📅 2026 Update: Changes to Federal Income Tax Rules

Since the original article was written, several important updates to federal income tax rules have taken effect. These changes could impact how taxpayers file their returns and what deductions they may claim. The earlier article continues further down the page, providing foundational information on gross receipt tax.

📈 Standard Deduction Increase

The standard deduction has increased for the 2026 tax year. Single filers and married individuals filing separately can now claim $16,100, up from $15,000 in 2025. For married couples filing jointly, the deduction is now $32,200, an increase from $30,000.

Heads of household have a new standard deduction of $24,150, rising from $23,000.

🎁 New Charitable Deduction for Non-Itemizers

For taxpayers who opt for the standard deduction, a new provision allows them to deduct cash donations to qualified charities. Single filers can deduct up to $1,000, while married couples filing jointly can deduct up to $2,000. This change applies to donations made to qualified 501(c)(3) public charities and is effective from 2025 through 2028.

👴 Senior Tax Deduction

Individuals aged 65 and older can now benefit from an additional $6,000 federal tax deduction. This deduction is effective for the 2025 tax year and is available regardless of whether the taxpayer itemizes deductions. It will continue through 2028, making it a significant advantage for senior taxpayers.

💼 Elimination of Federal Income Tax on Tips

Starting with the 2025 tax year, tipped workers no longer have to pay federal income tax on their tips. This change aims to lessen the tax burden on individuals who rely heavily on tips as a major source of income.

📌 Key Points Summary

  • Standard deduction increases for all filing statuses.
  • New charitable deduction for those taking the standard deduction.
  • Additional $6,000 deduction for seniors aged 65+.
  • No federal income tax on tips for tipped workers.

💡 Tips for Navigating Recent Tax Changes

Reviewing your specific tax situation with an attorney is essential for understanding how these changes apply to you.

📝 Understand the Standard Deduction

Make sure to check the updated standard deduction amounts for your filing status. This can significantly affect your taxable income and overall tax liability.

💰 Utilize Charitable Deductions

If you plan to make cash donations, remember you can deduct up to $1,000 as a single filer or $2,000 if married filing jointly. Ensure that your donations go to qualified charities.

👵 Take Advantage of Senior Deductions

If you're over 65, ensure you claim the additional $6,000 deduction. This can help reduce your taxable income significantly.

💵 Keep Track of Tips

If you work in a job where you earn tips, remember that federal income tax no longer applies to these earnings. This could provide you with more disposable income.

🚗 Consider Car Loan Interest Deductions

If you have loans for qualified vehicles, keep track of the interest you pay. You can deduct up to $10,000 per year for personal use, depending on your income.

🏆 Top Tax Services Ranked by User Reviews (2026)

Several services can aid taxpayers with the recent tax law changes. These services are ranked based on Trustpilot data checked in October 2026. Star ratings are one indicator of customer satisfaction, but unhappy customers often leave more reviews, affecting scores.

🥇 1. 1040.com

1040.com holds a Trustpilot score of 4.5. It is known for its user-friendly interface and flat-rate pricing. However, some users face navigation challenges and technical glitches while using the platform.

🥈 2. efile4Biz

efile4Biz has a Trustpilot score of 4.7. This service is recognized for its easy online filing and affordability, making it suitable for taxpayers looking for straightforward solutions. Some users report occasional navigation issues and limited support.

🥉 3. TaxSlayer

TaxSlayer has a Trustpilot score of 4.2. It is known for its online tax preparation and affordable pricing, which appeals to many taxpayers. However, some reviews mention occasional technical issues and concerns about pricing.

🆓 Free Government Assistance

The IRS offers free options like the Free File Program, allowing eligible taxpayers with an adjusted gross income of $73,000 or less to access free online tax preparation. The Volunteer Income Tax Assistance (VITA) program also provides free help to individuals making $60,000 or less, including limited English speakers. For seniors aged 60 and older, the Tax Counseling for the Elderly (TCE) program specializes in tax issues related to pensions and retirement.

🔎 What to Compare When Choosing Tax Services

  • ⭐ Trustpilot scores and review counts.
  • 💵 Pricing and available plans.
  • ⚙️ User interface and ease of navigation.
  • 📞 Customer support availability and responsiveness.
  • 📝 Features offered, including e-filing and deductions.

