A number of tax changes as part of the 2025 “Big Beautiful Bill” act could have major impacts on your return, in some cases leading to higher refunds and deductions.
According to the nonpartisan Tax Foundation, “refunds will be larger than typical in the upcoming filing season because of the One Big Beautiful Bill Act’s (OBBBA) tax cuts for 2025.” The Foundation added however that refund size “will vary significantly depending on taxpayers’ circumstances.”
An executive order issued in 2025 may also have an impact on how you get your refund, with the Internal Revenue Service phasing out physical checks being sent and encouraging taxpayers to use direct deposit.
The deadline to submit your 2025 taxes is April 15, and the first day of filing opened Jan. 26. As the deadline approaches, here’s what to know about the changes that could impact you.
New increases and deductions
Child tax credit increase
According to the IRS, the Child Tax Credit has increased from $2,000 per qualifying child to $2,200 for tax year 2025.
To qualify, a child must be under the age of 17 at the end of the tax year, and be a dependent of the taxpayer in question. They must also have lived with the parent or guardian for more than half the tax year.
There is a phaseout for taxpayers whose annual income is over $200,000 for single filers, or $400,000 for joint filers.
Standard deduction increases
The standard deduction for single taxpayers increased to $15,750 for tax year 2025. It also increased to $23,625 for the head of household, and to $31,500 for those taxpayers who are filing jointly.
Adoption credit, senior increases and more
As part of the act, the adoption credit increased, along with an estate tax exclusion, the IRS said. Some seniors could also claim a higher deduction, the new tax code states, as individuals ages 65 and older may claim an additional $6,000 deduction.
The act also eliminated tax on tips, overtime and car loan interest.
Taxes on tips
One of President Donald Trump’s campaign pledges was to eliminate taxes on tips for American workers, and while those taxes aren’t completely eliminated, there are significant deductions that can be made on returns.
According to the IRS, taxpayers can deduct up to $25,000 in tips if their modified adjusted gross income for tax year 2025 was below $150,000 for single taxpayers, or below $300,000 for those filing jointly.
That deduction can be applied for taxpayers who itemize their deductions, or for those who do not and take the standard deduction instead, according to the IRS.
Taxpayers should be aware however that some payroll taxes can still apply to tips, and that tips are still likely taxed at the state or local level, depending on where they live.
Overtime tax deductions
Taxes on overtime pay have also changed with provisions of the bill. Federal officials are cautioning workers that if their overtime pay is impacted by collective bargaining agreements, then they may not be eligible for the deduction, so residents will need to consult with an accountant or a tax preparation service for more information.
For those eligible, overtime pay can also be deducted up to $12,500 per taxpayer, with phaseouts beginning at a modified adjusted gross income of $150,000 for single taxpayers or $300,000 for those filing jointly.
Like the tax on tips, the change is only in effect temporarily.
State and local tax (SALT) deduction increases
For those taxpayers who itemize their deductions rather than taking the standard deduction, the SALT Deduction has increased to $40,000 from its previous level of $10,000.
That deduction can be important to taxpayers who work in states with higher tax rates, according to experts. More information can be found here.
Tax cuts for new cars
The bill also includes new deductions for newly-purchase vehicles that are either built in the United States or were assembled in the United States.
According to federal officials, a vehicle qualifies as an “Applicable Passenger Vehicle” if it has a vehicle weight of less than 14,000 pounds, and that is for primarily personal use.
Anyone who purchased a new vehicle in tax year 2025 and who paid at least $600 in interest on that vehicle is eligible for the deduction of up to $10,000.
What tax credits are going away?
Under the bill, two key tax credits that were championed by the Biden administration expired late last year: the electric vehicle credit ,and a home energy efficiency credit. According to NBC News, eligible taxpayers can still claim them on their returns this spring.
The $7,500 EV credit formally expired on Sept. 30, but taxpayers who bought an EV before then can collect the tax credit by filing an extra form with their tax returns.
Changes to how you get your refund
The IRS began phasing paper checks out in Sept. 2025 as part of Executive Order 14247. As part of the order, “most refunds will be delivered by direct deposit or other secure electronic methods” a release issues in September said.
The IRS added that direct deposit is the “fastest way to receive a refund,” which are typically issued within 21 days.
How much could your refund be?
Many could receive a bigger refund this year than they did in 2025, NBC News reported, with the nonpartisan Tax Foundation estimating the average tax refund this year to be $3,800, up nearly 25% from the previous year.
How to track your refund
Taxpayers can track refund status using Where’s My Refund?, the IRS2Go app, or their IRS Individual Online Account.
According to the IRS, refunds are “issued in less than 21 days if filing electronically,” choosing direct deposit. Non-electronic payments may take 6 weeks or longer for refunds sent by mail.
(Except for the headline, this story has not been edited by PostX News and is published from a syndicated feed.)
