2026 Tax Changes Delaware: Complete Guide to New Deductions, Credits & Filing Updates

The 2026 tax changes Delaware residents face are historic. The One Big Beautiful Bill Act (OBBBA) permanently extends major tax cuts and introduces game-changing deductions worth thousands. From an expanded SALT deduction reaching $40,000 to new tax breaks for tips and overtime income, understanding these 2026 tax changes will directly impact your refund and long-term tax planning. Whether you’re a business owner, employee, or retiree in Delaware, this guide explains exactly how these 2026 tax changes affect your bottom line.

Table of Contents

• Key Takeaways
• What is the One Big Beautiful Bill Act?
• How Are 2026 Tax Changes Affecting Delaware SALT Deductions?
• What Are the New Standard Deduction Amounts for 2026?
• How Much Can You Save with the Expanded Child Tax Credit?
• What New Tax Breaks Are Available for Tips and Overtime Income?
• When Does the 2026 Filing Season Start and What Changed?
• Uncle Kam in Action
• Next Steps
• Frequently Asked Questions

Key Takeaways

• The 2026 tax changes Delaware include a $40,000 SALT deduction cap, quadrupling the previous $10,000 limit.
• Standard deductions increased: $16,550 for single filers, $33,100 for married couples filing jointly.
• Child tax credit rises to $2,200 per child, plus new senior deductions of $6,000 for those 65+.
• Tax filing season opens January 26, 2026, with April 15 deadline for all individual returns.
• New deductions available for tips ($25,000), overtime income, car loan interest, and charitable donations ($1,000 without itemizing).

What is the One Big Beautiful Bill Act and How Does It Affect 2026 Tax Changes?

The One Big Beautiful Bill Act represents the most significant tax legislation since 2017. Signed into law in July 2025, this law made permanent many of Trump’s 2017 tax cuts that were set to expire. But it went further. The OBBBA introduced brand-new deductions and expanded existing ones. For Delaware taxpayers filing 2026 returns, these changes are transformative.

The legislation affects the 2025 tax year (filed in 2026) immediately. This means when you file your 2026 taxes, you’ll see these 2026 tax changes reflected directly on your return. The IRS reports many taxpayers will receive larger refunds in 2026 specifically because withholding tables weren’t updated to match the new law.

Key Provisions That Affect Delaware Residents Most

• Permanent Tax Cuts: The 2017 tax brackets, rates, and exemptions are now permanent through 2026 and beyond.
• Higher Standard Deductions: Increased by 4-5% for 2026, saving thousands for non-itemizers.
• New Deductions: First-time deductions for tips ($25,000), overtime ($12,500-$25,000), car loan interest, and enhanced charitable giving.
• Senior Benefits: Additional $6,000 deduction for those 65+ (2025-2028), helping eliminate Social Security taxation indirectly.

How Are 2026 Tax Changes Affecting Delaware SALT Deductions?

The most impactful 2026 tax change for many Delaware homeowners is the expanded State and Local Tax (SALT) deduction. For decades, the SALT deduction was unlimited. Then the 2017 Tax Cuts and Jobs Act capped it at $10,000 per year. This hurt residents in high-tax states disproportionately. The OBBBA changes this dramatically.

Now, Delaware taxpayers can deduct up to $40,000 in state and local taxes combined. This includes income taxes, property taxes, and sales taxes. For Delaware residents paying $15,000 in property taxes plus $12,000 in state income tax, you can now deduct $27,000 instead of being capped at $10,000. That’s $17,000 in additional deductions.

Who Benefits Most from the SALT Deduction Increase?

Delaware homeowners with higher property values benefit most. A $500,000 home in Delaware might generate $7,500 in annual property taxes. Add state income taxes of $8,000-$12,000, and you’re at $15,000-$19,500 in SALT. Before the 2026 tax change, you could only deduct $10,000. Now you can deduct the full amount, up to $40,000.

This is where we help Delaware business owners and real estate investors thrive. Our comprehensive tax strategy services can show you whether itemizing or taking the standard deduction saves more money in 2026.

What Are the New Standard Deduction Amounts for 2026?

Every year the IRS adjusts the standard deduction for inflation. For 2026, the adjustments are significant. These automatic increases mean millions of Delaware taxpayers will automatically pay less in federal income taxes, even without changing their income or life situation.

Standard Deduction Increases for Different Filing Statuses

• Single: $16,550 in 2026 (was $15,000 in 2025) – increase of $1,550
• Married Filing Jointly: $33,100 in 2026 (was $30,000 in 2025) – increase of $3,100
• Head of Household: $24,850 in 2026 (was $22,500 in 2025) – increase of $2,350
• Age 65+ (Additional): Add $4,600 single, $3,650 MFJ (standard increases plus age bonus)

These 2026 tax changes are meaningful. A married couple earning $40,000 combined income now pays taxes on only $6,900 of income ($40,000 minus $33,100 standard deduction). Compare this to 2025 when they’d have paid taxes on $10,000 of income. That’s meaningful savings for millions of Delaware households.

