Charles Trautman, EA · Since 1969
The return you’ll file in early 2027.
The 2025 tax law changed more for 2026 than any year since 2018. Most of it shows up on the return you’ll file next spring, and one change, how your refund arrives, has already happened. Here’s what’s different, in plain English.
Figures current as of October 11, 2026. Colorado changes have their own page.
The tax rates didn’t change. Almost everything around them did.
The seven rates, 10% through 37%, are now permanent. The brackets moved up about 4% for inflation, and the standard deduction rises to $16,100 single, $24,150 head of household, and $32,200 married filing jointly. People 65 and older still get the extra $6,000 senior deduction, through 2028.
For the first time since 2021, people who take the standard deduction can deduct cash gifts to charity: up to $1,000, or $2,000 on a joint return. It has to be cash (checks and cards count) to a regular charity or church. Gifts to a donor-advised fund don’t qualify. Keep the receipts.
If you itemize, the first 0.5% of your AGI in charitable gifts is no longer deductible. With AGI of $200,000, the first $1,000 you give buys no deduction. And in the top 37% bracket, itemized deductions are now worth at most 35 cents on the dollar. Bunching several years of gifts into one year, or giving from your IRA after age 70½, gets around most of this.
Venmo, PayPal, eBay, Etsy and similar platforms send a 1099-K only when you receive more than $20,000 and more than 200 payments in a year. The income is still taxable whether a form arrives or not. (See Form 1099-K.)
For payments made in 2026, a business sends Form 1099-NEC or 1099-MISC only when it pays you $2,000 or more, up from $600. If you’re a contractor, expect fewer forms and keep your own records. If you pay contractors, the new line applies to the forms you send in January 2027.
Family and others can put up to $5,000 a year into a Trump account for a child under 18, and an employer can contribute up to $2,500 of that tax-free. Children born 2025 through 2028 can get a one-time $1,000 from the government, but only if a parent elects it on Form 4547. (See the Child Tax Credit and Trump accounts.)
The business rate was 72.5 cents a mile for January through June 2026 and 76 cents from July 1 on. Medical and military moving miles went from 20.5 to 23.5 cents. If you’re self-employed, a dated mileage log now matters twice: once to prove the miles, once to price them.
The alternative minimum tax exemption now starts phasing out at $500,000 of income single and $1,000,000 joint, down from about $626,000 and $1.25 million, and it phases out twice as fast. Large stock option exercises and big capital gains years deserve a look before December.
A 529 plan can now pay up to $20,000 a year of K–12 tuition per student, up from $10,000, and the list of covered school expenses is longer. College expenses are unchanged.
Starting with 2026, you can deduct only 90% of your gambling losses, still limited to your winnings. Win $50,000 and lose $50,000, and $5,000 is taxable even though you broke even. A bill to undo this is pending.
If you get premium help through Connect for Health Colorado and your income comes in higher than you estimated, you now repay all of the excess when you file, with no cap. The extra help available through 2025 has also expired. Report income changes to the marketplace during the year. (See Marketplace Health Insurance.)
| Rate | Single | Married filing jointly | Head of household |
|---|---|---|---|
| 10% | $0 – $12,400 | $0 – $24,800 | $0 – $17,700 |
| 12% | to $50,400 | to $100,800 | to $67,450 |
| 22% | to $105,700 | to $211,400 | to $105,700 |
| 24% | to $201,775 | to $403,550 | to $201,750 |
| 32% | to $256,225 | to $512,450 | to $256,200 |
| 35% | to $640,600 | to $768,700 | to $640,600 |
| 37% | over $640,600 | over $768,700 | over $640,600 |
The 2025 brackets are in the numbers at a glance below.
The limit on deducting state and local taxes jumped from $10,000 to $40,000 for 2025 and $40,400 for 2026. Above about $500,000 of income, it starts to disappear.
