2026 tax changes for North Ohio filers: what’s different on the return you file in 2027
Checked against the sources linked at the end on 14 October 2026. Written by ProTaxService in Brunswick, OH, for taxpayers across North Ohio. General information, not tax advice for your situation.
TL;DR: The 2026 return, filed in early 2027, is the second year under the July 2025 federal tax law. The standard deduction rises to $16,100 single and $32,200 joint. The four deductions you can take without itemizing stay: up to $6,000 for each person 65 or older, qualified tips up to $25,000, qualified overtime up to $12,500 ($25,000 joint), and new-car loan interest up to $10,000. New for 2026: a $1,000 ($2,000 joint) charity deduction if you don’t itemize, new W-2 codes for tips and overtime, a $2,000 threshold for 1099-NEC, and a SALT cap of $40,400. Ohio moves to a single 2.75% bracket. These federal deductions don’t lower Ohio or city tax.
Most of the big changes arrived with the tax law signed on July 4, 2025 (Public Law 119-21; the IRS first called it the One, Big, Beautiful Bill and now calls it the Working Families Tax Cuts). Some of them first showed up on 2025 returns. For 2026 the amounts move with inflation, several new rules start, and the reporting on W-2s and 1099s catches up. This guide covers what a typical household or small business in Brunswick, Medina, Strongsville or Cleveland will notice, and then the state and city side.
The yearly numbers: standard deduction and brackets
For 2026 the standard deduction is $16,100 for single filers and married people filing separately, $32,200 for married couples filing jointly, and $24,150 for heads of household. The IRS says these 2026 amounts generally apply to returns filed in 2027.
| Filing status | 2025 | 2026 |
|---|---|---|
| Single or married filing separately | $15,750 | $16,100 |
| Married filing jointly | $31,500 | $32,200 |
| Head of household | $23,625 | $24,150 |
If you are 65 or older or blind, you still add the extra standard deduction: $1,650 for 2026 if you are married, or $2,050 if you are unmarried and not a surviving spouse.
The seven federal rates stay the same, from 10% to 37%. The income where each rate starts moves up:
| Rate | Single: taxable income over | Married filing jointly: over |
|---|---|---|
| 10% | $0 | $0 |
| 12% | $12,400 | $24,800 |
| 22% | $50,400 | $100,800 |
| 24% | $105,700 | $211,400 |
| 32% | $201,775 | $403,550 |
| 35% | $256,225 | $512,450 |
| 37% | $640,600 | $768,700 |
Four deductions you can take without itemizing (Schedule 1-A)
The IRS created Schedule 1-A for four deductions from the 2025 law: tips, overtime, car loan interest and the senior deduction. You can claim them whether you itemize or take the standard deduction. All four run for 2025 through 2028.
| Deduction | Most you can deduct | Starts to phase out above (MAGI) |
|---|---|---|
| Senior deduction | $6,000 for each person 65 or older | $75,000; $150,000 joint |
| Qualified tips | $25,000 per return | $150,000; $300,000 joint |
| Qualified overtime | $12,500; $25,000 joint | $150,000; $300,000 joint |
| Car loan interest | $10,000 per return | $100,000; $200,000 joint |
MAGI is modified adjusted gross income. The phase-outs work differently:
- Senior deduction: it drops by 6% of MAGI above the threshold.
- Tips and overtime: they drop by $100 for each $1,000 above it.
- Car loan interest: it drops by $200 for each $1,000 above it.
The senior deduction. It applies to each person who is 65 by the end of 2026 (born before January 2, 1962), so a couple who both qualify can deduct up to $12,000. It is in addition to the extra standard deduction for seniors. You must include the person’s Social Security number on the return and, if married, file jointly.
Tips and overtime. Tips count only in occupations the IRS lists as customarily and regularly receiving tips on or before December 31, 2024. For overtime, only the premium part counts: the “half” in time-and-a-half. Our guide to no tax on tips and overtime covers who qualifies.
The change for 2026 is the reporting:
- New W-2 entries. Employers now report tips in box 12 with code TP and the occupation code in box 14b. Qualified overtime goes in box 12 with code TT.
- New 1099-NEC boxes. The 1099-NEC has separate boxes for tips, the occupation code and overtime.
- No more estimating overtime. For 2025, workers could estimate their overtime when it wasn’t reported separately. For 2026 the IRS says no relief applies, and you can’t deduct more overtime than box 12, code TT shows. If you worked overtime and the code is missing, talk to your employer before you file.