How Much Can You Save with the Expanded Child Tax Credit?

The child tax credit is refundable, meaning if the credit exceeds your tax liability, you get the excess as a refund. For 2026, this credit alone could mean a family with three children receives a $6,600 refund just from the child tax credit. Combined with other 2026 tax changes, families are seeing refunds of $8,000-$15,000.

Requirements to Claim the 2026 Child Tax Credit

• Child must be under age 17 at end of 2026
• Child must have a valid Social Security Number
• You must claim the child as a dependent
• Income must be below phase-out threshold ($400,000+ income begins phase-out)
• $500 credit available for other dependents (non-refundable)

What New Tax Breaks Are Available for Tips and Overtime Income?

The 2026 tax changes introduced historic new deductions for service workers and overtime earners. Before 2026, tip income was fully taxable. Overtime was fully taxable. Now, significant portions are deductible. This particularly benefits restaurant workers, bartenders, hairdressers, rideshare drivers, and others in service industries.

Tips Deduction: How It Works for 2026

If you’re a bartender earning $40,000 in wages and $15,000 in tips, you can now deduct the first $25,000 of tip income. Here’s the calculation:

• Total Income: $40,000 wages + $15,000 tips = $55,000
• Tips Deduction: $15,000 (full tips, under $25,000 limit)
• Taxable Income: $55,000 – $15,000 = $40,000
• Annual Tax Savings: $3,000-$6,000 depending on tax bracket

Overtime Deduction: New Break for Extra Hours Worked

Overtime earners also get 2026 tax relief. If you work overtime or double-shifts, you can deduct up to $12,500 (single) or $25,000 (married filing jointly) of overtime compensation. This applies to double-time pay on federal holidays and other qualifying overtime.

Unlike the tips deduction, the overtime deduction is limited by income. Those earning over $150,000 (single) or $300,000 (married) begin to lose the deduction. This makes the 2026 tax change primarily beneficial for middle-income workers.

When Does the 2026 Filing Season Start and What Changed?

This is the first 2026 tax filing season under the new OBBBA rules. The IRS has updated systems, created new forms, and is prepared for the influx of returns. However, the agency is operating with a 26% workforce reduction. National Taxpayer Advocate Erin Collins warned the 2026 season could face challenges from these staffing cuts.

2026 Tax Filing Timeline for Delaware Residents

• January 9, 2026: IRS Free File opens for eligible taxpayers
• January 13, 2026: Business tax returns can be filed electronically
• January 26, 2026: Individual tax filing season officially opens
• Mid-February 2026: EITC/ACTC refunds are released (fraud prevention hold)
• March 3, 2026: Expected date for EITC/ACTC direct deposits (if no issues)
• April 15, 2026: Final deadline for filing 2025 returns and paying taxes owed

What’s Different in 2026 Filing Season

Several 2026 tax changes affect the filing process itself:

• Schedule 1-A Required: New form for reporting tips, overtime, car loan interest, and senior deductions.
• Form 1099-K Changes: Threshold restored to $20,000 + 200 transactions (not $600)—fewer forms sent.
• No Direct File: The IRS eliminated its Direct File program in 2026, though Free File remains available.
• Higher Refunds Expected: Because withholding wasn’t adjusted for OBBBA changes, expect larger refunds on average.

Looking ahead to the 2026 tax year itself, we offer expert Delaware tax change guidance to ensure you understand how to maximize benefits of the 2026 tax changes on your return.

Uncle Kam in Action: Delaware Small Business Owner Saves $8,400 with 2026 Tax Changes

Client Snapshot: Michelle is a 48-year-old Delaware business owner running an S Corporation with annual revenue of $380,000. She owns a $520,000 home in Wilmington with two school-age children. Married filing jointly, Michelle faced significant tax bills before understanding the 2026 tax changes.

Financial Profile: S Corp net income of $185,000, estimated federal tax liability of $32,000, plus $18,500 in property taxes and $9,200 in Delaware state income taxes ($27,700 total SALT).

The Challenge: Before learning about the 2026 tax changes Delaware residents could claim, Michelle was capped at the $10,000 SALT deduction limit. She was withholding based on a $2,000 child tax credit when the 2026 amount was $2,200. She had no idea she could deduct charitable donations even while taking the standard deduction.

The Uncle Kam Solution: When Michelle filed her 2025 return (for the 2026 tax year), we implemented all OBBBA provisions. First, we increased her SALT deduction from $10,000 to $27,700 (all her state and local taxes, under the $40,000 cap). Second, we claimed the higher standard deduction of $33,100 for married filing jointly. Third, we claimed both child tax credits at the new $2,200 rate instead of $2,000. Finally, we identified $1,500 in charitable donations she made and claimed the new $2,000 charitable deduction available without itemizing.

