- The deduction is now permanent. It was set to expire after 2025.
- A new minimum deduction of $400 applies if you have at least $1,000 of QBI from an active business you materially take part in.
- The income ranges where limits phase in are wider, which helps some higher earners keep more of the deduction.
For 2026, full deduction limits start to apply above $201,750 of taxable income for single filers and $403,500 for joint filers. Service businesses such as law, health, and consulting face extra limits above those levels. The math gets complex fast, so a tax professional can help.
10. Education Credits and Student Loan Interest
Two tax credits can help with college costs:
| Credit | Maximum Per Year | Key Rules |
|---|---|---|
| American Opportunity Tax Credit | $2,500 per student | First four years of college, at least half time, up to $1,000 refundable |
| Lifetime Learning Credit | $2,000 per return | Any year of college or job skill courses, not refundable |
You cannot claim both credits for the same student in the same year. Both have income limits.
Student loan interest: You can deduct up to $2,500 of student loan interest each year without itemizing. Your lender will send Form 1098-E. Income limits apply.
Note: The old tuition and fees deduction is gone. It ended after 2020 and was replaced by a larger Lifetime Learning Credit.
11. Rental Property and Short Term Rental Expenses
If you rent out a home, room, or condo through Airbnb, Vrbo, or a long term lease, you must report the income on Schedule E. You can also deduct the costs of running the rental.
Deductible rental costs include:
- Mortgage interest and property taxes for the rental portion
- Insurance, utilities, and HOA fees
- Repairs and maintenance
- Cleaning and supplies
- Platform service fees and advertising
- Furniture and décor
- Depreciation on the building over 27.5 years for residential property
14 day rule: If you rent your home for 14 days or fewer in a year, you do not report the rental income. You also cannot deduct rental expenses for that home.
12. No Tax on Tips (New)
Workers in jobs that customarily receive tips can deduct up to $25,000 of qualified tips each year from 2025 through 2028. You claim it on the new Schedule 1-A, and you do not need to itemize.
To qualify:
- The tips must be voluntary and reported on a W-2, 1099, or similar form.
- Your job must be on the IRS list of tipped occupations.
- You need a valid Social Security number.
- Married couples must file jointly.
The deduction phases out once modified AGI goes above $150,000, or $300,000 for joint filers. Tips are still subject to Social Security and Medicare taxes.
13. No Tax on Overtime (New)
If you earn overtime pay required under the Fair Labor Standards Act, you can deduct the extra “half” portion of your time and a half pay. The limit is $12,500, or $25,000 for joint filers, for 2025 through 2028.
For example, if your regular rate is $20 an hour and your overtime rate is $30, only the extra $10 per overtime hour counts. The same income phase out applies as the tip deduction: $150,000 for single filers and $300,000 for joint filers.
14. Car Loan Interest (New)
You can deduct up to $10,000 of interest on a loan for a new personal vehicle from 2025 through 2028. You do not need to itemize.
The vehicle and loan must meet these rules:
- The vehicle is new, not used.
- Final assembly took place in the United States.
- The loan started after December 31, 2024.
- The vehicle is for personal use more than half the time.
- The loan is secured by the vehicle and not from a family member.
- You list the vehicle identification number (VIN) on your return.
The deduction starts to phase out when modified AGI goes above $100,000, or $200,000 for joint filers. Leases do not qualify.
15. Enhanced Deduction for Seniors (New)
If you are 65 or older, you can deduct an extra $6,000 per person from 2025 through 2028. A married couple where both spouses qualify can deduct $12,000. This is on top of the regular standard deduction and the existing extra amount for people 65 and older. You can claim it whether you itemize or not.
The deduction shrinks by 6% of modified AGI above $75,000, or $150,000 for joint filers. You need a valid Social Security number, and married couples must file jointly. This deduction does not change how Social Security benefits are taxed, but it can lower your overall tax bill. For the many retirees in Delray Beach and Palm Beach County, this is one of the most valuable new breaks.
