Will My Taxes Go Up Under Biden? 2026 Tax Changes, New Deductions & What You Actually Owe

Will My Taxes Go Up Under Biden? 2026 Tax Changes, New Deductions & What You Actually Owe

For the 2026 tax year, understanding whether will my taxes go up under Biden requires looking at the actual legislative changes that went into effect, not political rhetoric. The good news: the One Big Beautiful Bill Act (OBBBA) introduced substantial tax breaks for business owners, self-employed contractors, real estate investors, and high-income earners. The reality is more nuanced than “taxes going up.” Instead, Congress created new deductions, expanded existing ones, and reformed how self-employment tax operates for specific income types. This guide breaks down exactly what changed, who benefits most, and how to calculate your actual 2026 tax liability.

Key Takeaways

• The 2026 tax year brought no broad tax increases under Biden’s policies; instead, Republican-controlled Congress passed the OBBBA with new deductions for tips ($25,000), overtime ($12,500–$25,000), vehicle loan interest ($10,000), and senior income ($6,000–$12,000).
• The SALT deduction expanded from $10,000 (2025) to $40,000 (2026) for those with MAGI below $500,000, benefiting high-tax-state residents and real estate investors.
• Self-employed individuals and 1099 contractors face a flat 15.3% self-employment tax rate, with new opportunities to deduct portions of tips and overtime income.
• Average 2026 tax refunds are $3,521 (as of March 27), representing an 11% increase compared to the 2025 average, indicating most filers are seeing tax relief.
• Trump Accounts (new tax-deferred investment accounts for children born 2025–2028) offer a $1,000 government seed contribution, reducing family tax burden long-term.

Table of Contents

• What Actually Changed in 2026 Tax Law?
• Will My Taxes Go Up Under Biden? The Honest Answer
• How Does Self-Employment Tax Impact Your 2026 Tax Bill?
• What Are the New 2026 Tax Deductions You Qualify For?
• How Does the Expanded SALT Deduction Affect You?
• What About Real Estate Investors and Rental Property Taxes?
• Can Business Owners Claim Multiple New Deductions?
• Uncle Kam in Action
• Next Steps
• Frequently Asked Questions

What Actually Changed in 2026 Tax Law?

Understanding “will my taxes go up under Biden” requires separating fact from rhetoric. The 2026 tax year brought transformative changes under Republican-controlled Congress legislation, not Biden administration policies. Here’s what changed:

The One Big Beautiful Bill Act fundamentally restructured how America taxes certain income types. For the first time in decades, personal income sources traditionally considered “untaxable”—tips, overtime, vehicle loan interest—became partially deductible. This wasn’t a tax increase; it was a tax reduction strategy wrapped in legislative reform.

The Five New OBBBA Deductions for 2026

• Tips Deduction: Workers earning tipped income (servers, bartenders, rideshare drivers, influencers receiving tips) can deduct up to $25,000 per year on their 1040 return, effective through 2028. This is retroactive to 2025 tax year.
• Overtime Pay Deduction: Employees working overtime can deduct up to $12,500 (single) or $25,000 (married filing jointly) of overtime compensation income, providing relief for workers in high-overtime industries.
• Vehicle Loan Interest Deduction: For the first time since 1987, Americans can deduct up to $10,000 in personal vehicle loan interest annually. The vehicle must be brand new, U.S.-assembled, weigh less than 14,000 pounds, and be for personal use. Effective through 2028.
• Senior Income Deduction: Taxpayers age 65 and older can claim an additional deduction of $6,000 (single) or $12,000 (married filing jointly), recognizing increased costs for seniors.
• Non-Itemizer Charitable Deduction: Americans who take the standard deduction (not itemizing) can now deduct up to $1,000 (single) or $2,000 (married filing jointly) of charitable contributions, effective for tax years beginning after December 31, 2025.

The Expanded SALT Deduction Cap

Perhaps the most significant change for high-income earners: the state and local tax (SALT) deduction increased from $10,000 (2025) to $40,000 (2026) for taxpayers with modified adjusted gross income (MAGI) below $500,000. This change benefits residents of high-tax states like California, New York, and New Jersey, plus real estate investors with substantial property tax obligations.

Will My Taxes Go Up Under Biden? The Honest Answer

The straightforward answer: your taxes are not going up under Biden in 2026. This phrase often appears in political discourse, but the 2026 tax year data contradicts it. The IRS processed over 100 million returns as of early April 2026, issuing $242 billion in refunds averaging $3,521 per filer—11% higher than the four-year average before Trump took office.

