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Analysis, explainers, and news on federal and state tax topics. For live rate data, see our Tax Tables and Tax Notes & News.
Federal
2027 Deductions: $16,600 Standard, a $40,804 SALT Cap and a Senior Deduction That Stays at $6,000
For 2027 the standard deduction rises to $16,600 single and $33,200 joint, the extra amount at 65 to $2,100 or $1,700, and the SALT cap to $40,804 with its phase-down starting at $510,050. The $6,000 senior deduction does not move. A 67-year-old single filer's deductions rise by $550, and a $520,000 couple with $50,000 of state and local taxes gains $1,919.
Win $50,000 and Lose $50,000 Gambling in 2026, and the IRS Taxes $5,000 of It
Starting with tax year 2026, §165(d) lets you deduct only 90 percent of gambling losses, still capped at winnings. A $65,000 earner who wins and loses $50,000 pays $1,100 more federal tax than the same year would have cost under the 2025 rule, while Illinois, North Carolina and Connecticut allow no gambling losses at all.
A $1,000 Tax Credit Saves $1,000; a $1,000 Deduction Saves $120 to $240 Federally
A $1,000 deduction lowers taxable income, so it is worth the filer's bracket rate: $120 at 12%, $220 at 22% and $240 at 24% for 2026. A $1,000 credit comes off the tax itself and is worth $1,000 at any of them. On the state return the two stack differently: a federal adjustment can lower state tax too, while a federal credit never reaches it.
Standard Deduction or Itemize: One $12,000 Schedule A Loses Federally and Wins in New York and California
Take whichever deduction is larger. For 2026 a single filer itemizes federally only once Schedule A tops $16,100, so $12,000 of mortgage interest, property tax and gifts loses to the standard deduction. New York and California let the same filer itemize on the state return anyway, while Georgia and Virginia tie the state choice to the federal one.
Adjusted Gross Income: How $6,500 of Adjustments Saves a $65,000 Earner $780 Federally and $0 in Pennsylvania
A single filer with $65,000 of wages who puts $4,000 in a traditional IRA and pays $2,500 of student loan interest has $58,500 of adjusted gross income for 2026. That cuts federal income tax by $780, and most state returns pick up the same lower figure, but Pennsylvania allows neither deduction.
How Tax Brackets Work, Dollar by Dollar on $65,000
A bracket rate applies only to the income inside that bracket. A single filer earning $65,000 in 2026 pays 10% on the first $12,400 of taxable income and 12% on the next $36,500, so federal tax comes to about $5,620, and a $5,000 raise that crosses into the 22% bracket adds about $950, leaving $4,050 more before payroll and state tax.
Marginal or Effective: the Two Tax Rates of a $65,000 Earner
A single filer earning $65,000 in 2026 has a 12% federal marginal rate and an 8.6% effective rate. The marginal rate prices the next dollar, so it answers what a raise or a deduction is worth; the effective rate is the share of all income paid, so it answers how two states compare.
Schedule 1-A: claiming the tips, overtime, car-loan and senior deductions
On the 2025 Schedule 1-A, a married couple with $203,400 of wages turns $22,000 of W-2 box 7 tips, $21,000 of overtime pay, $3,400 of car-loan interest and one 66-year-old into a $34,396 deduction on Form 1040 line 13b, worth $7,567 at 22%. Each part reads a different document and rounds its phase-down its own way.
The 2027 Federal Brackets Cut a $65,000 Single Filer's Tax by $68 and a $250,000 Couple's by $689
Rev. Proc. 2026-35 raises every 2027 bracket edge by about 3% and the single standard deduction to $16,600. At the same pay as 2026, that lowers federal income tax by $68 for a $65,000 single filer, $136 for a $120,000 couple, $359 for a $185,000 earner with $15,000 of gains, and $689 for a $250,000 couple.
