Did You Know? One Big Beautiful Bill Changes for Tax Year 2025
Taxes can be confusing, but some changes can actually help you save money. The table below shows what’s new in 2025, who it affects, and how it can lower your taxes. Check it out to see the updates that might help you and your family. Jump to the full article.
| Change | What’s New | How It Helps You |
|---|---|---|
| Lower Tax Rates Stay | 2017 lower tax brackets are now permanent | Most people won’t see higher taxes in 2026 |
| Bigger Standard Deduction | +$750 for single, +$1,125 for head of household, +$1,500 for married joint | Lowers your taxable income if you don’t itemize |
| Extra Deduction for Seniors | Age 65+ can claim up to $6,000 extra | Reduces taxes for older adults (some high earners may get less) |
| Higher SALT Deduction Limit | State & local tax deduction cap raised to $40,000 (2025–2029) | High-tax state residents can lower taxable income more if they itemize |
| Child Tax Credit Increase | $2,200 per child under 17 | Families pay less in taxes |
| Tips & Overtime Deductions | Tips and overtime partially deductible (limits apply) | Can lower taxable income if you work tipped or overtime jobs |
| Auto Loan Interest Deduction | Up to $10,000 interest deductible on new U.S.-made cars (2025–2028) | Can reduce taxes if you bought a qualifying car loan |
| Expiring Credits | Clean energy credits end 12/31/2025, EV credits end 9/30/2025 | Act in 2025 to claim these before they expire |
| 1099 & Reporting Changes | More 1099s may be issued, some old deductions removed | Keep track of income and deductions carefully |
Quick Tips for 2025 Tax Year
Bigger deductions and credits usually mean lower taxes
Some changes are temporary, so timing matters
Keep good records for tips, overtime, auto loans, and deductions
High-income earners may see reduced benefits
Full Article
Taxes are changing in 2025! Here are the key updates from the One Big Beautiful Bill (OBBBA) that could affect your tax return:
1. Lower Tax Rates Stay
The lower income tax rates from 2017 will stay in place. This means most people won’t see their taxes go up in 2026 — your 2025 taxes use the same lower rates.
2. Bigger Standard Deduction
The standard deduction is going up:
$750 more for single filers and married filing separately
$1,125 more for heads of household
$1,500 more for married filing jointly
This means you can lower your taxable income even more if you don’t itemize.
3. Extra Deduction for Seniors
If you are 65 or older, you can claim an extra “bonus” deduction of up to $6,000. This helps reduce taxes for older adults, but high earners may get less.
4. Higher State and Local Tax Deduction Limit
The limit on state and local tax deductions (SALT) is temporarily raised from $10,000 to $40,000 for 2025–2029. If you live in a high-tax state and itemize deductions, you could lower your taxable income a lot more.
5. Bigger Child Tax Credit
The child tax credit goes up to $2,200 per child under 17. Families with kids may pay less in taxes because of this.
6. New Deductions for Tips & Overtime
Workers in tipped jobs can deduct some of their tips.
Overtime pay may also be partially deductible (up to $12,500 for 2025–2028).
These changes can lower taxable income, but limits apply.
7. Auto Loan Interest Deduction
You may be able to deduct up to $10,000 in interest on new U.S.-made car loans bought in 2025–2028. Rules and income limits apply.
8. Expiring Credits
Some credits and deductions end after 2025:
Clean energy credits expire December 31, 2025
Electric vehicle credits expire September 30, 2025
Other deductions may no longer be allowed
If you plan to use them, act in 2025 to qualify.
9. 1099 and Other Reporting Changes
Some 1099 reporting rules are changing. More companies may need to send you 1099 forms, and some old deductions might no longer be allowed.
What This Means for You
Lower taxes: Bigger deductions and credits usually mean paying less tax.
Timing matters: Some deductions and credits expire, so you may need to act in 2025.
Phaseouts exist: High earners may see some benefits reduced.
More paperwork: New deductions mean you’ll need to track tips, overtime, auto interest, and other items carefully.
Temporary rules: Some changes are only for a few years. Plan for now and the future.
Footnotes / Sources
IRS Newsroom. One, Big, Beautiful Bill provisions. https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions
IRS. One, Big, Beautiful Bill Act: Tax deductions for working Americans and seniors. https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors
IRS. FAQs for modification of sections 25C, 25D, 25E, 30C, 30D, 45L, 45W, and 179D under Public Law 119-21. https://www.irs.gov/newsroom/faqs-for-modification-of-sections-25c-25d-25e-30c-30d-45l-45w-and-179d-under-public-law-119-21
IRS. How to update withholding to account for tax law changes for 2025. https://www.irs.gov/forms-pubs/how-to-update-withholding-to-account-for-tax-law-changes-for-2025
IRS. Publication 6961 (Rev. 9-2025). https://www.irs.gov/pub/irs-access/p6961_accessible.pdf
IRS. Internal Revenue Bulletin: 2025-38. https://www.irs.gov/irb/2025-38_IRB
Congress.gov. H.R.1 - One Big Beautiful Bill Act 119th Congress (2025-2026). https://www.congress.gov/bill/119th-congress/house-bill/1