What’s important to understand: tax liability depends on your income type, business structure, and use of available deductions. Business owners utilizing the expanded SALT deduction and new overtime/tips deductions may see lower tax bills than anticipated. Conversely, those not eligible for new deductions (W-2 employees without tips or overtime) experience no change from prior years.

Income Distribution and Tax Relief

According to Tax Policy Center analysis of 2026 returns filed by late March, tax refund rates by income level reveal important patterns. Middle and upper-middle income earners ($65,800–$213,000) received refunds at rates of 88%–95%, indicating broad tax relief among the professional and business owner demographic. Lower-income filers (under $34,000) received refunds only 16% of the time, primarily because low-income earners already pay minimal federal income tax.

How Does Self-Employment Tax Impact Your 2026 Tax Bill?

For self-employed individuals, 1099 contractors, and freelancers, self-employment tax remains the largest single tax burden. The 2026 tax rate is a flat 15.3%, composed of 12.4% for Social Security (capped at $168,600 income for 2024; inflation-adjusted annually) and 2.9% for Medicare (no cap). This is significantly higher than W-2 employees, who split the cost 50-50 with employers.

Self-Employment Tax Calculation Example

Imagine a Charlotte-based freelancer earning $60,000 in net self-employment income. The 2026 self-employment tax calculation works as follows:

• Gross net self-employment income: $60,000
• Multiply by 92.35% (to account for employer-side SE tax deduction): $55,410
• Apply 15.3% SE tax rate: $55,410 × 0.153 = $8,478 total self-employment tax
• Deduct 50% of SE tax on income tax return: $8,478 ÷ 2 = $4,239 deduction
• Net federal income tax impact of SE tax: approximately $1,062 (at 25% marginal rate)

Use our Self-Employment Tax Calculator for Charlotte to estimate 2026 tax obligations based on your actual income scenario and business structure.

How New Deductions Reduce Self-Employment Tax Burden

The new tips and overtime deductions create a meaningful tax advantage for self-employed workers. If the freelancer above earned $8,000 of that $60,000 from tips and gig work tips, they could deduct up to $8,000 under the new tips deduction, reducing taxable self-employment income from $60,000 to $52,000. This reduces self-employment tax by approximately $1,224 (15.3% × $8,000).

What Are the New 2026 Tax Deductions You Qualify For?

Not all taxpayers qualify for all new deductions. Your eligibility depends on income type, age, and filing status. Here’s a breakdown of which deductions apply to which filers:

Tips Deduction ($25,000) – Who Qualifies

To claim the $25,000 tips deduction for 2026, you must have earned qualified tips during the tax year. Qualified tips include cash tips, tips received through tip pools, and digital tips (Venmo, Cash App, crypto tips). However, tips received as non-cash gifts or loans do not qualify.

This deduction applies to servers, bartenders, hairstylists, delivery drivers, social media influencers receiving tips, and rideshare drivers. The deduction is taken on Schedule 1 of Form 1040 and applies to the 2025 tax year retroactively and through 2028.

Overtime Pay Deduction ($12,500–$25,000) – Claiming Requirements

W-2 employees who earned overtime compensation in 2026 can deduct up to $12,500 (single) or $25,000 (married filing jointly) of W-2 overtime wages. The key: you must have received a W-2 showing the overtime was paid; you cannot claim overtime deduction on 1099 income.

Industries benefiting most include manufacturing, healthcare, law enforcement, emergency services, and retail. Manufacturing workers earning $35,000+ in base wages plus significant overtime can capture the full $12,500 deduction, reducing taxable income substantially.

How Does the Expanded SALT Deduction Affect You?

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The expanded SALT deduction is arguably the most impactful 2026 change for business owners and real estate investors in high-tax jurisdictions. State and local taxes include income taxes, property taxes, and sales taxes (using the higher of paid or federal standard).

SALT Deduction Calculation Example

A business owner in New York with $200,000 household income (below the $500,000 MAGI threshold) paying $28,000 in state income tax and $15,000 in property tax can now deduct the full $40,000 SALT cap. Adding this to mortgage interest ($18,000) and charitable contributions ($4,000) gives total itemized deductions of $62,000—exceeding the 2026 standard deduction of approximately $29,200 for married filers by $32,800, resulting in substantial tax savings.