The Same $400,000 Gain Owes No AMT for 2025 and $9,770 for 2026
For tax year 2026 the AMT exemption starts phasing out at $500,000 of AMT income for a single filer instead of $626,350, and it shrinks 50 cents per dollar instead of 25. A single filer with $250,000 of wages and a $400,000 long-term gain owes $9,770 of AMT for 2026 and none for 2025.
Self-employment tax on a $40,000 side business, line by line
For tax year 2025, $40,000 of Schedule C profit with no wages produces $5,652 of self-employment tax and a $2,826 deduction on Schedule 1. Add a $150,000 W-2 and the same profit owes $4,307, because the Social Security ceiling has only $26,100 left.
Nothing paid until December on a $40,000 side business cost a $10 penalty, because last year's tax set the bar
A $65,000 earner with a new $40,000 side business owed $17,941 of 2025 tax, yet paying $386 on December 15 held the underpayment penalty to $10, because the prior-year rule capped what she had to prepay at $6,141. For 2026 that bar rises to $15,896, with the last installment due January 15, 2027.
How the SALT Cap Phases Down, in Dollars
For tax year 2026 the $40,400 SALT cap loses 30 cents for every dollar of MAGI above $505,000 and lands on its $10,000 floor at $606,334. Inside that band an itemizer's next dollar of income is taxed as $1.30, a 45.5 percent federal rate in the 35 percent bracket.
The 2026 W-2 Reports Tips Under Code TP and Overtime Under Code TT, and Overtime Has No Fallback Form
For tax year 2026, the tip and overtime deductions start from two new W-2 box 12 codes, TP and TT, plus a tipped-occupation code in new box 14b. A worker can report missing tips on Form 4137, but the overtime deduction reaches only overtime that appears on a W-2 or 1099.
Paper Tax Refund Checks Fell From 7% to Under 2% in One Filing Season
The first filing season under Executive Order 14247's paper-check cutoff is on the record: over 98% of the 57 million refunds the IRS issued through March 20, 2026 went out by direct deposit, and the check now survives only as a six-week fallback behind a CP53E notice.
Schedule 1-A Carries All Four OBBB Deductions, and None of Them Lowers AGI
The 2025 Schedule 1-A computes one modified AGI, runs the tip, overtime, car-loan-interest, and senior deductions through four separate phase-outs, and sends a single total to Form 1040 line 13b. The total stacks on the standard deduction or itemized deductions, and adjusted gross income never moves.
The Tip and Overtime Deductions Cap at $25,000 and $12,500, and Both End After 2028
For tax years 2025 through 2028, workers in listed tipped occupations can deduct up to $25,000 of reported tips, and hourly workers up to $12,500 of FLSA overtime premium. Only the half-time slice of overtime counts, the deductions come off after AGI, and a married worker must file jointly to claim either.
The 2026 SALT Cap Is $40,400 Until Income Passes $505,000
For tax year 2026 the SALT deduction cap is $40,400. It shrinks by 30 cents per dollar of modified AGI above $505,000, reaching its $10,000 floor at $606,334, and which states' filers see any of it depends on whose tax bills cleared the old cap.
The 2026 Federal Tax Brackets Keep the TCJA's Seven Rates, Permanently
The 2026 brackets are the TCJA's, inflation-adjusted and made permanent by OBBBA §70101. A single filer's 22% bracket starts at $50,400 of taxable income, the standard deduction is $16,100, and the top rate stays 37%.
The One Big Beautiful Bill's Four New Deductions Leave Your AGI Alone and End After 2028
The OBBBA added four temporary federal deductions, all claimed on new Schedule 1-A with or without itemizing: up to $25,000 of reported tips, $12,500 of overtime premium, $10,000 of car-loan interest, and $6,000 per filer 65 or older. None of them reduces AGI, and all four expire after 2028. The same law set the 2026 SALT cap at $40,400, the child tax credit at $2,200, and the estate exclusion at $15 million.