❓ Frequently Asked Questions

❔ What is the new standard deduction for 2026?

The standard deduction for single filers is now $16,100, while married couples filing jointly can claim $32,200 for the 2026 tax year.

🕒 When is the tax filing deadline for 2025?

The deadline to file individual tax returns for the 2025 tax year is April 15, 2026. If this date falls on a weekend or holiday, it typically extends to the next business day.

💸 Are there deductions for tips for 2026?

Yes, the One Big, Beautiful Bill Act allows eligible taxpayers to deduct up to $25,000 for qualified tips starting in 2025, which continues into 2026.

👴 How does the senior tax deduction work?

Individuals aged 65 and older can claim an additional $6,000 deduction for federal taxes. This applies regardless of whether they itemize their deductions.

🎁 Are there new charitable deductions for non-itemizers?

Yes, taxpayers taking the standard deduction can now deduct cash donations up to $1,000 for singles and $2,000 for married couples filing jointly to qualified charities.

🆓 What free tax help is available?

The IRS provides free options like the Free File Program for those with incomes under $73,000 and VITA services for individuals making $60,000 or less.

⚖️ Recent Court Cases Related to Tax Laws

Several recent court rulings have impacted federal tax laws, which relates directly to any changes in tax obligations and deductions.

You can browse more rulings on the news page for the latest updates on recent court decisions.

End of October 2026 Update





Gross Receipt Tax at a Glance


Gross Receipt Tax, also known as GRT, is a tax on the total income a business generates from its sales. GRT is based on the gross receipts of the business and is generally assessed as a percentage of the total receipts. Different states in the United States have their own laws and regulations regarding GRT, but this article focuses on the basics of this type of tax.

History of Gross Receipts Tax


Although GRT is commonly associated with state and local taxes, it was first used by the federal government during the Civil War. It was a means for the government to generate revenue to fund the war effort. At the time, the tax was levied on a variety of goods and services, such as tobacco, matches, and soap.

Over the years, the implementation of GRT has evolved. It has been adopted by many states and municipalities to raise revenue for public services, such as education, infrastructure, and public safety. Some states have even incorporated GRT into their tax structures as a primary source of revenue.

How Gross Receipts Tax Works


A gross receipts tax is levied on the total income a business earns from its sales. This includes all money collected from the sale of goods and services, as well as income generated by other means, such as rent, royalties, and interest.

The tax is calculated as a percentage of the total receipts, which can be different for each state. For example, New Mexico has a GRT rate of 5.125%, while Ohio has a GRT rate of 0.26%.

One key feature of GRT is that it is assessed on the gross receipts of a business, not its profits. This means that even if a business is not profitable, it may still owe GRT. This can be a challenge for small businesses, especially those that are just starting out.

For example, let's say a small business earns $100,000 in revenue in a year. If the GRT rate is 5%, the business would owe $5,000 in GRT. Even if the business only made a $10,000 profit that year, it would still owe the full $5,000 in GRT.

Gross Receipts Tax vs. Sales Tax


GRT is often confused with sales tax, but there are some key differences between the two. Sales tax is assessed on the final sale of goods and services to consumers, while GRT is assessed on the total income a business generates from its sales.

This means that sales tax is only charged to the end consumer, while GRT is charged to all businesses that generate revenue. In addition, sales tax is usually a flat rate that is added to the price of the goods or services being sold. GRT, on the other hand, is calculated as a percentage of the total receipts.

Another key difference between GRT and sales tax is how the revenue is allocated. In most states, sales tax revenue is used to fund various public services, such as schools, roads, and public safety. GRT revenue, on the other hand, is often used to fund general government expenses, such as salaries, pensions, and debt service.

Pros and Cons of Gross Receipts Tax


GRT has both advantages and disadvantages for businesses and governments. Here are some of the pros and cons of this type of tax:

Pros


- Broad-Based Revenue: GRT is assessed on the total income a business generates, regardless of the source of the revenue. This means that it can capture revenue from all types of businesses, including those that may not be subject to other types of taxes, such as income tax.

- Stable Revenue Source: GRT is based on the total receipts a business generates, which means that it can be more stable and predictable than other types of taxes. This is because businesses are less likely to alter their behavior based on changes in the tax rate.