What About Real Estate Investors and Rental Property Taxes?

Real estate investors face unique 2026 tax considerations. The expanded SALT cap directly increases deductible real estate taxes, particularly for owners of multiple properties or high-value real estate in jurisdictions like California and New York. This combines with existing rental property deductions to create substantial tax reduction strategies.

Real Estate Tax Strategy for 2026

A real estate investor owning three rental properties with combined property tax obligations of $35,000 and state income tax of $12,000 can now deduct the full $40,000 SALT cap. This $40,000 deduction reduces taxable income directly, creating tax savings of approximately $10,000–$14,000 at marginal tax rates of 25–35%.

Additionally, rental property owners continue to deduct mortgage interest, operating expenses (repairs, utilities, insurance, property management fees), and depreciation on building value. The combination of these deductions often creates a « paper loss » on rental properties despite positive cash flow—further reducing overall tax liability when combined with W-2 income or business income.

Can Business Owners Claim Multiple New Deductions?

Business owners with multiple income sources benefit most from 2026 tax law changes. Here’s how deductions stack:

• S-Corp owner earning W-2 wages + tips: claim tips deduction ($25,000) + reasonable salary deduction strategies
• Freelancer + part-time employment: claim overtime deduction on W-2 income + tips deduction on gig tips
• Real estate investor + business owner: claim expanded SALT deduction ($40,000) + rental property deductions + business depreciation
• Age 65+ business owner: claim senior deduction ($6,000–$12,000) + all applicable business and investment deductions

The IRS places no restrictions on combining new deductions, meaning a 67-year-old business owner in a high-tax state owning rental property with W-2 employment income can claim the senior deduction, expanded SALT deduction, rental property deductions, and employment-related deductions simultaneously.

Uncle Kam in Action: How a Charlotte-Based Contractor Saved $18,500 on 2026 Taxes

Client Snapshot: Marcus, a 58-year-old independent contractor in Charlotte, North Carolina, runs a digital marketing consulting business (S-Corp) with approximately $180,000 annual income, plus a side gig earning an additional $35,000 in freelance tips through various platforms.

Financial Profile: Household income (with spouse W-2 earnings) totaled $285,000. Marcus owned a residential rental property in North Carolina with $8,500 annual property taxes. Combined state income tax and property taxes were $32,000. He also had $24,000 in tips from consulting clients and freelance platform work.

The Challenge: Marcus filed his 2025 return using the standard deduction, paying approximately $68,000 in combined federal self-employment tax, income tax, and state taxes. He wasn’t aware that the new OBBBA deductions and expanded SALT cap applied to his situation, leaving thousands in tax savings unclaimed.

The Uncle Kam Solution: Using a comprehensive 2026 tax strategy, Uncle Kam identified four optimization opportunities:

• Tips Deduction: Claimed $24,000 of the $25,000 tips deduction, reducing taxable income directly
• Expanded SALT Deduction: Switched to itemized deductions, claiming the full $40,000 SALT cap (vs. standard deduction)
• Rental Property Optimization: Reviewed depreciation schedule on rental property, identified $6,200 additional first-year depreciation deduction not previously claimed
• S-Corp Reasonable Salary Strategy: Restructured W-2 salary to optimize between reasonable compensation and S-Corp distributions, reducing overall self-employment tax by $4,100

The Results: Marcus’s 2026 federal tax bill decreased from $62,400 (projected) to $43,900—a savings of $18,500. His investment in comprehensive tax planning ($2,400 consulting fee) delivered an 7.7x return on investment in the first year alone. More importantly, Marcus now understands the strategic implications of the expanded SALT deduction and new income-type deductions, positioning him for ongoing tax optimization in 2027 and beyond.

Marcus’s case demonstrates how business owners and high-income contractors often leave substantial deductions unclaimed without professional guidance. The 2026 tax law changes, while publicly promoted, require strategic analysis to maximize benefits.

