​Starting in 2025, seniors (age 65+) can claim an extra $6,000 standard deduction due to a provision in the Working Families Tax Cut Act.

This enhanced deduction is temporary, applying only to tax years 2025 through 2028. It also begins to phase out once your adjusted gross income (AGI) exceeds $75,000 for single filers or head of household filers and $150,000 for married couples filing jointly.

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Child Tax Credit (CTC) Increases

The new tax bill also raises the Child Tax Credit to $2,200 per qualifying child for the 2025 tax year (up from $2,000 in 2024). Additionally, more of the credit is refundable, meaning some families may see a larger tax refund even if their tax liability drops to $0.

The income thresholds for the CTC remain the same — the credit still phases out based on your filing status and modified adjusted gross income (MAGI).

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No Tax on Tips for 2025

The Working Families Tax Cut Act also creates a new above-the-line deduction for certain tip income for 2025 through 2028. You can deduct up to $25,000 in qualifying tips per tax return, and the deduction begins to phase out once your MAGI reaches $150,000 for single filers or $300,000 for joint filers.

Only certain occupations qualify; check out our No Tax on Tips Guide for all the details.

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No Tax on Overtime Pay

A new deduction for qualifying overtime pay is now available, effective in the 2025 tax year. You can deduct up to $12,500 if you’re a single filer or up to $25,000 if you’re married filing jointly. The deduction begins to phase out once your MAGI hits $150,000 for single filers or $300,000 for joint filers.

This is an above-the-line deduction, meaning you can claim the overtime deduction even if you claim the standard deduction. It is a temporary deduction, available only from 2025 to 2028. Read our full No Tax on Overtime Guide.

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Car Loan Interest Deduction

There is another temporary above-the-line deduction for car loan interest for tax years 2025 through 2028. You can deduct up to $10,000 of interest paid on a qualifying vehicle loan each year through 2028. This tax break begins to phase out once your MAGI exceeds $100,000 (or $200,000 for married couples filing jointly).

Your vehicle must meet specific requirements (including U.S. final assembly and a valid VIN) to qualify. If you financed your car, read our Car Loan Interest Deduction Guide to see if you qualify to deduct your interest payments.

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SALT ( State and Local Tax) Deduction Cap Increase

Another tax bill provision temporarily raises the SALT deduction cap beginning in the 2025 tax year. This increase gives some taxpayers in high-tax states more room to deduct state and local tax payments.

The SALT cap rose to $40,000 (up from $10,000) in 2025 and will increase each year slightly through tax year 2029. If your MAGI exceeds $500,000 ($250,000 for those married filing separately), your SALT cap gradually reduces, but it will never be less than $10,000.

This is a particularly useful change if you live in a state or city with higher tax rates.

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Clean Energy Credits Eliminated

The Working Families Tax Cuts Act didn’t just create new tax benefit opportunities — it also got rid of a few existing tax savings opportunities. The big one that has already ended is the electric vehicle (EV) credit. Only qualifying vehicles delivered on or before Sept. 30, 2025, will qualify for the EV credit. Some states may continue offering their own incentives, but at the federal tax level, this credit no longer applies for vehicles purchased after Sept. 30, 2025.

In addition, several other clean energy and energy-efficient tax credit programs will expire after Dec. 31, 2025, meaning home upgrades you make in tax year 2026 may no longer qualify for a federal tax credit.

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New Form 1099-DA for Digital Asset Reporting

Starting in 2025, the IRS rolled out Form 1099-DA, a new information return designed to improve reporting for digital asset transactions (like cryptocurrency). Brokers and platforms that handle digital asset sales will use Form 1099-DA to report proceeds (and eventually cost basis) from transactions to both taxpayers and the IRS.

While this form doesn’t create a new tax, it does standardize crypto and digital asset reporting, similar to how Form 1099-B works for stocks. If you buy, sell, or trade digital assets, you may receive Form 1099-DA beginning in 2026.

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Take Note of Changes to be Aware of:

In 2025 the IRS announced that it would phase out the use of paper checks. Those who request a paper check by mail will need to wait even longer to receive their payment. Direct Deposit is recommended. 

For the first time since the pandemic, defaulted federal loans can trigger a refund offset. This means if you’re behind on your student loan payments, the federal government can garnish your federal tax refund or state refund to cover unpaid balances.

Many popular credits and deductions now require a valid Social Security Number and cannot be claimed using an ITIN.