State & Local
A $65,000 Renter Gets $968 From Minnesota and Nothing From California
Twelve state renter programs, run for one single filer earning $65,000 and paying $1,500 a month: six pay something, led by Minnesota's $968 refundable credit, and six pay nothing because their income limits or age rules stop well short of that renter.
Twenty-Four States Want a Return Before the IRS Does
For tax year 2025 the IRS asked a single filer under 65 for a return at $15,750 of gross income. Twenty-four states drew their own line lower, from Pennsylvania's $33 to Kentucky's $15,650, and California drew it higher, at $22,941.
State Rate Changes Taking Effect in 2026, Ranked by What They Are Worth
Fifteen states changed an income tax rate for tax year 2026. For a single filer on $65,000 of wages, Montana's change is worth the most and Maine's is worth nothing, and South Carolina's rate cut is worth more than twice what that filer keeps, because the same law shrank the deduction.
Thirty pairs of states tax a commuter's wages only at home
For 2026, 15 states and the District of Columbia sit in 30 reciprocal pairings that leave a commuter's wages to the home state alone. Without one, an Indiana resident earning $65,000 in Illinois pays Illinois's tax in full and Indiana's credit only cancels Indiana's.
$10,000 of unemployment benefits costs nothing in California and $594 in Wisconsin
For tax year 2026, a $65,000 single filer who also collects $10,000 of unemployment owes no state tax on it in California, New Jersey, Pennsylvania, Virginia, Alabama or the District of Columbia. Wisconsin and Indiana offer a break that is gone by $32,000 of income, and Montana repealed its exclusion in 2024.
Ten States Let the Federal Tip Deduction Cut 2026 State Tax, and Twelve Have Said No
For tax year 2026, ten of the 41 states that tax wages let the federal tip deduction reduce state tax, and eight do the same for overtime. Georgia and Alabama wrote smaller deductions of their own, twelve states have said in writing that tips stay taxable, and for seventeen we found no published answer.
State earned income credits: which states add to the federal one
Thirty-two states and the District of Columbia add their own earned income credit to the federal one for tax year 2026. For a single parent of two earning $20,000, the refundable add-on runs from $289 in Oklahoma to $6,219 in the District.
California and New Jersey Tax the $4,400 a $65,000 Filer Puts in an HSA for 2026
The federal return excludes a 2026 health savings account contribution of up to $4,400 for self-only coverage. California and New Jersey do not: a $65,000 single filer who contributes the maximum is still taxed by either state on all $65,000, whether the money went through payroll or not, and California taxes the account's earnings every year as well.
How each state taxes Social Security and pensions in 2026
For the 2026 tax year, eight states tax some Social Security benefits: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah and Vermont. Pension and IRA rules spread wider, from Illinois, which subtracts every retirement dollar at any age, to California, which taxes all of it.
Sixteen state child tax credits for 2026 pay a $40,000 family anywhere from $0 to $2,807
Sixteen states pay their own child tax credit for tax year 2026, twelve of them in cash. A head of household earning $40,000 with children aged 2 and 4 collects $2,807 from Minnesota's, $2,000 from New Jersey's or Vermont's, and nothing from California's, Maryland's or Oregon's.
A $5,000 529 deposit is worth $0 to $1,000 in state tax for 2026, depending on the state
Thirty-seven states and the District of Columbia give a deduction or credit for 529 contributions in tax year 2026. For a single filer earning $65,000, a $5,000 deposit is worth nothing in North Dakota and $1,000 in Indiana, and nine states take another state's plan.
Four states collect local income tax on the state return, and eight more send a separate bill
Maryland, Indiana, Iowa and New York put the county, city or school-district income tax on the state return. Ohio, Pennsylvania, Michigan, Kentucky, Missouri, Alabama, Delaware and Oregon collect theirs through a separate return or city withholding, and in Philadelphia that separate bill is larger than the state's.
North Dakota Leaves the First $65,675 of 2026 Wages Untaxed, and Pennsylvania Taxes the First Dollar
For a single filer in tax year 2026, North Dakota's federal deduction and 0% bracket shield $65,675 of wages, Pennsylvania shields none, and Indiana and New Jersey stop at $1,000. Eight states use the federal $16,100 deduction, and twelve states take part or all of their shield back as income rises.
