Last year, President Trump signed into law his new One Big Beautiful Bill and many taxpayers are taking advantage of the benefits of that bill during this 2026 tax season. There has been a lot of excitement about many of the expanded and new deductions, as well as how it can potentially save taxpayers money. However, with this excitement does come risk. The new or expanded deductions often attract heightened scrutiny from the Internal Revenue Service, increasing audit risk for unprepared taxpayers. Let’s look at the bill and the deductions that may raise red flags with the IRS.
The One Big Beautiful Bill increases deductions for seniors who may claim an additional deduction of $6,000. This new deduction is per eligible individual (i.e., $12,000 total for a married couple where both spouses qualify). Another deduction is geared toward employees and those who are self employed. Those individuals may deduct qualified tips received in occupations that are listed by the IRS as customarily and regularly receiving tips on or before December 31, 2024, and that are reported on a Form W-2, Form 1099. Additionally, individuals who receive qualified overtime compensation may deduct the pay that exceeds their regular rate of pay – such as the “half” portion of “time-and-a-half” compensation.
Individuals may deduct interest paid on a loan used to purchase a qualified vehicle, provided the vehicle is purchased for personal use and meets other eligibility criteria, including that it must be manufactured in the United States. Finally, tax expansions were granted for health savings accounts. And telehealth and other remote care services can be received before meeting a high-deductible health plan deductible.
So how can these new deductions possibly trigger IRS audits?
One key point to remember is that new tax provisions lack a track record. This means the IRS has limited data and information to determine what “normal” looks like. Given that, outliers tend to stand out quickly and early reviews of these dedication claims often focus on identifying patterns of misuse and overstatement.
Another common occurrence is that taxpayers begin claiming the deductions, but they may not be completely aware of all the nuances and rules. And as such, they claim them incorrectly. It’s not uncommon for taxpayers and tax professionals to misinterpret eligibility rules, especially when guidance is still evolving. That inconsistency alone can trigger scrutiny, particularly when similar taxpayers report dramatically different positions.
Additionally, several common audit triggers become more pronounced when new deductions are involved. An example of this is large write-offs that significantly reduce taxable income, especially in the first year a deduction is claimed. Differences between tax returns, financial statements, or prior-year filings can also signal potential errors or aggressive positions. Also, if your deduction profile does not align with typical patterns in your industry, it may stand out in IRS data analytics.
While the “One Big Beautiful Bill” has many opportunities for tax deductions, it’s important to remember that “new” does not always mean opportunity. Instead, it often means visibility. And taxpayers who take aggressive or poorly documented deductions under new rules are more likely to find themselves under review. To avoid any confusion or potential IRS audits, I encourage business owners and individual taxpayers to consult with an experienced California tax attorney to understand how the new law may impact their specific situation.
Allison Soares is a partner and tax attorney at Vanst Law LLP. It doesn’t matter the issue: audits, collections, appeals, international disclosures, grumpy people— Allison enjoys fixing problems. In addition to her legal work, she has worked in accounting and utilizes that knowledge to her advantage while handling cases involving EDD audits from San Francisco to San Diego.
