U.S. / Individual & business – IRS Announces First Day of the 2026 Filing Season

Tax Extensions: Important Rule Most Taxpayers Misunderstand

If you need more time to file your return, you may request an automatic extension on or before April 15, 2026 (for individual returns).

Important: an extension is an extension to file, not an extension to pay.

To be valid, you must pay on or before April 15, 2026 the tax you expect to owe. Otherwise, interest and penalties may apply.

IRS Filing Volume: Why Filing Early and Electronically Matters

The IRS expects to receive approximately 164 million individual income tax returns this year, with most taxpayers filing electronically.

This matters for practical reasons:

• Electronic filing generally reduces processing time and errors
• It allows earlier visibility into acceptance/rejection issues
• It supports faster refund tracking when a refund is expected

New Federal Tax Law That Could Impact Your Tax Bill (OBBA / OBBBA)

In July 2025, Congress passed the One Big Beautiful Bill Act (OBBA), also known as H.R. 1. It was signed into law on July 4, 2025, as Public Law 119-21.

Several provisions have become effective and could impact your federal taxes, credits, and deductions.

2026 Marginal Tax Rates (OBBA)

• 37% for income over $640,600 (single) or $768,700 (married filing jointly)
• 35% for income over $256,225 (single) or $512,450 (married filing jointly)
• 32% for income over $201,775 (single) or $403,550 (married filing jointly)
• 24% for income over $105,700 (single) or $211,400 (married filing jointly)
• 22% for income over $50,400 (single) or $100,800 (married filing jointly)
• 12% for income over $12,400 (single) or $24,800 (married filing jointly)
• 10% for income up to $12,400 (single) or $24,800 (married filing jointly)

Alternative Minimum Tax (AMT) Exemption Amounts for 2026

• $90,100 for single filers (phased out at $500,000)
• $140,200 for married couples filing jointly (phased out at $1,000,000)

Estate Tax Exclusion for 2026

• Basic exclusion amount is $15,000,000
• Up from $13,990,000 for 2025 decedents

Adoption Credit Limits for 2026

• Maximum adoption credit is $17,670 (higher than $17,280 for 2025)
• Up to $5,120 of this credit may be refundable

Employer-Provided Childcare Credit Expansion (2026)

• Maximum amount increases from $150,000 to $500,000
• Maximum increases to $600,000 if the employer is an eligible small
  business

03. NO TAX ON TIPS (DEDUCTION FOR QUALIFIED TIPS

Who is eligible

If you work in a business where you customarily and regularly receive tips, you may deduct from your taxable income up to $25,000 of qualified tips received in 2025.

“Qualified tips” include:

• Voluntary cash tips
• Charged tips received from customers
• Shared tips

Note for self-employed taxpayers: the amount of qualified tips you deduct cannot exceed net income (before this deduction) from the trade or business where you earned the tips.

To claim the deduction, you must:

• File a joint return, if you’re married
• Reflect your Social Security number on your tax return

Who is not eligible

You cannot claim this deduction as a self-employed individual or an employee if you work in:

• Health industry
• Legal
• Accounting and actuarial science
• Consulting
• Athletics
• Financial services, brokerage services, investing and investment management
• Performing arts
• Trading or dealing
• And any other industry where your reputation is your principal asset (or that of one or more owners/employees)

04. NO TAX ON OVERTIME (DEDUCTION FOR QUALIFIED OVERTIME

If you work overtime, you may deduct from taxable income the portion of qualified overtime pay that exceeds your regular rate of pay.

Example:

• You may exclude the “half” portion of “time-and-a-half” from taxable income

Limits:

• If you file single: up to $12,500
• If you file jointly: up to $25,000

Overtime compensation may be reported on:

• Form W-2
• Form 1099
• Other statements provided to you
  You may also report it directly.

To claim the deduction, you must:

• File a joint return, if you’re married
• Reflect your Social Security number on your tax return

Income limits (phase-out)

The deduction is reduced when total revenue exceeds certain limits, and you cannot exclude any overtime income if modified adjusted gross income exceeds:

• $150,000 if single
• $300,000 if filing jointly

You may claim the deduction on your 2025, 2026, 2027 and 2028 tax returns.

06. HEALTH SAVINGS ACCOUNT (HAS) EXPANSION

Telehealth and remote care services

For plan years starting on or after January 1, 2025, the following rules are made permanent:

• You can receive telehealth and other remote care services before you’re required to meet a high-deductible health plan (HDHP) deductible.
• You may still contribute to your HSA even after using telehealth before you are required to meet the deductible.

7. EXPANDED ELIGIBILITY FOR BRONZE AND CATASTROPHIC PLANS

For plan years starting on or after January 1, 2026, bronze and catastrophic health insurance plans are treated as HSA-compatible.

This applies whether you bought the plans through an insurance exchange or not.

As a result:

• You’re eligible to contribute to an HSA
• Even if you previously could not contribute because your plan did not meet the strict HDHP definition

8. DIRECT PRIMARY CARE (DPC) ARRANGEMENTS

For plan years starting on or after January 1, 2026, if you are enrolled in certain direct primary care (DPC) arrangements, you may:

• Contribute to an HSA if you otherwise qualify
• Use your HSA funds tax-free to pay periodic DPC fees

9. EMPLOYEE RETENTION CREDIT (ERC) LIMITATION (BUSINESS OWNERS)

The OBBBA introduced new enforcement provisions affecting the ERC.

For example:

• If you filed after January 31, 2024 an ERC claim for the third and fourth quarters of 2021, the IRS can no longer allow or refund ERCs after July 4, 2025, even if you otherwise met eligibility requirements.

The bill strengthens compliance enforcement by imposing penalties on certain ERC promoters who fail to meet due diligence requirements when assisting with certain credit claims.

As a business owner or manager, effective July 4, 2025, no new ERCs claimed on a return for the third or fourth quarter of 2021 will be allowed or refunded if you filed the claim on a return after the January 31, 2024 deadline.

10. INVESTMENT AND COMMUNITY DEVELOPMENT (QUALIFIED OPPORTUNITY ZONES)

You may receive enhanced QOZ tax incentives for investing in underserved rural areas. Congress’ intent is to address the unique challenges of rural development.

The OBBBA reduced the substantial improvement threshold for improvements to property in a QOZ comprised entirely of a rural area:

• From 100% (regular QOZs)
• To 50% (rural QOZs)

What is a “rural area” (for this rule)?

A rural area means any area other than:

• A city or town with a population greater than 50,000
• And any urbanized area contiguous and adjacent to a city or town with a population greater than 50,000

This definition applies to states, D.C., and U.S. territories.

Background and current scope (as of 09/30/2025)

Historically, taxpayers may receive certain tax benefits for investing in economically distressed census tracts designated as Qualified Opportunity Zones (QOZs).

As of September 30, 2025, the Department of the Treasury and the IRS identified 8,764 QOZs in the U.S. Many have experienced lack of investment for decades. Of these, 3,309 are comprised entirely of a rural area.

If you would like support preparing and filing your 2025 U.S. tax returns during the 2026 filing season, you can contact AimlonCPA to schedule a tax consultation.