Guide
New 2026 deductions you can claim without itemizing
The 2025 tax law created three deductions that did not exist before, and separate rules raised the HSA and FSA ceilings. All of them work alongside the standard deduction — you do not have to itemize. Here is what each one is worth and who is left out.
Car loan interest deduction
Up to $10,000 per yearThe vehicle must be new — original use begins with you — bought for personal use, with final assembly in the United States. The loan has to be secured by the vehicle, so leases do not qualify. Your lender reports the interest on the new Form 1098-VLI. Check the VIN before you assume the car qualifies; final assembly location is not obvious from the badge on the trunk.
Check your VIN and calculate →Overtime deduction
Up to $12,500 ($25,000 joint)Only the premium portion counts. If your regular rate is $30 and overtime pays $45, the deductible part is the $15 above your regular rate — not the whole $45. Starting with 2026 W-2s your employer reports the qualified amount in Box 12 with code TT, so you do not have to reconstruct it from pay stubs.
Calculate your deductible premium →Senior deduction (65+)
$6,000 per person ($12,000 for a couple)You qualify if you are 65 or older at the end of the tax year, and each spouse qualifies separately on a joint return. It phases out at 6% of modified AGI above $75,000 ($150,000 joint) and disappears entirely at $175,000 ($350,000). This is separate from — and on top of — the extra standard deduction seniors already receive.
Check your phase-out →Raised HSA and FSA limits
HSA $4,400 / $8,750 · Dependent Care FSA $7,500The Dependent Care FSA limit rose from $5,000 to $7,500 — its first increase since 1986, and it is not indexed to inflation. HSA limits also moved up, with a $1,000 catch-up at 55. Because payroll-deducted contributions escape FICA as well as income tax, each dollar typically saves 30 to 38 cents. If open enrollment defaulted you to last year's election, you have to change it yourself.
See what each dollar saves →Who gets nothing
Two exclusions apply across all three new deductions: married filing separately is not eligible, and a valid Social Security number is required. Beyond that, each has its own income phase-out, so the same household can qualify for one and be phased out of another.
What to do before filing
Collect the paperwork that did not exist before: Form 1098-VLI from your auto lender and your W-2 Box 12 code TT figure. Both are new for this cycle, and both are easier to get now than during filing season.
※ Based on IRS guidance (Schedule 1-A, Form 1098-VLI, W-2 Box 12 code TT) and IRS Rev. Proc. 2025-19 for HSA limits. Estimates only — not tax advice. Confirm with a tax professional before filing.
Frequently asked questions
Do I have to itemize to claim these deductions?
No. The car loan interest, overtime, and senior deductions are all claimed on Schedule 1-A and stack on top of the standard deduction. That is what makes them unusual — most deductions require itemizing, and roughly 90% of filers do not itemize.
How long are these deductions available?
Tax years 2025 through 2028 unless Congress extends them. The HSA and FSA limits are separate — those are annual figures that get adjusted each year, and the Dependent Care FSA increase to $7,500 is a permanent statutory change with no expiry.
Can I claim more than one of them?
Yes. They are independent of each other. Someone 65 or older who works overtime and financed a new US-assembled car could claim all three, each subject to its own cap and phase-out.
What disqualifies me from all of them?
Filing married filing separately makes you ineligible for the three new deductions, and a valid Social Security number is required. Each also has its own income phase-out, so high earners may get a reduced amount or nothing.
Which one is worth the most?
It depends on your situation, but the largest headline caps are $25,000 of overtime premium on a joint return and $10,000 of car loan interest. In practice the HSA and Dependent Care FSA often deliver more because they avoid FICA as well as income tax — the savings land at roughly 30 to 38 cents per dollar contributed.
Run the numbers
Check what each deduction is actually worth to you.