The U.S. just kicked off its first tax season since President Donald Trump signed the One Big Beautiful Bill Act, or OBBBA, last July. Politics aside, the law is likely to affect how much you owe the IRS, how big your refund is and more.
The OBBBA extended and modified a lot of the provisions in the 2017 Tax Cuts and Jobs Act, which Congress passed during Trump’s first term. Crucially, many of the consumer-facing changes in the OBBBA were retroactive to the beginning of 2025, meaning they’ll affect the tax returns folks file this spring.
According to Hannah Cole, the founder of tax education website Sunlight Tax, that’s by design.
“The sugar-high part of the bill — the part that’s maybe a positive — is meant to hit now, before the midterm elections,” she says.
Here are eight major changes you can expect this tax season:
1. A larger standard deduction
The Tax Cuts and Jobs Act almost doubled the standard deduction, leading an estimated 90% of filers to take it. The OBBBA made this increased standard deduction permanent; for 2025, it’s $15,750 for single filers, $31,500 for married couples and $23,625 for heads of household.
This matters because the higher the standard deduction, the more income that gets shielded from taxes.
2. “No tax” on tips and overtime
Eligible workers — a broad category that includes bartenders, waitresses, bellhops, electricians, plumbers, tutors, babysitters, hairdressers, tattoo artists, tour guides and more — can deduct up to $25,000 of their qualified tips from their income.
“That can make a huge difference,” says Andy Phillips, head of H&R Block’s Tax Institute.
Cole points out that to qualify, your tips must be properly reported to employers, who for 2025 are “allowed to use any reasonable method” to approximate them. The IRS estimates that about 6 million employees report tipped wages.
There is also a new deduction for overtime work that lets certain employees “deduct the pay that exceeds their regular rate of pay” up to $12,500 ($25,000 for joint filers), per the IRS. Both the tip and overtime deductions start to phase out once your income reaches $150,000 for single filers ($300,000 for joint filers). They are available regardless of whether you itemize your taxes and last through 2028.
3. New ‘senior bonus’ and car loan interest deduction
The much-hyped “no tax on Social Security” proposal is different from what actually became law.
“The way [Congress] passed this bill through the reconciliation process, they were not able to change how Social Security works, including the way it was taxed,” Phillips says. “Instead, they created a new deduction.”
This so-called “senior bonus,” in effect for tax years 2025 through 2028, is a deduction worth up to $6,000 per taxpayer age 65 and older. It phases out for those with incomes over $75,000 ($150,000 for joint filers), and you don’t have to be already receiving Social Security benefits to claim it.
Taxpayers can also deduct interest paid on certain car loans. The maximum annual deduction here is $10,000, and it phases out once your income hits $100,000 ($200,000 for joint filers). To qualify, your loan has to have originated after Dec. 31, 2024, and be for a personal-use vehicle. That vehicle has to be under 14,000 pounds and have undergone final assembly in the U.S.
To find out that last part, drivers can use the National Highway Traffic Safety Administration’s VIN Decoder.
4. Bigger tax refunds
Treasury Secretary Scott Bessent has said that “millions of Americans may see the largest tax refunds of their lives in 2026.” And it’s true: Many taxpayers didn’t adjust their withholding after the OBBBA was passed. The IRS still hasn’t even updated the tax withholding estimator on its website.
That means millions of people over-withheld last year — and will get that cash in their refunds. In 2025, the average tax refund was $3,167. Estimates peg the typical refund boost for this year at $300 to $1,000.
“Refunds will be larger for a lot of folks,” but the jump won’t be the same across the board, Phillips says. “It’s going to be very personalized to each individual. What people need to do is get a really good understanding of what these rule changes mean to them.”
5. New IRS forms
If you’re finding it hard to keep track of all these changes, you’re in luck: The IRS has released a new form called the Schedule 1-A that basically rounds up the four deductions listed above and calculates what your savings are.
There’s no reason to worry about the document, though. Cole says that if you’re using a tax preparer, they’ll know how to capture the relevant data and file it on your behalf.
Another new IRS document is Form 4547, which lets parents who have eligible children elect to open a Trump Account, which is a tax-advantaged saving tool for Americans born between Jan. 1, 2025, and Dec. 31, 2028. As part of a pilot program, the U.S. Treasury will kick in $1,000 at birth that will grow until they turn 18. Family members and others can contribute up to $5,000 a year.
Trump Accounts don’t formally launch until this summer; at that time, it’s expected that the White House will debut an online portal. But as Vanguard points out, eligible taxpayers who file Form 4547 now will be ready to go as soon as the accounts open.
6. Child tax credit changes
Phillips explains that the OBBBA altered the child tax credit, increasing the maximum amount to $2,200 per qualifying child under 17 for 2025. Starting this year, it will be adjusted annually for inflation.
Previously, the max was $2,000 for 2025, and the credit was set to reverse to $1,000 per kid in 2026. Parents qualify for the full amount as long as their annual income is not more than $200,000 ($400,000 for married couples filing jointly); over those thresholds, the credit phases out.
The child tax credit is partially refundable, meaning you can get a portion of it as a refund even if you don’t owe any taxes. For 2025, the refundable part is worth up to $1,700.
7. No more paper checks
Don’t expect to get your tax refund via paper check this year — or ever again.
In 2025, Trump issued an executive order mandating that the federal government send all payments electronically starting Sept. 30, saying that paper “imposes unnecessary costs; delays; and risks of fraud, lost payments, theft, and inefficiencies.”
The IRS has long encouraged taxpayers to set up direct deposit in order to get refunds faster, but now that recommendation is a rule (with very few exceptions). If you don’t have a bank account, you can open one for low or no cost by visiting the FDIC’s Get Banked! site or MyCreditUnion.gov. If you’re unable to set one up, the IRS says it will offer options like prepaid debit cards and digital wallets.
Paper returns take weeks to process, so you should also be submitting your return digitally if possible.
8. A lower 1099-K reporting threshold
The 1099-K situation has proven to be quite the saga over the past few years. It used to be that the threshold for receiving a 1099-K form from a payment app or online marketplace was $20,000 and 200 transactions made. The American Rescue Plan of 2021 lowered the bar to $600 and any number of transactions, freaking out everybody from Etsy sellers to StubHub power users.
Casual payments between friends and family were never going to be subject to these rules, but the messaging was confusing. Because of that, the rollout of this new policy was delayed several times, with the IRS slowly raising the threshold until — you guessed it — the OBBBA changed it again.
Jared Ballew, vice president of government relations at TaxAct, says the new tax law restores the previous limits. If your payments for goods or services exceed $20,000 in over 200 transactions, the processor is required to send you a 1099-K. Under that, it might not.
But you’re not off the hook.
“If you’re working a side gig, even cash or Venmo payments are taxable,” Bellew says. “Not getting a 1099 doesn’t mean you don’t owe taxes on that income.”
More from Money:
Why Filing Your Taxes Early Is Especially Smart This Year
Here’s How to Track Your Tax Refund
IRS Officially Kills Direct File, a ‘Failed’ Program That Offered Millions Free Tax Prep
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