Most coverage of the 2025 tax law (P.L. 119-21, signed July 4, 2025) went to tips, overtime and the SALT cap. Several smaller provisions change what ordinary households owe on 2026 returns filed in 2027. Below, each one is quoted from the statute and worked for one household.
| Change | Section of P.L. 119-21 | Starts | Household example |
|---|---|---|---|
| $1,000 / $2,000 charity deduction without itemizing | 70424 (IRC 170(p)) | 2026 tax year | Saves the married couple $440 |
| 0.5%-of-AGI floor on itemized gifts | 70425 (IRC 170(b)(1)(I)) | 2026 tax year | First $750 of their gifts would not count if they itemized |
| Itemized deductions worth at most 35% | 70111 (IRC 68) | 2026 tax year | Only filers in the 37% bracket |
| Only 90% of gambling losses deductible | 70114 (IRC 165(d)) | 2026 tax year | $1,132 of tax instead of $732 |
| 1% tax on cash remittances | 70604 (IRC 4475) | Transfers after Dec 31, 2025 | $36.00 a year on $300 a month |
| $5,250 employer student loan payments tax-free, permanently | 70412 (IRC 127) | Payments after Dec 31, 2025 | About $1,557 a year of tax |
| New federal loan limits; Grad PLUS ends for new borrowers | 81001 (HEA 455(a)) | July 1, 2026 | $50,000 a year for a professional student |
Section 70424 amends IRC 170(p) so that a taxpayer who does not itemize gets a deduction “not in excess of $1,000 ($2,000 in the case of a joint return)” for cash gifts to public charities, not including donor-advised funds or supporting organizations. Section 70425 adds a floor for itemizers: gifts are deductible “only to the extent that the aggregate of such contributions exceeds 0.5 percent of the taxpayer’s contribution base.” Section 70111 rewrites IRC 68 so itemized deductions are reduced by 2/37 of the part in the 37% bracket, capping their value at 35 cents per dollar.
Household A. A married couple with $150,000 of AGI give $3,000 in cash to their church and a food bank, and have $20,000 of other itemized deductions. Itemizing would give $20,000 + ($3,000 − $750) = $22,250, well under the $32,200 standard deduction. So they take the standard deduction and add the $2,000 non-itemizer deduction. Taxable income drops by $2,000 in the 22% bracket: $440 saved. Before 2026 their gifts saved nothing. The floor does not touch them, because 170(p) is figured “without regard to” it. Try other numbers in the charitable deduction calculator.
Section 70114 rewrites IRC 165(d): the deduction for wagering losses “shall be equal to 90 percent of the amount of such losses during such taxable year” and is “allowed only to the extent of the gains from such transactions.” Losses still count only as an itemized deduction.
Household B. A single filer with $60,000 of other income and $10,000 of other itemized deductions wins $20,000 and loses $20,000 over the year. In 2026 only $18,000 of losses is deductible. Taxable income becomes $52,000 against $43,900 without gambling, adding $1,132 of tax to a year in which she came out even. Under the 2025 rule it would have been $732. Separately, the IRS’s W-2G instructions (revised January 2026) set a $2,000 minimum reporting threshold for 2026 payments, up from $1,200 for slots and bingo; every dollar of winnings is still taxable. The gambling winnings tax calculator runs the comparison and checks a win for a W-2G and 24% withholding.
Section 70604 adds IRC 4475: “There is hereby imposed on any remittance transfer a tax equal to 1 percent of the amount of such transfer.” It applies “only to any remittance transfer for which the sender provides cash, a money order, a cashier’s check, or any other similar physical instrument,” and not to transfers funded from an account at a U.S. financial institution or with a U.S.-issued debit or credit card. The sender owes it and the provider collects it.
Household C. A worker sends $300 home every month, paying cash at a store counter. Each transfer carries $3.00 of tax, $36.00 a year. Paying from a bank account or with a debit card in the same provider’s app would cost nothing in tax. Under the IRS proposed regulations (April 13, 2026), the tax applies to what the recipient receives, including promotional bonuses, but not the provider’s fee. Their own example, $1,000 plus a $5 bonus, owes $10.05. See the remittance tax calculator.
Section 70412 strikes the end date from IRC 127(c)(1)(B), so an employer can pay up to $5,250 a year of an employee’s student loans tax-free permanently, with the limit indexed for inflation after 2026. Section 70119 keeps the exclusion for loans discharged because of death or total and permanent disability, with a new Social Security number requirement. It rewrites IRC 108(f)(5) around those two cases only. The broader exclusion that covered other forgiveness from 2021 through 2025 was not extended, so forgiveness under an income-driven repayment plan in 2026 can be taxable federal income. Public Service Loan Forgiveness is excluded under a separate rule.
Household D. A nurse in the 22% bracket whose hospital pays $5,250 a year toward her loans avoids about $1,557 a year in income tax and 7.65% payroll tax, since the payment is excluded from both. Her younger brother starts a professional degree after July 1, 2026. Section 81001 ends Grad PLUS loans for new borrowers and caps his federal unsubsidized loans at $50,000 a year and $200,000 in total. Professional programs with an assumed $90,000 yearly cost of attendance would leave a $40,000 gap each year for savings, scholarships or private loans. Parents face new Parent PLUS limits of $20,000 a year and $65,000 per dependent student, and every student has a lifetime cap of $257,500. Students already enrolled and borrowing for a program as of June 30, 2026 keep the old limits for up to three academic years. Check the limits for a given student in the federal student loan limit calculator.
The new deductions for tips, overtime, car loan interest and seniors; the SALT cap changes; state tax treatment of any of these items; and business provisions. Proposed regulations on the remittance tax may change when final. Routine inflation adjustments are also left out, such as the 2026 foreign earned income exclusion of $132,900 for Americans working abroad (see the foreign earned income exclusion calculator). The figures use 2026 brackets and standard deductions from Revenue Procedure 2025-32.
Public Law 119-21, 139 Stat. 72 (July 4, 2025), sections 70111, 70114, 70119, 70412, 70424, 70425, 70604 and 81001 (govinfo). 26 U.S.C. 170 as amended (Cornell LII). IRS, Instructions for Forms W-2G and 5754 (revised January 2026). Treasury and IRS, Excise Tax on Remittance Transfers, proposed rule, 91 FR 18797 (April 13, 2026), and IR-2026-48. IRS Revenue Procedure 2025-32 (October 9, 2025). All accessed October 22, 2026.
Yes. From 2026, up to $1,000 of cash gifts to public charities ($2,000 on a joint return) is deductible on top of the standard deduction, under IRC 170(p) as amended by P.L. 119-21.
Only 90% of losses are deductible, up to your winnings, and only if you itemize. Breaking even on $20,000 leaves $2,000 taxable.
Yes, 1% on remittance transfers paid with cash, a money order or a cashier’s check, made after December 31, 2025. Transfers from a bank account or with a U.S. debit or credit card are exempt.
Forgiveness on account of death or disability remains tax-free. The broader exclusion for other forgiveness covered 2021 through 2025 only, so income-driven repayment forgiveness in 2026 can be federally taxable. PSLF stays tax-free.
Yes. P.L. 119-21 made the $5,250 exclusion under IRC 127 permanent and indexes it for inflation after 2026.
July 1, 2026: $20,500 a year for graduate students and $50,000 for professional students, with Grad PLUS ended for new borrowers.
No. The charity, gambling and itemized deduction changes apply to taxable years beginning after December 31, 2025, so they first appear on 2026 returns.