The Internal Revenue Service (IRS) began accepting 2025 tax year returns on January 26, 2026. For most individual taxpayers, this means you can now start submitting your federal return electronically personally or with the help of a tax professional.

Here’s everything you need to know about IRS updates and how newly enacted tax provisions might affect you:

Free File & Filing Options 

Those with adjusted gross income of $89,000 or less are eligible to use the IRS Free File program to prepare and file a federal return online at no cost. Unlike some past years, the IRS Direct File tool is not available for 2026. Taxpayers who want a free option will need to rely on Free File, IRS Free Fillable Forms, or volunteer programs like VITA and TCE.

Major Tax Law Changes

This tax season reflects major updates from the One Big Beautiful Bill Act and other recent legislation. These changes affect deductions, credits, reporting rules, and more — and getting them right can mean a bigger refund or a smaller tax bill. Here are a few highlights:

• Bigger SALT Deduction Cap: The state and local tax deduction cap has increased from $10,000 to $40,000 for 2025 returns. 
• Child Tax Credit Updates: The maximum Child Tax Credit went up for 2025 returns and has slightly different income phase-outs. 
• Senior Bonus Deduction: Taxpayers 65 and older can claim up to an extra $6,000 deduction through 2028 (subject to income limits). 
• 1099-K Reporting Rule Reversion: Platforms issue Forms 1099-K only under the higher $20,000/200-transaction threshold. 

These changes can impact everything from filing strategy to what forms you complete — and may require filing new schedules introduced for this season.

IRS Tools & Preparation Tips

To make the process smoother and help avoid delays:

• Open or log into your IRS Online Account: You can view your tax records, payment history, and important notices anytime. 
• Use direct deposit for refunds: The IRS has begun phasing out paper refund checks and strongly encourages direct deposit for faster, more secure refunds. 
• Gather forms early: W-2s, 1099s, digital asset transaction records, and other paperwork are key to accurate filing. 
• Be aware of scams: The IRS will never initiate unscheduled calls or texts; if in doubt, go to IRS.gov directly. 

What This Means for Taxpayers

The 2026 filing season is shaped by substantial tax law changes that affect millions of Americans. Whether you’re a first-time filer, a seasoned taxpayer, or preparing returns for a family, understanding the landscape will save you time and potentially maximize your refund.

There’s also growing conversation among tax professionals about IRS staffing levels and system readiness, so patience and organization are essential this season.

Final Takeaway

Filing season 2026 is here — earlier and more complex than many recent years. With changes to deductions, credits, and filing tools, preparation is the key to success. Use the IRS free resources, get your documents organized, and don’t wait until April to start — thousands of refunds are processed in just weeks, and early filing can help you get yours sooner.

Get Ready for the 2026 Tax Season!

The One Big Beautiful Bill can affect federal taxes, credits, and deductions. Taking proactive steps like organizing documents and information is crucial to avoid last-minute stress and potential mistakes come tax filing time in April.

Here are a some tips on how to get prepared:

1. Check Your Withholding

If you’re unsure about how much tax is being withheld from your paycheck, it’s a good idea to review your withholding now. The IRS provides a handy tool called the Tax Withholding Estimator to help you determine if you’re having the right amount deducted. Adjusting your withholding early can help avoid any surprises at tax time.

2. Keep Documents Organized

Start gathering important tax documents now, including things like W-2s from employers, 1099s from banks, and receipts for deductions or digital asset transactions. Keeping them organized will save you lots of time and reduce the stress of tracking them down later.

3. Review Changes in Tax Law

Each tax year can bring new laws or changes to existing ones. The IRS suggests reviewing any updates that might impact your filing, including new credits or deductions you may be eligible for. Being aware of tax changes can potentially save you money and reduce your tax burden.

4. Contribute to Retirement Accounts

Contributions to retirement plans like IRAs or 401(k)s can lower your taxable income. Consider contributing now, especially if you have a bit more flexibility financially. It can pay off when tax season rolls around!

5. Avoid Scams

The IRS also reminds taxpayers to be cautious of phishing attempts and tax-related scams. The IRS will contact you through official mail so be weary about unsolicited calls of texts! Always check for official IRS communication, and if something feels suspicious, report it directly to the IRS.

Conclusion

Preparing for the 2026 tax season might seem like something you can put off, but it’s best to start while there’s plenty of time. By reviewing your withholding, staying organized, and understanding potential tax law changes, you can make tax time easier and less stressful. The earlier you start, the more in control you’ll feel come tax season!

Washington Expands Sales Tax—Here’s What’s Changing Under Senate Bill (ESSB) 5814

On May 20, 2025, Washington State approved major tax legislation that significantly raises Business & Occupation (B&O) and sales taxes, introducing billions in additional tax burdens across the state. Beginning October 1, 2025, many businesses and services previously exempt from sales tax will now be included under Washington’s retail sales tax system. In response, the Department of Revenue (DOR) has begun notifying over 90,000 businesses to prepare for compliance and review the new requirements in detail.

Will This Affect My Business??

