FORT KNOX, Ky. — As the 2025 tax year ends, it is time to prepare for the 2026 filing season. By understanding tax obligations and making smart decisions throughout the year, you can avoid financial surprises at tax time and position yourself to make the most of your refund.
A strategically used refund can accelerate your financial goals.
By spreading your investments across different assets, you can maximize contributions while reducing long-term risk. Because tax strategies differ for each of us, it’s important to consider what is most tax-efficient for your financial world. How can you lower your taxes while increasing the value of your portfolio? Find what works for you. Your approach, time horizon, and risk tolerance all play a role in shaping future successes.
Our finances evolve constantly, making this the perfect time to reassess your saving strategies. Consider what worked well in 2025 and use those insights to set yourself up for a successful 2026.
The “One Big Beautiful Bill Act,” also known as OBBBA, was signed into law in July 2025, bringing significant updates to tax codes. Attached is a breakdown of the tax updates introduced by the OBBBA as you prepare for the upcoming tax season.
Refunds and income deductions:
- Larger tax refunds – Because the IRS did not adjust tax withholding tables for 2025, many of the new deductions in the OBBBA may result in a larger refund. The average refund is projected to increase to around $3,750, an 18% jump from 2025.
- No tax on tips – Up to $25,000 in annual tip income can be deducted through 2028.
- No tax on overtime – Singles may deduct up to $12,500 — married couples filing jointly up to $25,000 — for overtime pay through 2028.
Deductions and credits:
- Auto loan interest can be deducted up to $10,000 for new American-made vehicles.
- The standard deduction was permanently increased to $16,000 for singles and $32,200 for married couples filing jointly.
- Higher Senior deductions – taxpayers 65 and older may claim an additional $6,000 bonus ($12,000 for joint filers) on top of the existing age-based increases, but only if your annual income is below $75,000 (single) or $150,00 (married filing jointly).
- Higher SALT Caps. The State and Local Tax (SALT) cap has been raised temporarily from $10,000 to $40,000 through 2029. TIP: This may make itemizing more beneficial than the standard deduction for those homeowners in high-tax areas.
- Increased Child Tax Credit from $2,000 to $2,200 per child.
Other policy changes:
- Healthcare – Some cuts have been made to Medicaid and other healthcare programs with new work requirements for some Medicaid recipients.
- Energy credits – New clean energy tax credits have been introduced, and tax credits for biofuels will be extended.
Smart saving strategies for 2026:
- Trump Child Savings Account – A tax-advantaged savings account for children under age 18 has been implemented. The government provides a one-time $1,000 contribution for those born between 2025 through 2028.
- Boost your retirement contributions – New limits have been established to allow you to contribute up to $7,500 to an IRA ($8,600 if you are over 50) and $24,500 to a 401(k).
- Automate your refund – Using IRS Form 8888, you can split your refund into three different accounts: a high-yield savings account for emergencies; a brokerage account or IRA for long-term growth; and a money market checking account that earns interest.
- “Double up” savings – Why not increase your paycheck deductions for your TSP or 401(k) contributions and then use your tax refund to supplement your take-home pay? This will boost your pre-tax savings without straining your monthly budget.
- Receive benefits by maximizing a Health Savings Account – If you contribute up to $4,400 for individuals and $8,750 for families, you can lower your taxable income while building a fund for medical costs. Funds grow tax-free and withdrawals for medical expenses also are tax-free.
This is the perfect time to strengthen your financial foundation. Maximizing your savings doesn’t require dramatic changes — just consistency, awareness of your spending, and the creation of strong habits.
With the right strategies, you can approach the 2026 tax season with confidence, clarity and peace of mind.
For more advice, call 502-624-5989 to make an appointment with an Army Community Service financial counselor in-person or request a virtual appointment.
Visit Fort Knox News at www.army.mil/knox for all Central Kentucky's latest military news and information.
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