2026 Tax Season Kickoff: Critical Dates and New Rules California Taxpayers Must Know

The 2026 tax filing season officially opens on January 27, 2026, and California taxpayers face a landscape dramatically reshaped by the One Big Beautiful Bill Act (OBBBA) signed into law on July 4, 2025. Whether you’re an individual filer navigating the new SALT deduction limits, a business owner adjusting to permanent Tax Cuts and Jobs Act provisions, or someone who has fallen behind on previous years’ filings, understanding these changes before you file is essential to maximizing your refund and minimizing your tax liability.

At the Law Office of Pietro Canestrelli, our team—led by a former IRS agent and California Board Certified Tax Specialist—has been tracking these legislative developments since their inception. We’ve already helped hundreds of California taxpayers and business owners prepare for what promises to be one of the most significant tax seasons in recent memory. This comprehensive guide will walk you through every critical date, new rule, and planning opportunity you need to know for the 2026 filing season.

Key Tax Filing Dates for 2026

Missing a tax deadline can result in penalties, interest charges, and unnecessary stress. Here are the dates every California taxpayer should mark on their calendar:

Federal Tax Deadlines

January 27, 2026: IRS begins accepting and processing 2025 tax returns
January 31, 2026: Employers must furnish W-2 forms to employees; 1099-NEC forms due to contractors
February 18, 2026: First batch of refunds typically issued for early filers with direct deposit
April 15, 2026: Federal tax return due date (Form 1040); first quarter 2026 estimated tax payment due
April 15, 2026: Last day to contribute to IRA or HSA for 2025 tax year
June 15, 2026: Second quarter 2026 estimated tax payment due
September 15, 2026: Third quarter 2026 estimated tax payment due; extended business returns due
October 15, 2026: Extended individual returns due (if Form 4868 filed by April 15)

California State Tax Deadlines

California’s Franchise Tax Board (FTB) generally follows federal deadlines, but there are important distinctions:

April 15, 2026: California Form 540 due for most filers
April 15, 2026: First quarter California estimated tax payment due (Form 540-ES)
June 15, 2026: Automatic two-month extension for California residents living abroad
October 15, 2026: Extended California returns due

If you’re dealing with estimated tax payment requirements, our team can help you calculate the correct amounts to avoid underpayment penalties from both the IRS and the FTB.

Major Tax Law Changes Effective for 2025 Returns

The One Big Beautiful Bill Act represents the most sweeping tax legislation since the Tax Cuts and Jobs Act of 2017. Here’s what California taxpayers need to understand:

SALT Deduction Cap Increased to $40,000

Perhaps the most significant change for California taxpayers is the increase in the State and Local Tax (SALT) deduction cap from $10,000 to $40,000. This change is retroactive to tax year 2025, meaning you can claim it on the return you’ll file this season.

For high-income Californians who have been limited by the $10,000 cap since 2018, this represents a potential tax savings of thousands of dollars. If you pay significant California income taxes and property taxes, you may finally be able to deduct more of these expenses. Our detailed analysis of the new $40,000 SALT cap eligibility requirements can help you determine your potential benefit.

TCJA Provisions Made Permanent

The OBBBA made permanent many provisions from the Tax Cuts and Jobs Act that were scheduled to expire after 2025:

Individual tax brackets: The lower tax rates (10%, 12%, 22%, 24%, 32%, 35%, and 37%) are now permanent
Standard deduction: The nearly doubled standard deduction remains in place ($15,000 for single filers, $30,000 for married filing jointly for 2025)
Child tax credit: Enhanced at $2,500 per qualifying child with expanded refundability
Qualified Business Income deduction: The 20% QBI deduction for pass-through business owners continues

Business owners should review our guide on essential OBBBA updates for business owners to understand how these permanent changes affect their tax planning.

New Tax-Free Treatment for Tips and Overtime

Starting with tax year 2025, certain tip income and overtime compensation receive favorable tax treatment:

Tips: Cash tips for workers in traditionally tipped industries may qualify for tax-free treatment up to specified limits
Overtime: Overtime pay receives preferential treatment under the new law
Senior deduction: Taxpayers 65 and older receive an additional $6,000 deduction

These provisions have specific eligibility requirements and income limitations. The implications for California business owners regarding tip and overtime reporting have also changed.

Estate Tax Exemption Increase

The federal estate tax exemption increased to $15 million per person under the OBBBA. For married couples, this means up to $30 million can pass to heirs free of federal estate tax. California residents should note that California does not impose a separate state estate tax, making this particularly advantageous for high-net-worth families in our state.

If you’re considering estate planning strategies, our resources on protecting your assets with a trust and estate tax tips for Californians provide valuable guidance.