Under the new law, these businesses will fall under the definition of “retail sale” and be subject to retail sales tax including:

• Information technology services
• Custom website development services
• Investigation, security, and armored car services
• Temporary staffing services
• Advertising services
• Live presentations
• Sales of custom software and customization of prewritten software
• Modification of digital automated services (DAS) exclusions

What Business Owners Should Do

1. Check the DOR website – There’s a whole section on “services newly subject to retail sales tax” with guidance.
2. Read interim guidance – DOR has published detailed interim guidance (IGSs) for each type of service now taxed.
3. Update your contracts, invoices, and client communications – If your business sells these services, you may need to add sales tax to your billing.
4. Ask for help – If you’re not sure how the tax applies in your situation, you can request a letter ruling or reach out to DOR.
5. Stay informed – These are interim rules, and more permanent regulations are expected to follow.

Complexities & Complications

• Contracts signed before Oct. 1: If you locked in a contract before the law changed and paid before then, you may be exempt.
• Live presentations: Whether tax applies may depend on the attendee location.
• Temporary staffing: Taxability depends on how staffing is arranged (agency vs contractors).
• DAS exclusions : The law is tweaking what counts as a “digital automated service,” so some services that were excluded are no longer.
• Interim guidance: These are not yet final rules. DOR is taking feedback, and tax policy could shift after the 2026 legislative session.

Bigger Picture

• This change is part of a major revenue-raising package passed by the state.
• According to the Seattle Metro Chamber of Commerce, DOR is telling businesses to pay taxes now if you’re unsure, then possibly get reimbursement later if guidance changes.
• There’s some concern and pushback: not everyone’s thrilled, especially small businesses that may now bear a heavier tax burden. 

Bottom Line

• If you’re a business offering any of these newly taxed services, you need to act now: read the DOR guidance, potentially change your billing, and talk to your customers.
• If you’re a customer buying these services, don’t be surprised if your bill has a new “sales tax” line item starting October 1.
• Washington’s tax rules are shifting—and for a lot of service businesses, this isn’t a small change, it’s a big one.

For more information visit: 

dor.wa.gov

Seattle Metropolitan Chamber of Commerce

Washington State Hospital Association+1

On July 4, 2025, the One Big Beautiful Bill Act (Public Law 119-21) was signed into law, bringing several major tax deductions designed to benefit working Americans and seniors. The provisions take effect starting with the 2025 tax year and will be available through 2028.

Here’s a breakdown of the new deductions and what they could mean for you.

1. No Tax on Tips

For millions of service workers, tips are a big part of take-home pay. Under the new law, eligible taxpayers can now deduct qualified tips. 

• Who qualifies? Employees and self-employed individuals in occupations (as defined by the IRS) that customarily receive tips from customers or tip sharing. The list of qualifying occupations will be published by October 2, 2025.
• Deduction limits: Up to $25,000 per year (limited to net business income for self-employed).
• Income phase-out: Begins at $150,000 MAGI for single filers ($300,000 for joint filers).
• Eligibility rules:
  • Both itemizers and non-itemizers can claim it.
  • Married couples must file jointly.
  • Certain Specified Service Trades or Businesses (SSTBs) are excluded.
• Reporting: Employers and payors must issue statements showing the amount of tips received.

2. No Tax on Overtime

For those who regularly put in extra hours, overtime pay just got more rewarding.

• Deduction covers: The “extra half” portion of time-and-a-half required by the Fair Labor Standards Act (FLSA).
• Deduction limits: Up to $12,500 for individuals or $25,000 for joint filers.
• Income phase-out: Same as the tips deduction ($150,000 / $300,000).
• Eligibility rules:
  • Available to both itemizers and non-itemizers.
  • Married couples must file jointly.
• Reporting: Employers will be required to show total qualified overtime on tax forms.

3. No Tax on Car Loan Interest

Buying a new car could come with a valuable tax break.

• Deduction covers: Interest paid on a new car loan (leases and used vehicles do not qualify).
• Deduction limits: Up to $10,000 per year.
• Income phase-out: Begins at $100,000 MAGI for individuals ($200,000 for joint filers).
• Qualifying vehicle requirements:
  • Original use must start with the taxpayer.
  • Weighs less than 14,000 lbs.
  • Final assembly must be in the United States (check vehicle info label or VIN).
• Reporting: Lenders must provide annual statements of interest paid.

  Note: You’ll need to include your vehicle’s VIN on your tax return when claiming this deduction.

4. Extra Deduction for Seniors

Seniors receive an additional boost under this law.

• Deduction amount: An extra $6,000 per eligible taxpayer age 65+. For married couples where both spouses qualify, that’s $12,000 total.
• Income phase-out: Begins at $75,000 MAGI for individuals ($150,000 for joint filers).
• Eligibility rules:
  • Available to both itemizers and non-itemizers.
  • Married couples must file jointly.

This is in addition to the standard senior deduction already available under existing law.

Key Takeaways

• These deductions apply only for tax years 2025–2028.
• Many provisions require additional IRS guidance, expected later this year.
• Taxpayers must meet eligibility rules (including joint filing requirements, income thresholds, and valid social security).
• Employers, lenders, and other payors will face new reporting requirements—but the IRS promises transition relief for the first year.

Bottom Line

The One Big Beautiful Bill Act creates meaningful tax relief for service workers, employees logging overtime, car buyers, and seniors. Whether you’re earning tips, working extra hours, financing a new vehicle, or enjoying retirement, these new deductions could help reduce your tax bill.

Taxpayers should keep an eye out for IRS updates and start planning now to take advantage of these opportunities in 2025.