Car loan interest. The loan must be taken out after December 31, 2024 to buy a new vehicle for personal use, and secured by that vehicle. The vehicle must be a car, minivan, van, SUV, pickup or motorcycle under 14,000 pounds, with final assembly in the United States. The IRS says you can check the assembly location on the dealer label, in the VIN, or with the NHTSA VIN decoder. Lease payments don’t qualify. You must enter the VIN on your return. For 2026, lenders report this interest on Form 1098-VLI.
If you itemize: SALT, charity and the top bracket
The cap on state and local taxes (SALT) is $40,400 for 2026 ($20,200 if married filing separately), up from $40,000 for 2025. Above $505,000 of MAGI ($252,500 married filing separately), the cap drops by 30% of the excess, but not below $10,000 ($5,000 married filing separately).
For North Ohio households, the taxes that count toward the cap include:
- Ohio income tax;
- city income tax and school district income tax, which are local income taxes;
- property tax on your home.
The IRS lets you deduct state and local income taxes or general sales taxes, not both, plus real estate and personal property taxes. The cap went from $10,000 to $40,000 in 2025, so for many homeowners in Medina County or the Cuyahoga County suburbs, itemizing is worth checking again.
Charity changes in two ways for 2026:
- If you don’t itemize, you can deduct up to $1,000 ($2,000 joint) of cash gifts to eligible charities. Gifts to donor-advised funds and supporting organizations don’t qualify. This is new for 2026; for 2025, people who took the standard deduction got no federal deduction for cash gifts.
- If you itemize, only giving above 0.5% of your adjusted gross income is deductible. With $100,000 of AGI, the first $500 of gifts doesn’t count.
The top bracket. If your taxable income reaches the 37% bracket, the law limits the tax benefit of itemized deductions. Publication 505 describes it as a reduction of 5.4% of the smaller of two amounts: your itemized deductions, or your taxable income above the start of that bracket.
Families: child credits and the new Trump accounts
The child tax credit for 2026 is up to $2,200 per qualifying child, and up to $1,700 of it can be refunded.
- Refunds: the refundable part needs at least $2,500 of earned income.
- Income limit: the credit starts to shrink above $200,000 of income ($400,000 joint). The law made those thresholds permanent.
- Social Security numbers: the child needs an SSN valid for work, issued before the return’s due date. On a joint return, at least one spouse needs an SSN.
Child and dependent care credit. For 2026 the top credit rate rises from 35% to 50% of qualifying expenses. The expense limits stay at $3,000 for one child or dependent and $6,000 for two or more.
Trump accounts. These are new savings accounts for children.
- Start date: contributions can’t be made before July 4, 2026.
- Treasury deposit: for a child who is a U.S. citizen, born from January 1, 2025 through December 31, 2028, with an SSN, the Treasury makes a one-time $1,000 deposit. You elect it on Form 4547, which can be filed with your 2026 return.
- Yearly limit: family and employer contributions together are capped at $5,000 a year. An employer can put in up to $2,500 of that tax-free to the employee.
Side income and small business: the 1099 thresholds
- Form 1099-K. A payment app or online marketplace files one only if you were paid more than $20,000 in more than 200 transactions. That applies to 2025 and 2026; the lower thresholds that had been planned no longer apply.
- Form 1099-NEC and 1099-MISC. For payments made in 2026, the reporting threshold is $2,000, up from $600. A Brunswick contractor who paid a subcontractor $1,500 in 2026 doesn’t send a 1099-NEC for it in January 2027. The IRS says the threshold may be adjusted for inflation starting in 2027.
Income is taxable whether or not a form arrives. Our guide to 1099-K, 1099-NEC and side income covers the rest, including self-employment tax. If you are forming an LLC, our guide to Ohio LLC taxes covers what it registers and files.
What ended or got stricter in 2026
- Home energy credits. The energy efficient home improvement credit and the residential clean energy credit (for example, solar) have expired, and the IRS says you can no longer claim them on your 2026 return.
- Marketplace health insurance. If you got too much advance premium tax credit, there is no longer a limit on what you pay back. If your household income is above 400% of the federal poverty line, you can’t get the credit at all.
- Gambling losses. If you itemize, the deduction is limited to the smaller of 90% of your losses or your winnings.
Retirement and health account limits for 2026
| Account | 2026 limit |
|---|---|
| 401(k), 403(b), governmental 457 plans | $24,500; catch-up at 50 or older $8,000; ages 60 to 63, $11,250 |
| IRA | $7,500; catch-up at 50 or older $1,100 |
| HSA | $4,400 self-only; $8,750 family |
What changes for North Ohio filers: Ohio and city tax
Ohio’s 2026 rate is a single bracket.
- Rate: there is no tax on nonbusiness income up to $26,050 after exemptions. Above that, the tax is $332 plus 2.75% of the amount over $26,050 (Ohio Revised Code 5747.02(A)(3)(c)).
