Taxpayers could see a change in their tax returns this year and are advised by financial planners to prepare for further changes in 2026.
The changes or cessation of these COVID-era tax credits could lead to smaller tax returns for some:
- Child tax credit
- Child and dependent care credit
- Earned-income tax credit
In addition, by the 2026 tax filing season, the Tax Cuts and Jobs Act, enacted in 2018 during the Trump administration, will expire.
The policy was intended to reduce income tax rates, simplify tax filings for some, and stimulate the economy. When it expires, financial planners said interest rates could increase and cause smaller or non-existent tax returns.
“If there [are] no other changes, then they are going to revert to what tax rates were back in 2017, which was higher, pretty much across the board, regardless of how much income that you made in a given year,” said Brett Koeppel, founder and certified financial planner at Eudaimonia Wealth in Buffalo.
He recommended that people who can afford to forego some deductions in order to pay them now rather than later when interest rates may be higher or financial situations change.
“It can be more art than science,” Koeppel said. “You know, you're kind of guessing about, all right, what kind of tax rate and tax bracket I'm in today versus where am I going to be in the future?”
He also said filers save some money on the side in case they need to pay more than usual in 2026.