The New Tax Code Is Here — What It Actually Means for Your Paycheck
Picture this: you're reviewing your pay stub from last month and something looks slightly different. Your take-home is a little higher, but you're not sure why. Or maybe nothing looks different at all — and you are wondering if it should?
The One Big Beautiful Bill Act, signed into law in July 2025, took full effect in 2026. For most professionals, the changes are good news — but only if you know about them and act accordingly. While we aren’t accountants, our clients have had a lot of questions about this topic so we wanted to take space to address the updated tax code. As always, please be sure to consult your tax professional about your personal situation.
What actually changed:
The standard deduction is now $16,100 for single filers and $32,200 for married couples filing jointly. That's money you never pay tax on as it is a flat, government-set dollar amount that reduces your taxable income, potentially lowering your overall tax bill.
If you have kids, the child tax credit has been permanently extended and increased to $2,200 per child, with the amount now indexed to inflation going forward.
If you're charitably inclined and don't itemize, you can now deduct up to $2,000 in cash donations even when taking the standard deduction — a first.
And if you're 65 or older, there's a new temporary deduction worth up to $6,000 ($12,000 if you're a couple where both spouses qualify) through 2028.
The biggest shift is permanence. Tax rates and the standard deduction, which were set to expire after 2025, are now locked in for good.
What to Pay Attention to Today:
Here's the part that matters most right now: withholding tables were updated at the start of 2026 so you receive your tax cuts through higher take-home pay rather than a lump-sum refund next April. But that only works correctly if your W-4 on file with your employer is up to date.
If you haven't reviewed your W-4 since before 2026 — or since a major life change like marriage, a new child, or a job change — your withholding may be off.
If you are a W-2 employee OR a retiree with Social Security or a pension, spend five minutes with the IRS Tax Withholding Estimator. It'll tell you whether your current withholding is on track, and exactly what to adjust if it isn't. A small tweak now means no surprises in April.
Disclaimers: This is not tax or investment advice. Please be sure to consult with your tax professional regarding your personal situation.
