New Tax Rules Hit This Week as Filing Season Begins

Love it or hate it, tax season is coming, and the 2026 filing season brings some of the biggest changes New Yorkers have seen in years. Between new deductions, updated forms, and changes to how refunds are issued, now is a good time to start paying attention so nothing catches you off guard later.

The Internal Revenue Service will begin accepting 2025 federal tax returns on Monday, January 26, 2026, with the filing deadline set for Wednesday, April 15, 2026. Most taxpayers are expected to file electronically, and many may see larger refunds... but not everyone.

Key Tax Changes New Yorkers Should Know for 2026

Several major changes are taking effect thanks to legislation signed last summer, and many of them apply retroactively to income earned in 2025. One of the most talked-about updates is the new tax break for tips and overtime pay.

Workers who earn tips may now deduct up to $25,000 in qualified tip income, while individuals who earn overtime can deduct up to $12,500 of overtime wages. For married couples, overtime deductions can reach $25,000. These deductions begin to phase out for taxpayers with gross incomes above $150,000.

Another change likely to impact many New Yorkers is a new deduction for car loan interest, along with enhanced tax relief for seniors.

New Tax Breaks for Seniors

Taxpayers aged 65 and older will be eligible for an additional $6,000 deduction, on top of the standard deduction. For married couples where both spouses qualify, that’s a total of $12,000 in extra deductions. This change applies whether or not a taxpayer itemizes.

Important Reminder: You Don’t Have to Itemize

One of the most helpful details in the new tax law is that taxpayers can claim deductions for tips, overtime, car loan interest, and senior benefits even if they take the standard deduction. That means more people may qualify for these breaks than in past years.

New Forms and More Paperwork to Expect

While the deductions sound simple, the paperwork is changing. Taxpayers claiming any of the new deductions will need to complete a new two-page form called Schedule 1-A when filing their 2025 federal tax return. This form will be required for claiming deductions related to overtime pay, tip income, car loan interest, and senior tax benefits.

The IRS has released draft versions, but official forms must be used when filing.

Direct Deposit Is Becoming the Standard

Paper refund checks are being phased out as part of a federal effort to modernize payment systems. If you don’t already receive refunds via direct deposit, now is the time to set that up. Taxpayers without a bank account are strongly encouraged to open one to avoid refund delays.

Income From Side Hustles, Apps, and Digital Assets

New Yorkers who earn money through side gigs, payment apps, or online marketplaces should pay close attention this year. Income from these sources is taxable, and some taxpayers may receive Form 1099-K or Form 1099-DA for digital asset transactions. Even if you don’t receive a form, all taxable income must still be reported.

This includes cryptocurrency, NFTs, and other digital assets, which must be disclosed on your federal return.