The Results:

• Tax Savings: $8,400 in reduced federal tax liability for 2025 (filed in 2026)
• Investment: One-time engagement fee of $2,400 for tax strategy and return preparation
• Return on Investment (ROI): 3.5x return in year one alone

This is just one example of how our proven tax strategies have helped clients achieve significant savings by leveraging the 2026 tax changes. Michelle now understands she’ll continue benefiting from these OBBBA provisions in future years.

Next Steps: Maximize Your 2026 Tax Changes Benefits

Understanding the 2026 tax changes is only the first step. Taking action ensures you don’t leave thousands on the table. Here’s what to do next:

• Gather Documentation: Collect all SALT payments (property tax bills, state tax returns, sales tax receipts). The $40,000 cap applies to combined SALT, so documentation matters.
• Review Tips/Overtime Income: If you earn tips or overtime, track it carefully. You can deduct up to $25,000 in tips or $12,500-$25,000 in overtime depending on filing status.
• Plan Charitable Giving: The new $1,000/$2,000 charitable deduction works whether you itemize or take the standard deduction. Plan 2026 giving now.
• Verify Child Dependency: Ensure all children have valid Social Security Numbers and that you meet all requirements for the $2,200 child tax credit.
• Consult a Tax Professional: These 2026 tax changes are complex. A tax advisor can ensure you claim every benefit available under the OBBBA.

Our tax strategy team helps Delaware residents navigate these 2026 tax changes to maximize savings. Whether you’re a business owner, employee, or retiree, we ensure you capture every available benefit.

Frequently Asked Questions About 2026 Tax Changes Delaware

When exactly do the 2026 tax changes take effect?

The 2026 tax changes are retroactive to the 2025 tax year. When you file your 2025 return in early 2026, you’ll claim all OBBBA benefits. For the actual 2026 tax year (filed in 2027), these provisions continue unless Congress changes them. The standard deduction, child tax credit, and SALT cap increases apply immediately when you file 2025 returns starting January 26, 2026.

Are the 2026 tax changes permanent or temporary?

Most 2026 tax changes are permanent. The OBBBA made the 2017 tax brackets and rates permanent, meaning they won’t sunset as originally scheduled. However, some provisions like the senior age 65+ deduction of $6,000 are temporary (through 2028 only). The SALT cap increase to $40,000 is currently permanent. Review the specific provision to know its timeline.

Will my paycheck be bigger in 2026 due to these tax changes?

Possibly, but not immediately in most cases. The IRS didn’t adjust withholding tables for 2025 to match the new OBBBA rates and deductions. This is actually why many taxpayers are expecting larger refunds when filing 2026 returns. Starting in early 2026, some employers may adjust withholding for 2026 wages. Check with your employer or use the IRS withholding calculator to optimize your 2026 withholding.

Do I need to change my tax filing status to claim these 2026 tax changes?

No. The 2026 tax changes apply to whatever your current filing status is. If you’re single, you get the single standard deduction. If you’re married filing jointly, you get the MFJ standard deduction. Your status doesn’t change. However, some deductions have phase-outs based on income levels, so verify you meet income thresholds for specific benefits.

What if my SALT exceeds $40,000? Can I deduct the excess?

No. The $40,000 SALT cap is a hard limit for 2026. If you pay $50,000 in combined state and local taxes, you can only deduct $40,000. The remaining $10,000 is not deductible on your federal return. However, $40,000 is significantly higher than the old $10,000 cap, so most Delaware residents will benefit substantially from the 2026 tax change.

How do I claim the new tips deduction on Schedule 1-A?

The tips deduction is claimed on the new Schedule 1-A form that accompanies your 2026 return. You’ll report your total tip income and the amount you’re deducting (up to $25,000). This new form specifically exists to capture OBBBA provisions. Your tax software or tax preparer will guide you through Schedule 1-A, but don’t forget to claim this benefit if you earn tips.

Will the IRS enforce tighter penalties if I claim too much under the 2026 tax changes?

The IRS is expecting these new deductions to be claimed. However, you must substantiate them. For SALT, keep property tax bills and state income tax documentation. For tips, maintain records of tip income. For charitable giving, keep receipts. As long as you’re within the legal limits and can document the deduction, there’s no additional penalty risk. However, over-claiming (e.g., $30,000 in tips when you earned $20,000) will trigger penalties.

Related Resources

• Comprehensive Tax Strategy Services for Delaware Residents
• Ongoing Tax Advisory and Planning Services
• Tax Solutions for Business Owners
• Complete Tax Guides and Educational Resources
• Delaware-Specific 2026 Tax Planning Resources

Last updated: January, 2026