SALT is the itemized deduction for state income tax and property taxes. From 2018 through 2024 it was capped at $10,000, which is why so many Colorado homeowners stopped itemizing. A couple paying $9,000 of Colorado income tax and $5,000 of property tax could deduct only $10,000. Now all $14,000 counts, and with mortgage interest and charitable gifts, itemizing may beat the standard deduction again. (See Itemized Deductions vs. the Standard Deduction.)
The $500,000 line. For 2026, once your modified AGI passes $505,000 ($500,000 for 2025), the cap shrinks by 30 cents for every dollar over the line. By about $606,000 it’s back to $10,000. The line is the same for single and joint filers, so a married couple gets no more room than one single person.
| Modified AGI (2026) | Your SALT cap |
|---|---|
| $505,000 or less | $40,400 |
| $550,000 | $26,900 |
| $600,000 | $11,900 |
| $606,333 or more | $10,000 |
Married filing separately: half of each figure.
In that $505,000 to $606,000 range, every extra $1,000 of income also takes away $300 of deduction. If you’re in the 35% bracket, that works out to about a 45.5% federal rate on the income in that band. Not many people see it coming.
Timing. A bonus, Roth conversion, stock sale or rental sale that would push you through the band may cost less spread over two years. 401(k) and HSA contributions lower your income. Owners of S corporations and partnerships can have the business elect Colorado’s pass-through entity tax, which moves the state tax outside the cap.
The higher cap rises 1% a year through 2029, then drops back to $10,000 in 2030. Plan with that in mind. (See Tax Code for High Earners.)
The big federal credits for electric cars and home energy upgrades are gone. If you bought or installed in time, you could still claim them on your 2025 return. For anything after the cutoff, there’s no federal credit.
The $7,500 new EV credit, the $4,000 used EV credit, and the commercial credit behind the EV lease deals all ended for vehicles acquired after September 30, 2025. “Acquired” means a written binding contract and a payment, even a small deposit or trade-in, by that date. Delivery could come later.
The energy efficient home improvement credit, worth up to $3,200 a year, doesn’t apply to anything placed in service in 2026: insulation, windows, doors, central air, furnaces, water heaters, heat pumps and energy audits.
The 30% residential clean energy credit ended for expenditures made after 2025, and the IRS treats the expense as made when installation is complete. A December deposit on a system finished in January doesn’t qualify.
An unused solar credit from 2025 or earlier still carries forward to 2026 and later returns, so don’t lose track of it. The builder’s credit for new energy efficient homes ended June 30, 2026. Colorado still has some credits of its own, including a smaller EV credit of $750 for 2026. (See Colorado changes for 2026.)
2025 is the return filed in 2026. 2026 is the return you’ll file in early 2027.
| 2025 | 2026 | |
|---|---|---|
| Deductions | ||
| Standard deduction, single | $15,750 | $16,100 |
| Standard deduction, head of household | $23,625 | $24,150 |
| Standard deduction, married filing jointly | $31,500 | $32,200 |
| Extra for 65+ or blind (single / married, each) | $2,000 / $1,600 | $2,050 / $1,650 |
| Senior deduction, age 65+ (each) | $6,000 | $6,000 |
| SALT cap (shrinks above) | $40,000 ($500,000) | $40,400 ($505,000) |
| Charitable deduction without itemizing | None | $1,000 / $2,000 joint |