Deductions That Are Gone for Good
The new law made several cuts from 2017 permanent. You can no longer deduct:
- Moving expenses, except for active duty military and certain intelligence community members
- Unreimbursed employee expenses, such as work clothes or job travel, with limited exceptions
- Tax preparation fees, unless they relate to a business or rental on Schedule C or Schedule E
- Personal theft losses outside a declared disaster
- Safe deposit box fees and other miscellaneous itemized deductions
Filing a 2025 Return on Extension?
If you are still filing your 2025 return before the October 15, 2026 deadline, some rules are different. For 2025:
- The SALT cap is $40,000, not $40,400.
- PMI is not deductible.
- Gambling losses are 100% deductible, up to winnings.
- The dependent care credit tops out at 35%.
- The non-itemizer charitable deduction is not available.
- The business mileage rate is 70 cents per mile.
The tips, overtime, car loan, and senior deductions do apply to 2025.
How to Make Sure You Don’t Miss a Deduction
- Keep records all year. Save receipts, mileage logs, and bank statements in one place.
- Compare both options. Run the numbers for itemizing and the standard deduction every year.
- Watch your income. Many new deductions phase out at certain income levels.
- Plan before December 31. Timing gifts, equipment purchases, and property tax payments can shift deductions into the right year.
- Get expert help. A tax professional can spot breaks your software may miss.
Missing a deduction or claiming one you don’t qualify for can be costly. Learn what happens if you underpay the IRS.
Get Help From Nexus United Inc.
The new tax law brings real savings, but the rules are more complex than ever. The tax professionals at Nexus United Inc. help individuals and business owners in Delray Beach and across Palm Beach County claim every deduction they are entitled to. Whether you need tax preparation, accounting services, or consulting and advisory support, we are here to help. Call us at (855) 639 8740 or contact us today.
Frequently Asked Questions
What are the new tax deductions for 2026?
The new deductions cover qualified tips, overtime pay, interest on new US assembled car loans, and an extra $6,000 for seniors. PMI is deductible again, and non-itemizers can deduct up to $1,000 of cash gifts to charity ($2,000 joint). You claim most of these without itemizing.
What is the standard deduction for 2026?
The 2026 standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly. Heads of household get $24,150. Seniors may also claim extra amounts on top of these figures.
Can I deduct charitable donations if I don’t itemize?
Yes, starting in 2026. You can deduct up to $1,000 of cash gifts to qualified charities, or $2,000 if you file jointly. Gifts to donor advised funds do not qualify.
What is the SALT deduction limit for 2026?
The SALT cap is $40,400 for 2026, or $20,200 for married couples filing separately. It shrinks for modified AGI above $505,000 but never falls below $10,000.
Can Florida residents take the SALT deduction?
Yes. Florida has no state income tax, so most residents deduct state and local sales tax instead. You can add property taxes to that amount, up to the $40,400 cap.
Are gambling losses still deductible in 2026?
Yes, but only 90% of your losses count, and only up to your winnings. You must itemize to claim them. This means you may owe tax even if you broke even.
Is private mortgage insurance deductible in 2026?
Yes. Starting with the 2026 tax year, PMI premiums are treated as deductible mortgage interest again. You must itemize to claim this deduction.
What is the IRS mileage rate for 2026?
The business rate is 72.5 cents per mile from January 1 to June 30, 2026. It rose to 76 cents per mile starting July 1, 2026. Medical miles rose from 20.5 cents to 23.5 cents on the same date.
Can I deduct tax preparation fees?
Not as an individual. The deduction for personal tax prep fees was removed. Self-employed people and landlords can still deduct the part of the fee tied to their business or rental.
Is the QBI deduction still available?
Yes. The new law made the 20% QBI deduction permanent. Starting in 2026, active business owners with at least $1,000 of QBI get a minimum deduction of $400.
