Public Law 119-21, known as the One Big Beautiful Bill Act and now labeled "Working Families Tax Cuts" on IRS pages, keeps changing what a U.S. return looks like. This post covers the US tax changes 2026 that matter most if you recently arrived, hold an H-1B, L-1, F-1 or green card status, or send money to family in India.
What are the US tax changes 2026 for individual returns?
Most items run from tax year 2025 through 2028 and are claimed on the new Schedule 1-A, whether you take the standard deduction or itemize.
| Change | Amount and limits | Notes |
|---|---|---|
| Tips deduction | Up to $25,000 | Phases out above $150,000 modified AGI ($300,000 joint) |
| Overtime deduction | Up to $12,500 ($25,000 joint) | Only the premium portion of overtime pay |
| Car loan interest | Up to $10,000 | New U.S.-assembled personal vehicle, loan made after 2024 |
| Senior deduction | $6,000 per person aged 65 or older | Phases out above $75,000 ($150,000 joint) |
| State and local tax cap | $40,000 for 2025 ($20,000 if married filing separately) | Reduced for higher incomes, never below $10,000 |
| Charity for non-itemizers | $1,000 ($2,000 joint) from tax year 2026 | Cash gifts only |
These deductions are claimed on the return itself, so keep your W-2 or 1099 breakdowns. Our Form 1040 roadmap shows where Schedule 1-A sits.
Why an SSN now decides several credits
For the child tax credit, you (or your spouse on a joint return) and each qualifying child need a Social Security number valid for U.S. employment, issued before the return's due date including extensions. The credit is up to $2,200 per child for 2025, with up to $1,700 refundable. The credit for other dependents ($500) accepts an SSN, ITIN or ATIN. The tips, overtime and senior deductions also require an SSN on the return, and married couples generally must file jointly.
Most nonresident aliens cannot claim these credits. If you are waiting on a number, read how to apply for an SSN or ITIN and start early, because a number issued after the due date does not count for that year.
How the 1 percent remittance tax works
The tax applies to remittance transfers after December 31, 2025, and the transfer provider, not the recipient, collects it from the sender. Transfers funded from a bank account or a U.S.-issued debit or credit card are excluded. The first provider deposit was due January 29, 2026, and the IRS gave providers penalty relief for the first three quarters of 2026; that relief does not remove the tax from senders.
Example: you hand $5,000 in cash to a money transmitter agent in Naperville for a family account in Pune. The tax is $50. The same $5,000 sent from your bank account carries no remittance tax. See our guide to remittances, gifts and the Liberalised Remittance Scheme.
What about Trump accounts and health coverage?
Trump accounts accept contributions starting July 4, 2026. Parents or guardians elect an account for certain children on Form 4547, which can bring a one-time $1,000 federal pilot contribution. Individuals may add up to $5,000 a year, and employers up to $2,500 per employee. Bronze and catastrophic marketplace plans also became HSA-compatible on January 1, 2026.
The October 14, 2026 proposed premium tax credit rules are not final. If you are a lawfully present noncitizen who buys marketplace coverage, watch for the final rule before you enroll for 2027.
What should you do now?
- Confirm your SSN status for every person who will be on the return.
- Move India transfers to bank-funded channels unless cash is unavoidable.
- Update Form W-4 if your withholding no longer matches your expected 2026 tax; see withholding and estimated tax for newcomers.
- Keep records of tips, overtime premiums and vehicle VIN numbers.
- Plan your first-year return with our newcomer filing guide.
How we can help
We prepare the U.S. side of your return from our base in the Aurora, Illinois area and coordinate with your Canadian CPA or Indian Chartered Accountant so the figures match across countries. Start with individual returns for newcomers and NRIs or the moving from India to the US checklist. More background is in our USA guides.
Frequently asked questions
Do ITIN holders get the new tips and overtime deductions?
No. The IRS requires a Social Security number on the return for the tips, overtime and senior deductions, so ITIN filers cannot claim them.
Does the remittance tax apply to wire transfers from my bank account?
No. The tax targets transfers funded with cash, money orders, cashier's checks or similar physical instruments. Bank-funded and U.S.-issued card-funded transfers are excluded.
Is the 2026 standard deduction different from 2025?
Yes. For 2026 it is $16,100 for single filers, $32,200 for joint filers and $24,150 for heads of household, up from $15,750, $31,500 and $23,625 for 2025.
Are the premium tax credit changes final?
No. The Treasury and IRS rules announced October 14, 2026 are proposed, with the eligibility standards described as starting in 2027.
Official sources
- IRS: Working Families Tax Cuts, individuals and workers
- IRS: One Big Beautiful Bill provisions
- IRS: Child tax credit
- IRS: Instructions for Form 720 (remittance transfer tax)
- IRS: Treasury and IRS move to protect health care benefits (IR-2026-121)
- IRS: Instructions for Form 1040-NR
This page summarizes public guidance in plain language. If anything here differs from the official source, the official source controls.
General information only. It is not tax, legal, accounting or immigration advice for your situation, and rules change; confirm the current rules with the official source or a licensed professional in the relevant country.