| Brackets and rates | ||
| 10% bracket ends, single / joint | $11,925 / $23,850 | $12,400 / $24,800 |
| 12% bracket ends, single / joint | $48,475 / $96,950 | $50,400 / $100,800 |
| 22% bracket ends, single / joint | $103,350 / $206,700 | $105,700 / $211,400 |
| 24% bracket ends, single / joint | $197,300 / $394,600 | $201,775 / $403,550 |
| 32% bracket ends, single / joint | $250,525 / $501,050 | $256,225 / $512,450 |
| 37% bracket starts, single / joint | $626,350 / $751,600 | $640,600 / $768,700 |
| 0% capital gains, taxable income up to (single / joint) | $48,350 / $96,700 | $49,450 / $98,900 |
| Social Security wage base | $176,100 | $184,500 |
| Retirement and health accounts | ||
| 401(k), 403(b), 457 | $23,500 | $24,500 |
| Catch-up at 50+ (ages 60–63) | $7,500 ($11,250) | $8,000 ($11,250) |
| IRA (catch-up at 50+) | $7,000 ($1,000) | $7,500 ($1,100) |
| HSA, self-only / family | $4,300 / $8,550 | $4,400 / $8,750 |
| HSA catch-up at 55+ | $1,000 | $1,000 |
| Charitable gift from an IRA (QCD), age 70½+ | $108,000 | $111,000 |
| Family, gifts and estates | ||
| Child Tax Credit, per child | $2,200 | $2,200 |
| Dependent care FSA, per household | $5,000 | $7,500 |
| Annual gift exclusion, per person | $19,000 | $19,000 |
| Estate and lifetime gift exemption | $13.99 million | $15 million |
| Mileage (cents per mile) | ||
| Business | 70 | 72.5 (Jan–Jun), 76 (Jul–Dec) |
| Medical and military moving | 21 | 20.5 (Jan–Jun), 23.5 (Jul–Dec) |
| Charity | 14 | 14 |
| Information returns | ||
| Form 1099-K (payment apps) | Over $20,000 and 200 payments | Over $20,000 and 200 payments |
| Form 1099-NEC / 1099-MISC | $600 | $2,000 |
| Colorado | ||
| Income tax rate | 4.40% | 4.40% |
| TABOR refund | $19 – $59 per person | None |
Under an executive order signed in March 2025, the federal government began phasing out paper checks on September 30, 2025. This past filing season was the first in which a paper refund check was no longer the default. Almost nobody we talk to knew.
The IRS holds your refund and mails a notice, CP53E. You have 30 days to add direct deposit information through your IRS Online Account. If you do nothing, a paper check goes out about six weeks after the notice date. Either way, the refund is late.
The IRS allows limited exceptions. You can choose one in your IRS Online Account, or by phone, and a paper check usually follows in one to two weeks. Many prepaid debit cards and some payment apps can take a direct deposit; ask the provider for a routing and account number.
A wrong routing or account number means a rejected deposit, and there’s no second notice. The refund is mailed as a check, weeks later. We confirm your direct deposit information every year. If you’ve changed banks, tell us.
The same order covers money going the other way. Paper checks to the IRS are still accepted for now, but electronic payment is the expected route: IRS Direct Pay (free, from your bank account), your IRS Online Account, EFTPS for businesses, or a card, which carries a fee.
It’s where you answer a CP53E, see your payments and notices, and pull transcripts. Set it up yourself at IRS.gov/account, and be wary of anyone offering to “help” you do it. (See the Dirty Dozen.)
Direct deposit is faster and safer. E-filed returns with direct deposit usually see a refund within 21 days, and paper checks are far more likely to be lost, stolen or altered.
These are already law. Nobody has to vote on them. They’re just written to start or stop on a set date, and most people don’t know the dates.