California-Specific Tax Considerations for 2026

While federal changes dominate the headlines, California taxpayers face unique state-level considerations:

California’s Progressive Tax Rates

California maintains the highest state income tax rate in the nation at 13.3% for income over $1 million. Combined with federal taxes, high-income Californians can face marginal rates exceeding 50%. Strategic planning around income timing, retirement contributions, and deduction optimization becomes critical.

Pass-Through Entity Tax Election

California’s Pass-Through Entity (PTE) tax election remains available through 2030 following SB 132’s extension. This election allows qualifying businesses to pay state taxes at the entity level, effectively working around the SALT cap for business owners. Even with the increased $40,000 cap, the PTE election may still provide benefits for high-income business owners.

Our guide on how California tax laws affect small businesses explains the PTE election and other state-specific strategies.

FTB Enforcement Intensification

The California Franchise Tax Board has significantly increased enforcement activities. Penalty notices surged 32% in 2025, driven by enhanced data matching capabilities that cross-reference IRS filings, Secretary of State business registrations, and CDTFA sales tax records. Accuracy on your California return has never been more important.

Common Tax Season Mistakes to Avoid

After years of helping California taxpayers resolve issues with the IRS and FTB, we’ve identified the most common—and costly—mistakes:

Failing to Report All Income

The IRS receives copies of your W-2s, 1099s, and K-1s. Their matching system will catch unreported income, often triggering an audit or automatic adjustment. This is especially important for:

Gig economy workers receiving 1099-K forms
Cryptocurrency traders (new Form 1099-DA requirements begin this year)
Freelancers and independent contractors
Those with multiple income sources

If you have cryptocurrency holdings, new reporting requirements make accurate reporting essential.

Missing Deductions and Credits

Many taxpayers leave money on the table by failing to claim legitimate deductions. Our guide to overlooked tax deductions highlights opportunities many filers miss, including:

Home office deductions for self-employed individuals
Medical expense deductions exceeding 7.5% of AGI
Charitable contribution strategies
Education credits and deductions
Energy-efficient home improvement credits

Filing Status Errors

Choosing the wrong filing status—or failing to optimize it—can cost thousands. This is particularly relevant for those going through divorce, recently widowed, or with complex household situations. If you’re marrying someone with tax debt, filing status decisions become even more critical.

What to Do If You Have Unfiled Returns

If you haven’t filed tax returns for one or more years, the worst thing you can do is continue to avoid the problem. The IRS actively pursues non-filers, and penalties accumulate rapidly:

Failure-to-file penalty: 5% of unpaid taxes per month, up to 25%
Failure-to-pay penalty: 0.5% per month, up to 25%
Interest: Currently accruing at over 8% annually

The good news is that coming forward voluntarily—before the IRS contacts you—typically results in better outcomes. Our team has helped numerous clients with multiple years of unfiled returns come into compliance while minimizing penalties. Learn more about the consequences of filing late and your options for resolution.

When to Consider Professional Help

While many straightforward returns can be prepared using tax software, certain situations warrant professional assistance:

You Should Consider a Tax Attorney If:

You’re facing an IRS or FTB audit
You have unfiled returns from multiple years
You owe more than $10,000 in back taxes
You’ve received collection notices or threats of levy
You have complex business, investment, or international tax situations
You need to negotiate with the IRS or seek penalty abatement

Our article on why you might need a tax attorney instead of a tax preparer explains the critical differences and when legal representation becomes necessary.

Preparing for Tax Season: Your Checklist

Start gathering these documents now to ensure a smooth filing process:

Income Documents

W-2 forms from all employers
1099 forms (1099-NEC, 1099-MISC, 1099-INT, 1099-DIV, 1099-B, 1099-R, 1099-K, 1099-DA)
K-1 forms from partnerships, S corporations, or trusts
Social Security benefit statements (SSA-1099)
Gambling winnings (W-2G)

Deduction Documentation

Mortgage interest statement (Form 1098)
Property tax bills
Charitable contribution receipts
Medical expense records
Business expense documentation
Education expenses (Form 1098-T)

Get Expert Guidance for the 2026 Tax Season

The 2026 tax season brings unprecedented changes that create both opportunities and pitfalls for California taxpayers. Whether you’re looking to maximize the new SALT deduction, navigate complex business tax situations, or resolve past filing issues, the Law Office of Pietro Canestrelli is here to help.

As a former IRS agent and California Board Certified Tax Specialist, Pietro Canestrelli brings insider knowledge of how the IRS operates combined with deep expertise in California tax law. Our team has helped thousands of taxpayers across California protect their rights and achieve the best possible outcomes.

Don’t navigate this complex tax season alone. Contact the Law Office of Pietro Canestrelli today to schedule a confidential consultation and ensure you’re fully prepared for the 2026 filing season.

← Previous Post