The Internal Revenue Service (IRS) is urging Americans to begin preparing now for the 2026 filing season, noting that broad tax-law changes, newly adjusted benefit thresholds, and a phaseout of paper refund checks will make early organization critical for filing accurate returns.
“A little advance work preparing paperwork and organizing information now can help with filing tax returns quickly and accurately,” the agency said in a statement, adding that the Nov. 26 notice is the first in a series of reminders it intends to publish to help taxpayers get ready for the upcoming filing season.
The announcement notes that Treasury and the IRS are still releasing implementation details on the One Big Beautiful Bill Act, which introduces several major deductions for tax years 2025 through 2028, including no federal tax on tips, overtime pay, and car-loan interest, as well as a new temporary deduction for seniors and certain other groups.
New Deductions and Emerging Guidance
The IRS issued detailed instructions on Nov. 21 on how workers can calculate the new deductions for tips and overtime amounts. The guidance explains several methods employees may use to determine qualified tip amounts, depending on how their employer reports them on Forms W-2, 4070, or Form 4137. The agency also said that only workers in occupations that “customarily and regularly” receive tips will be eligible for the new deduction.
Roughly 6 million Americans report tipped wages each year and will need to follow the new rules. The overtime deduction, meanwhile, applies only to employees covered by the Fair Labor Standards Act, with the allowable amount tied to how employers itemize overtime premiums on earnings statements.
States are also moving in parallel. Texas, Wyoming, Florida, and Michigan have adopted their own exemptions for tips and overtime pay at the state level. Federal officials have hinted that more relief may be coming: Trump has said tariff revenues could eventually support a dividend for taxpayers, while Treasury Secretary Scott Bessent has suggested that lower taxes may also be used to distribute that benefit.
Retirement and Tax-Threshold Adjustments for 2026
The IRS is also rolling out broad cost-of-living adjustments for retirement accounts and tax provisions for 2026. Contribution limits for 401(k)s, 403(b)s, most 457 plans, and the Thrift Savings Plan will rise to $24,500 next year, while IRA limits increase to $7,500.
Catch-up contributions for workers 50 and older will expand as well, including a new $8,000 limit for workplace plans and an adjusted $1,100 catch-up level for IRAs under the SECURE 2.0 Act. Roth IRA and traditional IRA income-eligibility bands will shift higher to accommodate inflation, and SIMPLE retirement plans will see higher contribution caps.
Defined benefit pensions will see higher maximum payouts, rising to $290,000, while the overall contribution limit for defined contribution plans will increase to $72,000 in 2026. Eligibility thresholds for the Saver’s Credit will also rise.
These changes follow the Social Security Administration’s announcement of a 2.8 percent cost-of-living adjustment for 2026, affecting roughly 75 million beneficiaries.
Gather Documents Early, IRS Says
The IRS said in its Nov. 26 announcement that taxpayers should begin assembling all required documentation well ahead of filing. Officials said accurate returns depend on having complete records of W-2s, 1099s, bank information, and digital-asset transactions and warned that missing or inaccurate paperwork could cause refund delays.
The agency urged filers to wait until all forms arrive before submitting returns, noting that organized records will make it easier to claim any new or modified deductions and credits created under the One Big Beautiful Bill.
The IRS said additional updates related to the new tax law, retirement adjustments, and documentation requirements will be released through December and January.