| When | What happens |
|---|---|
| 2026–2027 | Catch-up contributions go Roth for higher earners. If you’re 50 or older and earned more than $150,000 in Social Security wages the year before, your 401(k) catch-up contributions must go into the Roth side: no deduction now, tax-free later. Many plans started in 2026; the IRS rules require it in 2027. |
| 2027 | The Saver’s Match replaces the Saver’s Credit. Instead of a tax credit, the government deposits up to $1,000 (half of up to $2,000 saved) directly into your retirement account. It phases out by $35,500 of income single and $71,000 joint. |
| 2027 | A new federal scholarship tax credit. Up to $1,700 for gifts to approved scholarship organizations, dollar for dollar. Colorado has opted in. |
| 2027 | The $2,000 Form 1099-NEC and 1099-MISC threshold starts rising with inflation. |
| End of 2028 | Four new deductions expire. The deductions for tips (up to $25,000), overtime (up to $12,500, or $25,000 joint), car loan interest (up to $10,000) and the $6,000 senior deduction all end after the 2028 tax year unless Congress extends them. (See the new deductions.) |
| End of 2028 | Last birth year for the $1,000 Trump account deposit. Only children born 2025 through 2028 qualify. |
| 2027–2029 | The SALT cap keeps rising 1% a year, to about $41,600 in 2029. The $505,000 income line rises 1% a year too. |
| 2030 | The SALT cap drops back to $10,000. High-tax homeowners who itemize because of the bigger cap may go back to the standard deduction. |
No expiration date: the tax rates and brackets, the larger standard deduction, the $2,200 Child Tax Credit (rising with inflation), the $15 million estate exemption, the 20% deduction for business owners, 100% bonus depreciation, the charitable deduction for non-itemizers and the 0.5% floor for itemizers. “Permanent” means until Congress changes it.
None of these are law. Each needs to pass both the House and the Senate and be signed. Most bills never make it. We’ve listed only the ones with real movement or that clients keep asking about.
Status checked October 11, 2026. Congress returns after the November 3 election, and government funding runs out December 11. Year-end tax provisions often ride on that funding bill. We’ll update this section as things move.
Passed the House · No Senate vote
The extra premium help for Connect for Health Colorado coverage expired at the end of 2025. The House voted 230–196 on January 8, 2026 to extend it for three years. The Senate never voted, and talks on a smaller two-year version have stalled more than once. Open enrollment for 2027 runs November 1 to December 15. Shop under the current rules rather than wait. (See Marketplace Health Insurance.)
Approved by committee · Needs House and Senate votes
Starting with 2026, the 2025 tax law lets you deduct only 90% of gambling losses, so someone who breaks even can owe tax. The Digital Asset Tax Certainty Act would restore 100%, back to January 1, 2026. Ways and Means approved it 38–5 on September 16. The same bill sets crypto tax rules, including applying the wash-sale rule to crypto. Keep your win/loss records either way.
Senate committee approved · Parts passed the House
A bipartisan package, the Taxpayer Assistance and Service Act, would improve Where’s My Refund, IRS online accounts and call-backs, and set standards for paid preparers. The Senate Finance Committee approved it July 30. The House passed related bills September 15, including tax relief for people who lose money to scams. This is the most likely candidate for a year-end package.
Introduced · In committee, no vote
The home sale exclusion has been $250,000 single and $500,000 joint since 1997, with no adjustment for inflation. The More Homes on the Market Act would double it and index it. The No Tax on Home Sales Act would end the tax on selling a main home entirely. Both have sat in committee since 2025. (See the home sale exclusion.)
No bill has passed either chamber
There is no tariff rebate or “tariff dividend” check. The $2,000 idea was never introduced as a bill, and the bills that were introduced haven’t moved. Refunds of tariffs the Supreme Court struck down in February go to the businesses that paid them, not to households. Texts and websites asking you to “register” for a check are scams; the IRS doesn’t do that.
On the Colorado ballot November 3
Amendment 87 would replace the 4.4% flat tax with six rates from 3.7% to 8.4%, starting in 2027, and needs 55% of the vote. Anyone with Colorado taxable income under about $511,000 would pay a little less, at most $325 a year; above that, more. Proposition 136 would cap the rate at 4.4%. If both pass, the courts or the legislature will likely have to sort it out. (See Colorado changes for 2026.)
Tax year 2026 is the return you’ll file between late January and April 2027. A few changes, including the $40,000 SALT cap, the 1099-K threshold and the end of paper refund checks, already applied to 2025 returns.
Starting with 2026, yes: up to $1,000 of cash gifts, or $2,000 on a joint return, on top of the standard deduction. Gifts of goods and gifts to donor-advised funds don’t count. Keep a receipt or bank record for every gift.