The Highest Top Rate in the Country Costs a $65,000 Filer Less Than Illinois's Flat Tax
California's top income tax rate is the highest of the 51 jurisdictions, yet it charges a $65,000 single filer less for 2026 than flat-rate Illinois, Kentucky or Michigan. Ranked by what that filer pays, the list barely resembles the one ranked by top rate.
Why W-2 box 16 can show more state wages than box 1 shows federal wages
Box 1 of a W-2 leaves out a 401(k) or 403(b) deferral. Pennsylvania keeps both in box 16, New Jersey keeps the 403(b), and Ohio cities keep both in box 18, so a $65,000 earner deferring $5,000 can see $60,000 federally and $65,000 for the state.
Georgia's Flat Rate Is Higher Than Illinois's, and It Charges a $65,000 Earner Less
Fifteen states tax wages at one rate for 2026, from Arizona's 2.5% to Idaho's 5.3%. The rate is a poor guide to the bill: Georgia's 4.99% charges a $65,000 single filer less than Illinois's 4.95%, and Kentucky's 3.5% charges more than Iowa's 3.8%, because each state subtracts something different before the rate applies.
The states where inflation raised your taxes
Virginia, Delaware, Alabama, Kansas and New Jersey write their 2026 brackets and deductions as fixed dollar amounts, so a raise that only matched 3.7% inflation is taxed at more than 3.7%. Minnesota, Maine, Oregon, Nebraska, Missouri and North Dakota index theirs by statute.
The tax measures on your November 3 ballot, state by state
Twenty statewide measures in eleven states would change an income, property or sales tax on November 3, 2026. Only one of them changes the 2027 state income tax bill of a $65,000 single filer: Colorado's Amendment 87, which would cut it by about $223.
What Changed for 2026: Thirteen States Cut, One Raised, Thirty-Seven Stood Still
Thirteen states cut their top personal income tax rate for 2026 and one raised it — Maine, by two points, through a surcharge that reaches nobody under a million dollars. The median bill for a $65,000 single filer fell about $110.
Twenty States Cut Their Top Income Tax Rate Between 2022 and 2026
Twenty states lowered their top personal income tax rate over five years, three raised theirs, and four abandoned graduated brackets entirely. Every figure here is computed from TaxMath's own rate tables.
State Tax on a Capital Gain Runs From 0% in Missouri to 13.3% in California
Missouri now subtracts 100% of federally reported capital gains, the first full exemption in a state that still taxes wages. Nine states give a gain a defined discount, eight tax nothing at all, Washington taxes only gains above its deduction, and California stacks up to 13.3% on top of the federal 23.8% ceiling.
Nine States Have No Income Tax. Only Four Ban It.
Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming charge no broad-based personal income tax for 2026, but only four of the nine zeros sit behind a constitutional ban. Washington's is scheduled to end: a 9.9% tax on income above $1 million takes effect January 1, 2028.
Washington's Luxury Taxes Come Out to $3,840 on a $150,000 Car, $750 on the Boat, and Zero on the Plane
Since July 1, 2026, the luxury surcharge on a $150,000 car in Washington is $3,840: 8% of the price above a $102,000 exempt amount that steps up every July. A boat at the same price owes a flat 0.5%, and the 10% aircraft tax was repealed before its first day.
Illinois's Tax Overhaul Never Touched the Flat 4.95%
Illinois's overhaul of apportionment and foreign-income deductions lives on corporate schedules; the IL-1040 still charges a flat 4.95%, unchanged since July 2017 and constitutionally required to stay non-graduated. What moves an Illinois bill is the exemption allowance ($2,925 for 2026, gone in one step above $250,000 of AGI), the retirement subtraction, and the 5% property tax credit.
