With the passage of the OBBB bill in July 2025, many taxpayers should be able to get higher after tax take home pay in 2026. This is because the OBBB tax changes are retroactive to 2025 and and people did not make adjustments to 2025 withholding. One may want to make W-4 withholding changes for items that will be in effect until 2028.
Some possible adjustments are:
- No federal tax on tips or overtime.
- Increased standard deduction amounts.
- Senior deduction up to $6000 per person 65 and older.
- Increase in Child Tax Credit to $2200 from $2000.
- Above the line charitable contribution deduction up to $2000 even if one doesn't itemize.
This may result in as much as $50-100 additional take home pay per month even if one isn't earning more. However, YMMV.
This is not financial nor tax advice. Please consult a professional advisor.
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