Only if you signed a binding contract and made a payment, even a small deposit, on or before September 30, 2025. If both happened in October, there’s no federal credit.
Only as an exception. Without bank information on your return, your refund is held until you add it or claim an exception, and a check comes weeks later. Put your routing and account number on the return.
Not unless Congress passes one, and as of October 11, 2026 no rebate bill has passed the House or the Senate. Ignore texts or websites asking you to register for one.
No TABOR refund for 2026, overtime added back, smaller credits, and a tougher addback above $300,000 of income. It’s all on Changes Coming for Colorado in Tax Year 2026.
Last year’s return
The 2025 tax law was signed July 4, 2025, and much of it applied right away to the return filed in early 2026. If you haven’t filed for 2025 yet, or your return missed one of these, it’s not too late. An amended return can usually claim it for up to three years.
All four work whether you itemize or take the standard deduction. They’re claimed on a new form, Schedule 1-A, and all four need a valid Social Security number on the return.
Up to $25,000 a year of qualified tips, for employees and self-employed workers in occupations that customarily received tips as of December 31, 2024. Tips must be voluntary and reported on a W-2, a 1099, or Form 4137. Cash, card and app tips count; mandatory service charges, like an automatic 18% for large parties, don’t. The deduction shrinks by $100 for every $1,000 of income over $150,000, or $300,000 joint. Married couples must file jointly.
Up to $12,500 a year, or $25,000 joint, for the “half” in time-and-a-half: the premium above your regular rate that federal law (the Fair Labor Standards Act) requires. Overtime required only by Colorado’s rules or a union contract, beyond what federal law requires, doesn’t count, and salaried workers exempt from overtime don’t qualify. Same income limits as tips, and married couples must file jointly.
An extra $6,000 for each person 65 or older, $12,000 for a couple who are both 65, on top of the regular extra standard deduction for age. It shrinks by 6% of income over $75,000, or $150,000 joint. It isn’t limited to Social Security recipients; it’s based on age.
Up to $10,000 a year of interest on a loan taken out after 2024 for a new car, SUV, pickup or motorcycle for personal use, with final assembly in the United States. Used vehicles and leases don’t qualify, and you’ll need the VIN. It phases out above $100,000 of income, or $200,000 joint.
For 2025, W-2s didn’t have to show tips or overtime separately. You may need pay stubs or a separate statement from your employer to prove the amount. Starting with 2026 W-2s, there are new boxes for tips, overtime and your occupation code.
Children born in 2025 can get a one-time $1,000 government deposit, but a parent has to elect it on Form 4547, which can go in with the 2025 return. If your 2025 return is already filed, it isn’t too late to make the election.
The IRS list is longer than most people expect. It covers eight groups, and it reaches well past restaurants: plumbers, electricians, hair stylists, tutors and delivery drivers are all on it.
| Group | Some of the occupations included |
|---|---|
| Beverage and food service | Bartenders, wait staff, chefs and cooks, baristas, bussers, dishwashers, hosts, bakers |
| Entertainment and events | Casino dealers, musicians and singers, DJs, dancers, entertainers, digital content creators, ushers |
| Hospitality and guest services | Bellhops, concierges, hotel desk clerks, housekeepers |
| Home services | Handymen, landscapers, electricians, plumbers, HVAC installers, appliance repair, house cleaners, locksmiths, tow truck drivers |
| Personal services | Personal care aides, event planners, wedding photographers and videographers, officiants, pet sitters, tutors, nannies |
| Personal appearance and wellness | Hair stylists, barbers, nail technicians, massage therapists, estheticians, makeup artists, personal trainers, tattoo artists, tailors |
| Recreation and instruction | Golf caddies, music and art teachers, tour guides, ski and dive instructors |
| Transportation and delivery | Valets, taxi and rideshare drivers, shuttle drivers, pizza and grocery delivery, car wash attendants, movers |
Tips earned in a professional-services business, such as law, accounting, health care, consulting, financial services or the performing arts, don’t qualify, whether you own the business or work for it. Neither do tips from illegal activity, or tips paid as event tickets, meals or other non-cash items.
