2026 Federal Tax Season Insights
Where do I even start?
When will the filing season open? Great question. Normally, it’s the last Monday in January (ish), but because there was a new tax law, that could be delayed as the IRS has to revise forms and software.
The IRS is behind on new forms and software because of the 6-week shutdown.
If the IRS is behind, then they haven’t sent schematics to the tax prep software companies to update filing software, which also has to be tested.
You want the real kicker? The current government funding plan is only through 1/30/26, so we could have another shutdown at the worst possible time for tax filing.
Then there’s the actual tax law.
It is 100% normal for government to issue a “technical corrections bill” after they issue major tax legislation.
Tax legislation becomes law.
The IRS interprets the law.
The politicians say, “Woah, Nellie! That’s not what we meant!”
The politicians pass a technical corrections bill.
However, passing the last tax bill was so contentious and then the shutdown/CR on government funding was so contentious, I don’t know that a technical corrections bill will happen. And if it does, will it only be technical corrections and not new legislation?
Then go back to all the steps that need to happen before the IRS can actually open filing season. It’s going to be a mess.
So what’s wrong with the law and why would we need technical corrections? Most of you are either salaried or retired. These things don’t apply to a lot of my client base, but still, these are things that will hold us up.
On the “No Tax On Social Security” lie: Yes, there’s tax on social security. Seniors over 65 get a deduction so that some of the social security isn’t taxable. And?
The law actually says that taxpayers over 65 will be allowed a $6,000 deduction and married filing jointly taxpayers will be allowed a $12,000 deduction per return (subject to income phaseouts).
The IRS interpreted that as: singles get $6k; marrieds get $12k. But married filing separately? You don’t get anything. I can’t imagine that’s what was intended.
I think “no tax on tips” and “no tax on overtime” will be the same thing. It’s not “no tax”. It’s a deduction for some. Will it double for marrieds? Or is it a per return deduction so that a couple that both work overtime won’t get a doubled deduction, but only a single dollar amount per return? If filing separately, do they get anything at all?
And furthermore (this is a good one), I was in continuing education this week and the presenter said that no tax on overtime wasn’t the 1.5x that you get when you work over 40 hours but the .5 differential that you get when you work overtime.
So say you have an employee that makes $20/hour.
That employee works over 40 hours so starting with 41 hours makes $30 on every hour of overtime.
From what this guy said, the IRS has interpreted that to be the $10 differential from the normal $20/hour, not the full $30 for overtime pay. I can’t imagine that’s what was intended, but here we are in need of technical corrections.
These things may not apply to you and I get that, but if they need to do technical corrections on these things, what else will they find and change? Stay tuned.