Tax Items to Review in 2026

The tax landscape has shifted significantly for 2026, offering several new opportunities to reduce your taxable income. At Valoris View, we believe proactive planning is the key to financial clarity. Below is a breakdown of the essential tax updates you should review this year to ensure your strategy remains optimized.

New Car Loan Interest Deduction

If you are in the market for a new vehicle, your financing may now offer a tax benefit. You can deduct up to $10,000 of car loan interest as an “above-the-line” adjustment—meaning you can claim it even if you take the standard deduction.

  • The Requirements: The vehicle must be new, purchased (not leased), and have undergone final assembly within the U.S.
  • Income Thresholds: The deduction is reduced by 20% for income above specific levels:
    • Single Filers: Phase-out starts at $100,000 MAGI and is fully eliminated at $150,000.
    • Married Filing Jointly: Phase-out starts at $200,000 MAGI and is fully eliminated at $250,000.

Deductions for Overtime and Tip Income

For tax years 2025 through 2028, workers in specific earning structures can benefit from significant new income exclusions.

  • Overtime Pay: You can deduct up to $12,500 of overtime pay from your taxable income.
  • Tip Income: Tipped workers can deduct up to $25,000 of tips.
  • Phase-outs: For both categories, the benefits begin to phase out at $150,000 for single filers and $300,000 for joint filers.

The SALT Deduction Increase

The State and Local Tax (SALT) deduction cap has seen a substantial move. Previously capped at $10,000, the limit has risen to $40,000.

This cap is scheduled to increase by 1% annually through 2029 before its scheduled reversion in 2030. Note that for those married filing jointly, a phase-out begins at $500,000 of MAGI.

Strategic Charitable Giving

The One Big Beautiful Bill Act has introduced a new “floor” for charitable contributions for those who itemize, while creating a new benefit for those who do not.

  • For Itemizers: To claim charitable deductions, taxpayers must now contribute at least 0.5% of their Adjusted Gross Income (AGI). If you fall below this floor in a single year, carryforwards are allowed.
  • For Non-Itemizers: Even if you take the standard deduction, you are now eligible for an above-the-line deduction of $1,000 (single) or $2,000 (joint) for charitable gifts.

A Closing Thought

While these updates provide new paths to tax efficiency, they also introduce complexity regarding income thresholds and phase-outs. We encourage you to review these items with your Valoris Wealth advisor to see how they integrate into your broader 2026 financial plan.