If you’re self-employed in a tipped occupation, the deduction can’t be more than your net profit from that business. Tips still owe Social Security and Medicare tax; the deduction is for income tax only.
The 2017 tax cuts were set to expire after 2025. The 2025 law made most of them permanent and added to several.
$15,750 single, $23,625 head of household and $31,500 married filing jointly for 2025, more than the amounts already announced. The current tax rates are permanent, and personal exemptions are gone for good.
The deduction for state income and property taxes went from $10,000 to $40,000 ($20,000 married filing separately), reduced above $500,000 of income. Many Colorado homeowners who stopped itemizing in 2018 should run the numbers again. (See the SALT cap.)
$2,200 per child under 17, with up to $1,700 refundable, and it now rises with inflation. The child needs a Social Security number, and so does at least one parent on the return. (See the Child Tax Credit.)
Up to $5,000 of the adoption credit can now come back as a refund even if you owe no tax. Before, families with little tax liability couldn’t use it.
Since July 4, 2025, 529 money can pay K–12 costs beyond tuition: books, curriculum, tutoring, testing fees and educational therapies. It can also pay for professional credentials and licensing programs after high school.
The $20,000-and-200-payment threshold for payment apps and online marketplaces was restored for 2025 and retroactively for earlier years. The planned drop to $600 never happens. (See Form 1099-K.)
The special rules for personal casualty losses in federally declared disasters were extended, which can mean a bigger deduction without itemizing. Starting in 2026, state-declared disasters count too. (See casualty losses.)
A high-deductible health plan can cover telehealth before you meet the deductible without costing you the right to contribute to an HSA. That rule is now permanent. (See Health Savings Accounts.)
2025 was the last year for the home energy and solar credits, and EV credits ended September 30. If you qualified, they belong on the 2025 return. (See energy credits that ended.)
Sole proprietors, landlords, and owners of S corporations and partnerships picked up several breaks for 2025.
Equipment and other qualifying property acquired after January 19, 2025 can be written off in full the year it’s placed in service. Bonus depreciation had been phasing down toward zero.
The limit on expensing equipment roughly doubled, to $2.5 million, starting to phase out once purchases pass $4 million.
U.S. research and development costs can be deducted right away instead of spread over five years. Small businesses with average gross receipts under about $31 million can apply it back to 2022 by amending, which can mean refunds.
The 20% qualified business income deduction for pass-through owners was set to expire after 2025. It’s now permanent, with wider phase-in ranges and a $400 minimum starting in 2026. (See S corporations.)
Anyone can sell tax preparation. In December 2024 the IRS proposed updates to Circular 230, the rules for tax professionals who practice before the IRS. They’re worth knowing when you choose a preparer.
A 2013 court case, Loving v. IRS, ended the IRS’s attempt to test and license ordinary return preparers. Today only Enrolled Agents, CPAs and attorneys are fully bound by Circular 230’s standards and can represent you in any IRS audit, appeal or collection.
The proposed rules would treat fees based on a percentage of your refund or tax savings as “disreputable conduct.” Pricing tied to the size of your refund rewards aggressive positions, and you’re the one who answers for them.
The proposals add technological competence to professional competence and encourage written data security plans. Federal law already requires tax professionals to have a written information security plan.
Every return here is prepared in this office and signed by an Enrolled Agent, a federal credential issued by the IRS, who can represent you if the IRS ever has questions. (See About the Tax Shop.)
Tips, overtime, the senior deduction, car loan interest, the larger SALT cap, a final energy credit: if one of these applied to you and isn’t on your 2025 return, an amended return can usually claim it within three years of filing. Bring us the return and we’ll check.
Most of the planning on this page only works before December 31: bunching charitable gifts, timing income around the SALT line, fixing withholding. Call and we’ll look at your numbers. Taxes can be tough, but the Tax Shop has your back.