Taxpayers Could See a Change in their 2025 Tax Bill or Refund

The IRS recently posted about changes in taxpayers’ 2025 tax bills based on provisions of last Summer’s tax bill.

Taxpayers may see a reduction in their tax bill or an increase in refunds this year. The One, Big, Beautiful Bill makes several changes for this tax filing season.

New deductions have been added, and certain credits have been updated. Some of these changes are retroactive to the start of 2025, which suggests that taxpayers may not have adjusted their withholding or recalculated their estimated income tax obligations.

Key additions and changes that may affect taxable income or a refund

New deductions

Seniors age 65 and older may be eligible to claim an additional deduction of up to $6,000. This is in addition to the current higher standard deduction for seniors under existing law.
Tipped workers may be eligible to deduct up to $25,000 for qualified tips. This limit applies per return for single filers and married couples filing jointly.
Individuals may be eligible to deduct up to $12,500; $25,000 for joint filers for qualified overtime.
Individuals may deduct up to $10,000 in qualified passenger vehicle loan interest.

It’s important for taxpayers to know that each of these deductions phase out based on income level for individual and joint filers and have specific eligibility requirements.

Updates to credits

A portion of the Adoption Credit is now refundable up to $5,000 per eligible child beginning in tax year 2025 and indexed for inflation annually.

Indian Tribal governments are now recognized to have the ability to determine whether a child has special needs for purposes of the adoption tax credit.

For taxpayers claiming the Child Tax Credit, they (or their spouse if filing jointly) and each qualifying child must have a Social Security number valid for employment and issued before the return’s due date, including extensions, to claim the CTC.

Taxpayers should maintain records to show their eligibility for any tax deductions or credits they claim. They shouldn’t be tempted by scam promoters who share misleading information while trying to promote large refunds.

The IRS Interactive Tax Assistant can help a person decide if they're eligible for many popular tax credits and deductions.