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There is a list of 2025 Tax Changes that you should be aware of before filing your taxes before the April 15th deadline. The One Big Beautiful Bill, signed into law on July 4th, 2025, has several key tax provisions in it. If you’re not sure what it means for your taxes, you’re not alone. In this article, we’ll break down everything you need to know into simple terms.
This legislation introduced the most sweeping changes to the U.S. tax code since 2017. Several of the changes could mean a bigger refund or a lower tax bill for you.
If you’d like to have a tax professional explain these changes to you, schedule an appointment at a Jackson Hewitt location near you today.
Table of contents
2025 Tax Return Changes
What is the One Big Beautiful Bill?
The One Big Beautiful Bill Act (also referred to as the OBBBA) is a sweeping piece of federal legislation signed into law on July 4, 2025. Its primary purpose was to prevent most of the 2017 Tax Cuts and Jobs Act (TCJA) from expiring. Without it, tax rates would have automatically reverted to their pre-2017 levels at the end of 2025. This would have meant higher taxes for the majority of American filers.
Beyond preserving existing tax cuts, the bill introduces several brand-new deductions and modifies or eliminates others.
Why does the 2017 tax law matter to my 2025 return?
The TCJA made major changes to tax rates, the standard deduction, and the child tax credit in 2017. These changes were set to expire in 2025.
The One Big Beautiful Bill made most of those changes permanent now. It also expands a few provisions and adds entirely new ones.
Does the One Big Beautiful Bill affect my 2025 taxes?
Yes. Some provisions apply retroactively to the 2025 tax year, meaning they affect the return you’re filing now in 2026. The most notable 2025 changes include the new tip and overtime deductions, the expanded senior deduction, the increased SALT cap, and the higher standard deduction.
The larger structural changes, such as expanded business deductions and new child savings accounts, take effect starting in 2026.
2025 Standard Deductions and Tax Brackets
Did the standard deduction change for 2025?
Yes, slightly. The standard deduction increased by $750 to $15,750 for single filers, and by $1,500 to $31,500 for married couples filing jointly.
For most filers, the standard deduction remains the better choice over itemizing. If your total deductible expenses (mortgage interest, charitable contributions, state and local taxes, etc.) don’t exceed these thresholds, you’ll want to take the standard deduction.
Are the tax brackets the same for 2025?
Yes. The seven income tax rates established in 2017 (10%, 12%, 22%, 24%, 32%, 35%, and 37%) are now permanent. Without the One Big Beautiful Bill, rates would have reverted to higher pre-2017 levels starting in 2026. That’s no longer happening. The two lowest brackets (10% and 12%) will receive an additional inflation adjustment in 2026.
New Deductions Available For 2025
If you’ve watched any news over the past several months, you’ve most likely heard about “no tax on tips, overtime, and social security,” but what does that actually mean? Here’s a breakdown of the new deductions created under this law, and they apply starting with the 2025 tax year.
It’s important to note that these new deductions will come off your Adjusted Gross Income (AGI) before you even get to the standard deduction, which can help you get a larger tax refund or lower your tax bill.
I work in a tipped profession. Is there really no tax on my tips?
Starting in 2025 and running through 2028, workers in occupations that customarily receive tips can deduct up to $25,000 in qualified tip income per year. This tax law change reduces your taxable income by that amount. Your tips need to be reported on a W-2 or 1099.
This deduction is not available to filers with modified adjusted gross income above $150,000 (or $300,000 for joint filers).
Eligible occupations include service industries like hospitality, food service, cosmetology, and personal training, or any job the IRS has identified as customarily tip-receiving as of December 31, 2024.
I earned overtime this year. Can I deduct that too?
Yes. For tax years 2025 through 2028, workers covered by the Fair Labor Standards Act can deduct the overtime portion of their wages (the extra “half” in time-and-a-half pay). Workers can deduct up to $12,500 per year ($25,000 for joint filers) now.
Like the tip deduction, this deduction is not available to filers with modified adjusted gross income above $150,000 (or $300,000 for joint filers).
Your employer needs to designate overtime wages on your W-2; if they haven’t yet, there is a special 2025 transition rule allowing employers to approximate overtime pay.
I’m 65 or older. Is there a new deduction for seniors?
Yes, and it’s a significant one. Seniors aged 65 and older can claim an additional deduction of $6,000 per eligible individual ($12,000 for married couples where both spouses qualify) for tax years 2025 through 2028. This deduction is on top of the existing senior standard deduction.
This deduction is not available to filers with modified adjusted gross income over $75,000 for single filers ($150,000 for joint filers). Senior filers must have a valid Social Security number to qualify.
I bought a new car. Can I deduct the loan interest?
If you purchased a new vehicle for personal use after December 31, 2024, you may be able to deduct up to $10,000 in car loan interest per year through 2028.
To qualify, your vehicle must be new (used vehicles don’t qualify), assembled in the United States, purchased for personal use (not business), and financed through a loan. Leased cards do not receive this deduction.