- Simple and Efficient: GRT is a relatively simple tax to administer, as it is based on a single factor (total receipts) and is often collected along with other taxes, such as sales tax or use tax.

Cons


- Burden on Small Businesses: GRT can be particularly challenging for small businesses, especially those that are just starting out and may not yet be profitable. This is because GRT is based on gross receipts, not profits, which means that even businesses that are not making money may still owe GRT.

- Disincentive for Growth: GRT can also be a disincentive for businesses to grow and expand. This is because the tax is based on total receipts, which means that as a business grows and generates more revenue, it will also owe more in GRT.

- Complexity of Rates: GRT rates can be complicated, especially for businesses that operate in multiple states or jurisdictions. This is because each state may have its own GRT rate, and businesses may need to keep track of different rates for different types of sales.

Gross Receipts Tax in the United States


Gross receipts taxes have been adopted by many states and municipalities throughout the United States. The following is an overview of GRT in some of the most populous states:

California


California does not have a statewide GRT. However, some cities and counties in California do have their own gross receipts tax. For example, San Francisco has a GRT that ranges from 0.16% to 0.65% depending on the type of business.

Florida


Florida has a GRT that is imposed on certain industries, such as retail sales, leases of commercial property, and the sale of taxable services. The tax rate varies by county and ranges from 0.5% to 2.5%.

New Mexico


New Mexico has a statewide GRT that is assessed on all businesses that generate revenue within the state. The tax rate varies by location and ranges from 5.125% to 8.6875%.

Ohio


Ohio has a GRT called the Commercial Activity Tax (CAT), which is assessed on gross receipts of businesses that exceed $150,000 per year. The tax rate is 0.26% of the total receipts.

Texas


Texas has a statewide GRT that is called the Texas Margin Tax. The tax is assessed on all businesses that generate revenue in Texas, with some exemptions for small businesses. The tax rate varies by industry and ranges from 0.375% to 1%.

Conclusion


Gross receipts tax is a tax on the total income a business generates from its sales. It is assessed as a percentage of the total receipts and can be a source of revenue for state and local governments. While GRT has advantages, such as a broad-based revenue source and stability, it also has disadvantages, such as a burden on small businesses and a disincentive for growth. It is important for businesses and individuals to understand GRT and how it applies to their particular situation.

Gross receipt taxes are imposed on the total profit of any company. There are some companies, such as non profits, that are exempt form having to pay this tax. In non profits, any revenue, or profit, is poured back into the company, therefore there is no actual profit. A gross receipts tax is a form of sales tax that is imposed on the seller of good and services.

Generally, the seller will add to the cost of a product and pass those taxes onto the consumer. Consumers often end up shouldering the burden of the taxes on any item, which were likely imposed at several levels, without ever realizing it.

The gross receipts tax is only currently imposed in about ten states. The gross receipts tax includes taxes on all profit or revenue for any business, regardless of the source of that revenue. Gross receipts taxes are the burden of the business that sells an item to consumers. The tax is not the burden of those that purchase the item, but the cost of the tax is often added to goods and services.

This is done so that a business can recoup some of the money they spend on gross receipts taxes. The tax is  implicitly added to the cost of any item. In other words, the consumer will not see the tax listed on their receipt. Rather, the tax is included in the price of the item once it is in the hands of the consumer.

Generally, the gross receipts tax is imposed a different percentages, depending on the size, or profitability of a business. Smaller businesses are generally charged a lower percentage of their profit as a gross receipt tax. For example, Delaware imposes a gross receipts tax at a rate of less than one percent to businesses that have a profit below a certain threshold, whereas businesses with a higher profit are subject to a gross receipt tax of up to two percent.

Each state imposes its gross receipts tax differently. In Mississippi, there is a three and half percent gross receipt tax imposed on construction across the state. There are a variety of ways that a gross receipts tax can be imposed to businesses.

The Gross receipt tax has been the subject of controversy. No state is suppose to impose a tax that could have negative impact on business of the Nation as a whole. Some gross receipts taxes are in excess of five percent which could discourage a business from having a branch in a certain state. There have been challenges to the tax, because businesses have claimed that it unfairly places a burden on them.

However, the tax is generally added to the cost of products once they reach the consumer. While the consumer may not realize the increase in price is due to the gross receipts tax, the cost of products to consumers in certain states, is higher in proportion to the percentage of tax assessed by that state.