The One Big Beautiful Bill Act, which was signed into regulation in July, created a number of new tax provisions and made changes to others which might be in impact for this 12 months. So it’s value having the rundown of among the key ones earlier than making ready your 2025 tax return.
Some of the provisions could end in a decrease tax invoice for you – or the next refund. But determining whether or not you’re eligible to declare them – and what paperwork you’ll want to achieve this – could also be extra complicated and time consuming than traditional for tax filers and tax professionals.
“The United States tax code is complex, not simple. Unfortunately, the OBBBA further complicates tax filing,” a Tax Foundation evaluation notes.
Here are 10 of essentially the most notable changes for particular person filers:
1. The next normal deduction
The normal deduction for 2025 was raised to $15,750 for single filers, up from the $15,000 beforehand in place. For married {couples} submitting collectively, it’s elevated to $31,500, up from $30,000. And for heads of households, their normal deduction might be $23,625, up from $22,500.
Most filers take the usual deduction as a result of it’s increased than the entire of itemized deductions they’re eligible to declare (e.g., mortgage curiosity, state and native taxes, charitable contributions, medical bills, and so forth.).
Anyone born earlier than January 2, 1961 and who has a legitimate Social Security quantity could now take a $6,000 deduction (or $12,000 if married submitting collectively and every partner qualifies). This new deduction is taken on high of your normal deduction or itemized deductions.
But the your deduction might be decreased if your modified adjusted gross revenue (MAGI) is greater than $75,000 ($150,000 for joint filers) however lower than $175,000 ($250,000). Above these ranges, the tax break is disallowed.
3. The next state and native tax deduction
What had been a $10,000 cap on the quantity of state and native taxes that itemizers could deduct on their federal revenue tax return is now $40,000 ($20,000 if married submitting individually).
The so-called SALT deduction allows you to deduct both your state and native revenue taxes or your state and native normal gross sales taxes. On high of that, you additionally could also be allowed to deduct your property taxes, assuming your revenue or gross sales taxes don’t put you over the cap.
If you’re a really high-income filer you’ll be limited in how a lot you might deduct. That contains anybody with a MAGI over $500,000 ($250,000 if married submitting individually).
If you acquire a brand new automobile (eg, a automotive, bike or van) for private use this 12 months and also you took out a mortgage to finance the acquisition, you might be allowed to deduct a minimum of among the curiosity. But provided that the ultimate leg of manufacturing for your automobile was completed within the United States, which is one thing that needs to be disclosed once you look up your Vehicle Identification Number (VIN).
But you gained’t be allowed to deduct greater than $10,000 a 12 months – an quantity that’s decreased if your MAGI is over $100,000 ($200,000 if married submitting collectively). Once your MAGI exceeds $149,000 ($249,000 for joint filers) the deduction is disallowed.
While your lender might be required to furnish to each you and the IRS a type that reviews on the curiosity you paid, they don’t have to achieve this this 12 months. So, for record-keeping functions, ask your lender or verify your mortgage statements to make it easier to doc the curiosity you paid in 2025, stated Tom O’Saben, director of tax content material on the National Association of Tax Professionals.
To declare the deduction you have to to fill out a new form – Schedule 1-A – in accordance to draft directions from the IRS.
While the Trump administration has billed this new break as “no tax” on suggestions, that’s inaccurate. It is a deduction for some or all of 1’s “qualified” suggestions, topic to revenue limitations.
“Qualified” is outlined as “voluntary cash or charged tips” that employees obtain from clients or by means of tip sharing in industries for which tipping is frequent. (Here is Treasury’s preliminary list of the industries wherein tipping is taken into account customary.)
Eligible employees can deduct up to $25,000 in tipped revenue. But they are going to solely get the complete worth of their deduction if their MAGI is beneath $150,000 ($300,000 if married submitting collectively).
Many tipped employees may not benefit from the supply since they earn too little to owe federal revenue tax. Middle-income employees who earn suggestions might be most definitely to qualify for the deduction.
To declare the brand new tax break, you have to to fill out a new form – Schedule 1-A – in accordance to draft directions from the IRS.
The Trump administration has billed this new break as “no tax” on extra time. But that isn’t correct. It is a deduction for a portion of what is considered “qualified” overtime pay.
The tax break will solely apply to the portion of certified extra time pay above your traditional wage, however that portion might be restricted to not more than the “half” in time-and-a-half pay, in accordance to IRS guidance. So if you happen to make $20 an hour and earn $30 for extra time, the deductible portion can be $10. If you earn $35 for extra time, the deductible portion would nonetheless simply be $10.
Also, what constitutes “qualified” extra time for the needs of the deduction might be pushed by the Federal Labor Standards Act, not state or metropolis regulation or union guidelines, O’Saben stated. That typically means time labored past a 40-hour week at not more than time-and-a-half pay.
Lastly, you might solely deduct up to $12,500 of eligible extra time compensation ($25,000 for joint filers). And you possibly can solely take the complete deduction if your MAGI is lower than $150,000 ($300,000 for joint filers). You might be allowed to deduct a smaller quantity if your MAGI is increased, however the deduction might be disallowed if your revenue is exceeds $275,000 ($550,000 for married {couples}).
To declare it, you have to to fill out a new form – Schedule 1-A – in accordance to draft directions from the IRS.
The OBBBA raised the utmost quantity for the kid tax credit score to $2,200 for every qualifying baby, up from $2,000 beforehand scheduled for this 12 months. It additionally requires, amongst different issues, that oldsters and their qualifying kids have Social Security numbers.
The IRS has extra right here on the eligibility rules and the way the credit score works.
The OBBBA accelerated the expiration dates of the new clean vehicle tax credit score (value up to $7,500) and the used clean vehicle credit score (value up to $4,000). A credit score is a dollar-for-dollar discount of your tax invoice.
Neither might be obtainable for any plug-in electrical (EV) or gasoline cell automobile (FCV) you bought after September 30, 2025.
If you probably did buy such a automobile for private use this 12 months earlier than September 30, and in any other case qualify to take the credit score, you’ll have to fill out Form 8936 and embody it with your tax return.
The federal authorities will put $1,000 into particular person funding accounts for infants born between January 1, 2025, and December 31, 2028.
To be eligible, the newborn should be a US-born citizen, and each the dad and mom and the newborn should have Social Security numbers.
To alert Treasury that you simply had a brand new child in 2025 and qualify for the federal seed cash, the “fastest, safest, and easiest way to make the election(s) is to file Form 4547 with your current-year e-filed tax return,” in accordance to draft instructions from the IRS. More steering on the particulars is predicted to be forthcoming.
For the primary time, your crypto transactions on any centralized crypto change like Coinbase will be reported to the IRS and to you. So, if you happen to offered or exchanged your crypto holdings on such a platform in 2025, you must count on a 1099-DA to be despatched to you by mid-February. That doesn’t imply all your crypto exercise might be reported, nevertheless. Here is more on what might be excluded from your 1099-DA.