This deduction is not available to filers with modified adjusted gross income over $100,000 ($200,000 for joint filers). You’ll need to include your Vehicle Identification Number (VIN) on your tax return.
Not sure if you qualify for these new deductions? A Jackson Hewitt tax professional can review your situation and make sure you’re not leaving money on the table.
Changes for Families
Did the Child Tax Credit change?
The expanded Child Tax Credit from 2017 is now permanent. Due to a slight increase, the maximum credit is $2,200 per qualifying child for 2025.
The refundable portion (additional child tax credit) remains at $1,700 for 2025.
Note that eligibility rules have been tightened slightly compared to prior years, so it’s worth verifying your child’s qualifying status.
What about the child and dependent care credit?
There is a modest increase to the child and dependent care credit under the new law. The bigger family-related changes, including a major expansion of employer-provided childcare credits, take effect in 2026.
I’ve heard about “Trump Accounts.” What are those?
Trump Accounts are new federally backed, tax-deferred savings accounts created for children. The government will contribute $1,000 to the account of each eligible child born between 2025 and 2028.
Parents and others can contribute up to $5,000 per year (adjusted for inflation starting in 2027), and employers can contribute up to $2,500 tax-free.
Funds grow tax-deferred and must be invested in U.S. index-tracking funds.
Withdrawals can only begin at age 18. The account then functions similarly to a traditional IRA.
You can sign up for your child’s Trump account here.
The SALT Deduction
I pay high state and local taxes. Did the SALT cap change?
Yes, significantly. The cap on the state and local tax (SALT) deduction has been raised from $10,000 to $40,000 for the 2025 tax year for single and joint filers (married filing separately is capped at half).
SALT deductions include income, sales, and property taxes paid at the state and local level.
The cap will increase by 1% per year through 2029, then revert to $10,000 in 2030.
The deduction begins to phase down for modified adjusted gross income above $500,000.
If you live in high-tax states like California, New York, New Jersey, and Illinois, this is a big change. Previously, these state residents were effectively capped at $10,000 under the prior rule.
If you live in any of these states, you need to recalculate whether itemizing now makes more sense than taking the standard deduction.
Clean Energy Credits: What Got Cut
I was planning to claim an EV credit. Is that still available?
Not if you purchased after September 30, 2025. The federal electric vehicle credit, which was worth up to $7,500 for a new EV and $4,000 for a used one, has been eliminated for vehicles acquired after that date.
If you bought an EV before October 1, 2025, you may still be able to claim the credit for the 2025 tax year. Check your purchase date carefully.
What about credits for home energy improvements?
The Energy Efficient Home Improvement Credit (for things like insulation, windows, and doors) and the Residential Clean Energy Credit (for solar panels, geothermal pumps, and similar installations) have both been eliminated for expenditures made after December 31, 2025.
If you made qualifying improvements during 2025, you can still claim those credits on your 2025 return, but this is the last year.
2025 Tax Filing Questions
How do all these changes affect what I owe or my refund?
That depends entirely on your situation. Filers who work in tipped or overtime-heavy occupations, are 65 or older, live in high-tax states, or have qualifying children will see the most direct benefit from these changes.
The standard deduction increase benefits almost everyone who doesn’t itemize.
The elimination of clean energy credits will affect filers who were counting on those for 2026 and beyond.
The best way to make sure you’re capturing every deduction you qualify for is to have your return prepared or reviewed by a tax professional.
When is the tax deadline for 2025 returns?
The deadline to file your 2025 federal tax return is April 15, 2026.
What if I need more time?
You can file for a tax extension to push your filing date back to October 15, 2026.
It’s important to call out that a tax extension is not an extension to pay. If you owe taxes, interest and penalties begin accruing on any unpaid balance after April 15.
Tax Extension Tip: It’s worth paying your 2025 estimated taxes before the April 15th deadline. You can still file a tax extension to give you more time to complete your return.
Should I file my own taxes this year or get professional help?
Given the number of new provisions from the One Big Beautiful Bill, getting a tax professional to file your 2025 tax returns would be a good idea.
If you earn tips, overtime pay, are over the age of 65, or live in a high-tax state, we highly recommend doing so. This is a year where it’s easier than usual to miss something that could get you a larger refund or lower your tax bill.
A tax professional can verify which new deductions apply to your situation. They’ll make sure you get the best tax return possible or lower your tax bill, if you own a business.
Jackson Hewitt tax professionals can verify which new deductions apply to your situation.
Get Your Taxes Done Right
With more moving parts than a typical filing year, 2025 returns are worth getting a second set of eyes on. Jackson Hewitt offers online and in-person tax filing services. Get access to real tax professionals and take advantage of their maximum refund guarantee and 100% accuracy guarantee.
You can schedule an appointment with a Jackson Hewitt professional and file your federal returns for as low as $49 for new clients.
File Your 2025 Taxes with Jackson Hewitt →
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This article is for informational purposes only and does not constitute professional tax advice. Tax laws are complex and individual circumstances vary. Consult a qualified tax professional for advice specific to your situation. This site may receive compensation if you file through links on this page.
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