New York's Estate Tax Cliff Begins One Dollar Past $7,350,000
New York's 2026 basic exclusion is $7,350,000, and Tax Law §952 claws it back at $20 per dollar of overshoot: a $7,360,000 estate owes $28,560, a $7,500,000 estate owes $386,400, and past $7,717,500 the whole estate is taxed from its first dollar.
Georgia's Income Tax Glide Path Stops at 3.99%
A Senate committee recommended eliminating Georgia's income tax by 2032. HB 463, the law Georgia enacted instead, cuts the 2026 rate to 4.99% and steps it down 0.125 points a year toward a 3.99% floor, with every step past 2026 conditioned on revenue tests that had just blocked prior law's scheduled cut.
Washington's 9.9% Tax on Income Over $1 Million Starts January 1, 2028
SB 6346, signed March 30, 2026, taxes individual income above a $1 million household deduction at 9.9% beginning January 1, 2028, with the first returns due in 2029. Initiative 645, certified to the November 3, 2026 ballot, asks voters to repeal it before the first dollar is collected.
Money
West Virginia Is the One State That Taxes a $44,000 Retiree's 2027 Social Security Raise
Social Security rises 3.6% from January 2027, so $24,000 of benefits becomes $24,864. For a single retiree who also draws a $20,000 pension, that raise adds no federal tax and no state tax anywhere on 2026 law except West Virginia, where the senior modification shrinks by every benefit dollar the state exempts.
The $10,000 Car Loan Interest Deduction Turns on the VIN
For tax years 2025 through 2028, up to $10,000 a year of interest on the loan behind a new, US-assembled, personal-use vehicle comes off taxable income on Schedule 1-A, stacked on the standard deduction. The assembly test is settled per VIN, and past $100,000 of MAGI the deduction shrinks by $200 for each $1,000.
The Trump Account Is a Traditional IRA With a $1,000 Head Start
Section 530A builds the Trump Account as a traditional IRA for children: a one-time $1,000 Treasury deposit for children born 2025 through 2028, after-tax contributions capped at $5,000 a year, and ordinary income tax on the earnings at withdrawal. Growth is tax-deferred, and the widely reported 'tax-free' label is wrong.
Planning & Explainer
Five December Moves, Priced on the 2026 Returns of a $65,000 and a $185,000 Filer
Before December 31, 2026, an extra $5,000 of 401(k) deferral cuts the $65,000 single filer's federal tax by $600 and the $185,000 filer's by $1,200; harvesting $18,000 of losses saves the second filer $2,970. Pennsylvania taxes the deferral anyway; Illinois does not.
Bonus Depreciation Is 100% in 2026, and Permanent
Public Law 119-21 repealed the TCJA phase-down before the 20% year arrived: property acquired after January 19, 2025 gets a permanent 100% first-year write-off. The 2026 Section 179 cap is $2,560,000, and the 20% QBI deduction no longer expires.
When Does Itemizing Beat the Standard Deduction in 2026?
Itemizing pays for tax year 2026 once Schedule A clears $16,100 single or $32,200 joint. Under the $40,400 SALT cap, a single homeowner's state and local taxes clear that line by themselves in New Jersey and Illinois; in Texas and Florida the standard deduction usually still wins.
The $6,000 Senior Deduction Stacks to $24,150 Tax-Free for a Single 65-Year-Old in 2026
Taxpayers 65 and older deduct an extra $6,000 each through 2028, stacked on the standard deduction and the age-65 addition: for 2026 the layers total $24,150 for a single filer and $47,500 for a couple who are both 65. Each $6,000 shrinks by six cents per dollar of modified AGI over $75,000 ($150,000 joint) and is gone at $175,000 ($250,000 joint).
The $15 Million Estate Tax Exemption Stops at the State Line
OBBBA §70106 set the federal estate and gift exclusion at $15 million for 2026 and struck the sunset. Twelve states and DC still levy their own estate taxes, and a $10 million estate that owes the IRS nothing owes Washington State $1,100,000.