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This year\u2019s tax season \u2014 which officially kicked off this past Monday \u2014 will be a doozy.<\/p>\n
The Internal Revenue Service anticipates receiving some 164 million individual income tax returns, with the bulk filed online, as Americans digest the many provisions of President Trump\u2019s signature One Big Beautiful Bill Act. Upgrades include measures relating to tips and overtime, a hike in the maximum child tax credit, an increased cap for state and local tax deductions, and a bigger deduction for qualifying seniors.<\/p>\n
The Bank of America Institute projects a 26% boost to refunds thanks to the changes, \u201cthough much of the increase is likely to be concentrated among middle- and higher-income filers.\u201d<\/p>\n
All said, average refunds could be up between $300 and $1,000 compared to recent years, when typical refunds averaged around $3,000, according to the Tax Foundation.<\/p>\n
Still, a survey from Intuit\u2019s TurboTax found 2 in 5 Americans didn\u2019t know anything about the new tax changes, while about 33% felt they\u2019d be worse off, CPA and TurboTax expert Lisa Greene-Lewis told Yahoo Finance.<\/p>\n
\u201cFilers are going to see up to $1,000 more in their refund, or a lower balance due,\u201d Greene-Lewis said. While this filing season may seem intimidating, \u201c2017 was the last time that there were big tax law changes, and we made it through that time,\u201d Greene-Lewis said.<\/p>\n
Here\u2019s what to know before taxes are due April 15.<\/p>\n
Read more: <\/em>Free tax filing: How to file your 2025 return for free<\/em><\/p>\n\n Deciphering deductions<\/strong><\/p>\n The standard deduction \u2014 which reduces a payer\u2019s taxable income \u2014 is $15,750 for single filers this tax season and $31,500 for married couples filing jointly, a modest boost from the previous year. Taxpayers over 65 can also temporarily claim up to $6,000 in addition to either the standard deduction or itemized deductions, according to H&R Block.<\/p>\n For the senior deduction, \u201cthe biggest beneficiaries are upper-middle-class seniors with significant wealth, who have a lot of discretion over how much income to realize in a given year,\u201d Marc Goldwein, senior policy director for the Committee for a Responsible Federal Budget, a nonpartisan group that advocates for fiscal responsibility, told Yahoo Finance last year.<\/p>\n The senior deduction, which is available per eligible individual, phases out for filers with modified adjusted gross incomes over $75,000, or $150,000 for couples, the IRS said.<\/p>\n Read more: <\/em>Standard deduction vs itemizing: How to decide<\/em><\/p>\n Tips and overtime<\/strong><\/p>\n Certain workers who have historically received tips, like restaurant servers and others designated by the IRS, will temporarily be able to deduct up to $25,000 in qualified tips on their federal returns through 2028. The benefit phases out at incomes above $150,000, and workers will still have to pay federal taxes on tips beyond the $25,000 cap.<\/p>\n<\/p><\/div>\n As for overtime, qualifying workers will be able to deduct up to $12,500 of overtime pay, or $25,000 for joint returns, with the perk similarly phasing out for those with incomes above $150,000 and only effective through 2028.<\/p>\n But, despite the provisions popularly being known as \u201cno tax on tips\u201d and \u201cno tax on overtime,\u201d \u201cthey are deductions, and it\u2019s based on your tax rate,\u201d Greene-Lewis said. Filers will still owe state and local taxes on that income, as well as Social Security and Medicare taxes.<\/p>\n Read more: <\/em>Tax credits vs. deductions: What\u2019s the difference?<\/em><\/p>\n Car loans<\/strong><\/p>\n Taxpayers will be able to deduct interest paid on auto loans taken after Dec. 31, 2024, for new, made-in-America vehicles purchased for personal use, up to $10,000 annually through 2028, according to the IRS.<\/p>\n The deduction is available whether you\u2019re itemizing or claiming the standard deduction.<\/p>\n Changes to the SALT cap<\/strong><\/p>\n Trump\u2019s new tax law hiked the cap on state and local tax (SALT) federal deductions from $10,000 to $40,000 for joint filers, especially benefiting big earners with expensive homes in high-tax states. By itemizing their deductions, these homeowners could see thousands of dollars in annual savings.<\/p>\n Child tax credit<\/strong><\/p>\n The child tax credit received a tiny bump in the tax bill, rising from $2,000 to up to $2,200 per child for taxpayers who make under $200,000 annually as a single filer, or $400,000 if filing jointly. Moving forward, the maximum credit will be adjusted for inflation.<\/p>\n To qualify for the refundable portion of the child tax credit, which can be worth up to $1,700, taxpayers must earn at least $2,500 in annual income, locking out some extremely low-income families.<\/p>\n Green benefits<\/strong><\/p>\n If you had renewable energy equipment installed in your home last year, you can still claim the tax perks that expired Dec. 31, 2025. Filers can receive a credit for up to 30% of a solar project\u2019s qualifying costs, for example, as well as up to 30% of the total cost of certain energy efficiency home improvements installed through the end of last year, up to $3,200.<\/p>\n For the $7,500 electric vehicle tax credit, though, the car would\u2019ve had to be purchased and acquired before Sept. 30.<\/p>\n >> Find more tax tips and information on our Personal Finance tax hub<\/em><\/strong><\/p>\n Emma Ockerman<\/em> is a reporter covering the economy and labor for Yahoo Finance. You can reach her at <\/em>emma.ockerman@yahooinc.com<\/em>.<\/em><\/p>\n