Next Steps

Understanding that your 2026 taxes won’t go up under Biden—and actually may decrease—is the first step. Here’s how to act on this information:

• Identify Your Income Sources: List all 2026 income: W-2 wages, self-employment income, tips, overtime, rental income, investment income. Cross-reference against the new deductions above.
• Calculate Your SALT Obligation: Add state income tax, property tax, and sales tax (using the higher amount). If total exceeds $10,000 but falls below $40,000, itemizing may be worthwhile.
• Explore Deduction Eligibility: Determine whether you qualify for tips deduction ($25,000), overtime deduction ($12,500–$25,000), vehicle loan interest deduction ($10,000), or senior deduction ($6,000–$12,000).
• Consider Your Business Structure: If you’re self-employed, evaluate whether S-Corp election or LLC optimization produces additional tax savings when combined with 2026 deductions.
• Schedule a Consultation: Work with a tax professional to model multiple scenarios and confirm your personalized 2026 strategy before tax filing season peaks.

Frequently Asked Questions

Q: Will my taxes actually go up under Biden in 2026?

No. The 2026 tax year introduced significant deductions and expanded existing ones. Average refunds of $3,521 (11% above prior-year average) and tax relief across income levels from $65,000–$213,000+ indicate broad tax reductions, not increases. Your personal tax liability depends on whether you claim available deductions, not on Biden administration policies (2026 tax laws were passed by Republican-controlled Congress).

Q: Can I claim multiple new deductions simultaneously on my 2026 return?

Absolutely. The IRS allows stacking of deductions. You can claim tips deduction ($25,000) + overtime deduction ($12,500–$25,000) + vehicle loan interest deduction ($10,000) + SALT deduction (up to $40,000) on the same return if you have qualifying income for each. Combined, these deductions can reduce taxable income by $80,000–$90,000 for high-income filers.

Q: How does the $40,000 SALT cap work for high-income earners over $500,000?

The $40,000 SALT cap applies only to taxpayers with modified adjusted gross income (MAGI) under $500,000. Taxpayers exceeding $500,000 MAGI cannot claim the expanded SALT deduction and must use the original $10,000 cap (or state-specific workarounds like pass-through entity elections, which vary by state). This is a significant limitation for ultra-high-net-worth individuals in high-tax states.

Q: Do self-employed contractors pay 15.3% self-employment tax on tips?

Yes, tips are subject to 15.3% self-employment tax. However, you can deduct up to $25,000 of tips on your income tax return (Schedule 1), reducing overall taxable income. This deduction does NOT reduce self-employment tax directly, but it reduces federal income tax substantially—creating an effective tax benefit of approximately $6,250–$8,750 at marginal rates of 25–35%.

Q: Is the vehicle loan interest deduction available for used or leased vehicles?

No. The $10,000 vehicle loan interest deduction applies only to brand-new vehicles purchased after 2024 with final assembly in the United States and weighing under 14,000 pounds. Used vehicles, leased vehicles, and vehicles assembled outside the US do not qualify. Additionally, the deduction expires after 2028.

Q: When do I need to file my 2026 tax return, and are there extensions available?

The 2026 tax return filing deadline is April 15, 2027. If you cannot file by April 15, you can request an automatic six-month extension (through October 15, 2027) by filing Form 4868. However, extensions delay filing only—not payment obligations. Estimated taxes on any balance due are still expected by April 15.

Q: What is a Trump Account, and does it benefit my family’s 2026 taxes?

Trump Accounts are tax-deferred, custodial investment accounts for children born between 2025 and 2028. The U.S. Treasury provides a $1,000 seed contribution to each eligible account opened during the pilot phase. Growth inside the account is tax-deferred, reducing family tax burden long-term. While not a 2026 deduction, Trump Accounts provide immediate tax benefits for families with young children, setting up tax-free growth for 60+ years.

Q: Should I itemize or take the standard deduction in 2026?

Compare itemized deductions (including up to $40,000 SALT, mortgage interest, charitable contributions) against the standard deduction (approximately $29,200 married filing jointly for 2025; inflation-adjusted for 2026). If itemized deductions exceed the standard deduction, itemize. The expanded SALT cap makes itemizing worthwhile for far more taxpayers in 2026 than in prior years, particularly high-income earners and real estate investors.

This information is current as of 4/10/2026. Tax laws change frequently. Verify updates with the IRS or a tax professional if reading this later in the tax year.

Related Resources

• Comprehensive 2026 Tax Strategy Planning for Business Owners and High-Income Professionals
• Self-Employment Tax Guide: How 1099 Contractors Can Minimize SE Tax in 2026
• Real Estate Investor Tax Strategies: Maximizing Deductions and Depreciation Benefits
• Entity Structuring Consultation: LLC vs. S-Corp for Tax Optimization
• 2026 Tax Preparation and Filing Services for Business Owners

Last updated: April, 2026