- Compared with 2025: the top rate was 3.125% above $100,000.
- Personal exemptions: you get none if your modified AGI is $500,000 or more. For 2025 the cut-off was $750,000.
- Business income deduction: unchanged at $250,000 ($125,000 each if married filing separately), with business income above it taxed at 3%.
Our guide to Ohio income tax in 2026 has the full schedule and worked examples.
The new federal deductions don’t lower Ohio tax. The Ohio return starts from your federal adjusted gross income. The Schedule 1-A deductions and the standard deduction come after that line, so a server with $20,000 of qualified tips still has those tips in Ohio income.
City tax is not changed by the federal law.
- Wages: North Ohio cities tax wages, including tips and overtime. RITA says these are not exempt from city income tax.
- Self-employment: they also tax net profit from self-employment.
- Rates: the rate depends on where you live and work, for example 1.25% in Medina, 2.0% in Brunswick and 2.5% in Cleveland.
Our list of North Ohio cities shows each city’s rate, collector and credit. The Brunswick city income tax guide covers Brunswick’s own rules.
Frequently asked questions
Do I have to itemize to get the new deductions?
No. The senior, tips, overtime and car loan interest deductions on Schedule 1-A work with the standard deduction. So does the new charity deduction of up to $1,000 ($2,000 joint).
My 2026 W-2 doesn’t show overtime in box 12, code TT. Can I still deduct it?
For 2026 the IRS says you can’t deduct more qualified overtime than box 12, code TT shows. The estimate allowed for 2025 doesn’t carry over. Ask your employer about it before you file.
Does the senior deduction replace the extra standard deduction for people over 65?
No, it is in addition to it. A single filer who is 65 or older in 2026 gets the $16,100 standard deduction, plus $2,050 for age, plus up to $6,000 from Schedule 1-A, depending on income.
I live in Medina. Do these changes lower my Ohio or city tax?
Generally not. Ohio starts from federal AGI, before these deductions. Medina’s 1.25% city tax, collected by RITA, still applies to your wages, including tips and overtime. Ohio’s own changes for 2026 are the single 2.75% bracket and the $500,000 limit for personal exemptions.
I bought a used car in 2026. Can I deduct the loan interest?
No. The vehicle must be new, meaning its original use starts with you. It also needs final assembly in the United States, and the loan must be secured by the vehicle.
The short version
- Standard deduction 2026: $16,100 single, $32,200 joint, $24,150 head of household.
- No itemizing needed: senior $6,000 per person, tips up to $25,000, overtime up to $12,500 ($25,000 joint), new-car loan interest up to $10,000, charity up to $1,000 ($2,000 joint).
- Itemizers: SALT cap $40,400; charity only above 0.5% of AGI.
- Families: child tax credit $2,200 (up to $1,700 refundable); care credit rate up to 50%; Trump accounts open to contributions from July 4, 2026.
- 1099s: 1099-NEC at $2,000 for 2026 payments; 1099-K at $20,000 and 200 transactions.
- Ohio: a single bracket, $332 plus 2.75% above $26,050; the federal deductions don’t flow to Ohio or city tax.
Rules change, and your facts matter. Confirm figures with the IRS, ODT or your city, or bring your records to a preparer well before a deadline.
ProTaxService is a small practice in Brunswick, OH, run by Elena Rusakovich, an IRS-registered tax preparer (PTIN), working with individuals and small businesses across North Ohio. We prepare individual tax returns that bring the federal, Ohio and city returns together, for Brunswick and for the cities that use RITA, such as Medina and Strongsville, and we can check which of the new deductions apply to you. Tell us what you need or call (440) 212-9613.
Sources
- IRS: 2026 inflation adjustments (IR-2025-103) and Revenue Procedure 2025-32 (standard deduction, brackets, child tax credit). Working Families Tax Cuts: individuals and workers (senior, tips, overtime, car loan interest). Schedule 1-A fact sheet (FS-2026-04). Publication 505 (2026) (SALT, charity, itemized limit, expired credits, premium tax credit, gambling losses). Read 14 October 2026.
- IRS: overtime deduction FAQ (FS-2026-13), 2026 W-2 and W-3 instructions, Form 1098-VLI instructions, Form 1099-K threshold FAQs, who must file a Form 1099, Topic 503, deductible taxes, Topic 506, charitable contributions, child tax credit, Trump accounts, 2026 retirement limits (IR-2025-111), 2026 HSA limits (Rev. Proc. 2025-19). Read 14 October 2026.
- Law: Public Law 119-21. Ohio Revised Code 5747.02 rates, 5747.025 personal exemptions, 5747.01 business income deduction. Read 14 October 2026.