Tax Law Changes

Child and Dependent Care Credit

Increases credit amount from 35% to 50% of child and dependent care expenses, reduced (not below 35%) by 1% for each $2,000 by which AGI exceeds $15,000, and further reduced (not below 20%) by 1% for each $2,000 ($4,000 joint) by which AGI exceeds $75,000 ($150,000 joint). The maximum amount of qualified work expenses for the credit remains $3000 ($6000 for 2 or more qualifying children).

Kiddie Tax

To be subject to the kiddie tax, the individual must have unearned income of at least $1,350 in 2026. The amount to figure the "kiddie tax" is $2,700.

Form 1099-K Reporting Thresholds

Taxpayers will receive Form 1099-K, Payment Card and Third-Party Network Transactions, when reportable proceeds exceed $20,000 and 200 transactions for 2026, although they may receive the form at a lower amount. This threshold applies to third party settlement organizations. Taxpayers are required to report all taxable income on their federal income tax return, regardless of amount or whether an income reporting document is received.

Qualified Long-Term Care Distribution Reported on Form 1099-R

For tax years after 2025, participants will be able to receive qualified long-term care distributions from defined contribution plans. The distributions will be reported on Form 1099-R and are taxable to the participant but will not be subject to the 10% additional tax for early distributions.

• The law does not require defined contribution plans to permit qualified long-term care distributions.